Health 2.0 business models: Sermo

sermo_logo_small1Dan Palestrant, CEO of  Sermo, the ‘Facebook for MDs’, famously declared at last year’s Health 2.0 that ‘Google Ads is not a business model’. Many companies do interesting things, but how do they align the interests of their constituency with the interests of the people who are going to pay for the platform’s existence?

Sermo has 90,000 members and is currently recruiting around 7,000 new members a month. Palestrant estimates his subscriber base is ‘double the size’ of all the other American physician online communities added together, and predicts that Sermo will have one in five American physicians on its books by the end of the year. New users are verified and credentialed as registered US physicians. Palestrant stated that one tenth of one per cent of user actions were monetized; in other words, 99.9% of the activity that takes place is non-commercial physician-to-physician interaction.

Sermo’s users ‘pay’ for all the social networking functionality that the platform affords them via opt-in interactions with financial service providers (notably Bloomberg), the pharma industry, and government research agencies (FDA, AMA, clinical trials). Physicians are not charged for membership of Sermo, nor are they exposed to banner advertising.

The eight products that Sermo offers to industry fall into three classes of physician interaction: learning, research and engagement. By way of an example, Palestrant described a recent partnership with Pfizer based around Sermo offering its members the opportunity to click on contextually relevant links (usually corresponding to drug names or disease states) and pose questions to Pfizer HQ’s medical information teams, who pledge to respond in 24 hours. The answer is posted to the community.

Everyone participating would appear to benefit from this interaction. Palestrant characterized the service as being a ‘red phone’ for its membership direct to the pharmaceutical company; for their part, the pharmaceutical company enjoys an open, direct link to MDs, as well as financial savings.

The thing to learn from Sermo’s experience is that whilst its users will not tolerate banner advertising, they are more than amenable to having the opportunity to consult ‘hotspots’ of contextually relevant sponsored information if they so wish: the right information, shown to the right class of physicians, at the right time. Sponsors’ opt-in surveys that require 100 voluntary responses typically take around an hour to recruit the target number of participants.

Palestrant noted that Sermo now ‘works with 10 of the 12 largest pharma companies in the USA’, and with this sort of immediate, targeted physician interaction, it’s easy to see why.

Thanks to @agouveia for the link.

2 thoughts on “Health 2.0 business models: Sermo

  1. A free service with opt-in interactions which users pay for is a potential model for Health 2.0. However, it would be a shame to see this underpinned by the pharma industry.

  2. Hi Andrew

    I think I left a reply on one of the other forums that I was unsure of Sermo’s business model. Having had another look I take it back. It’s an innovative approach and it allows physicians to chose. More traditional business models would have tried to lead users down a certain path, what we are seeing in Health 2.0 is that users are now deciding. Like it.

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