After pivot from scheduling tool to telehealth platform, Zocdoc raises $150M
At the beginning of the pandemic, appointment scheduling company Zocdoc faced a conundrum: most practices had ceased to offer in-person visits as Covid-19 cases continued to climb. The company quickly pivoted in April, adding a tool for patients to search for telehealth appointments and for physicians to offer video visits.
The gambit seems to have paid off, as the New York-based company claims it now has 10,000 providers offering virtual visits on its platform. To support this shift, Zocdoc recently raised $150 million from private equity firm Francisco Partners.
Zocdoc CEO Dr. Oliver Kharraz said the company tried a few different flavors of telehealth before finding a model that patients preferred. Before the pandemic, telehealth visits only accounted for 1% of appointment bookings through Zocdoc — it wasn’t necessarily something that its users were seeking at the time.
In its first foray into telehealth in 2020, Zocdoc tried to build what everyone else was doing — an urgent care platform that connects patients to the first doctor available. The company tested that against a different model where patients could schedule a visit with a doctor that they’d normally see in-person.
“It turned out that when patients were given the case between an acute service and a service where they could select the doctor, they chose the latter by a ratio of 10:1,” Kharraz said in a phone interview.
He also found that patients, by far, were choosing doctors that were in close proximity to them, even for a telehealth visit. Now, bookings for in-person visits have recovered to pre-pandemic levels, while telehealth bookings are up 20%.
“We expect in the long run, that’s where telehealth will shake out,” he said.
In the last year, Zocdoc said its revenue has increased, after growing 35% year-over-year in 2019, though it wouldn’t share exact numbers. The company is now turning a profit, after shifting from a flat subscription model for physicians to a fee-per-booking model in 2018. The change led to an outcry among practices who relied on the service, but Zocdoc said it has also resulted in a 50% increase in the number of providers on its platform in states that have transitioned to the new payment model.
The company also recently rolled out a Covid-19 vaccine scheduling tool, which is being used by the city of Chicago. It pulls in appointment availability from local health systems, as well as point of dispensing sites opened by the city.
With the new funding, Kharraz said the company aims to build out a marketplace where users can search for in-network doctors, book in-person or virtual appointments, and get prescription refills. As many other telehealth companies line up to go public, he didn’t indicate that Zocdoc plans to do so, yet.
“I get this question quite a bit these days,” he said. “We are profitable… We are in many ways masters of our own destiny, so we don’t feel we need to go public to do our growth plan. I’m focused on building it up into an important healthcare company.”