There’s a new game in town for D2C health business models

When most of us think about direct-to-consumer health care, we think about companies like Hims and Ro selling products (hair loss treatments, erectile dysfunction meds, weight loss treatments, and so on) to their customers, typically pending a consultation with a doctor. What stands out about these companies is their commitment to and ongoing focus on cash pay. If you scroll the websites for any of these players, you can see exactly what it’ll cost.

Per their executives’ statements over the years, it’s unlikely these companies will ever take health insurance. These businesses are committed to that model, and it's working well in areas where speaking to a physician in person is awkward or uncomfortable. There are also clear downsides, like a lack of brand loyalty. Sophisticated consumers can search for the lowest price within a few minutes.

A VC friend recently referred to this set of direct-to-consumer companies as the “shadow healthcare players.” That's spot on because they’re building entirely outside of the system. Because of that, it's possible to be totally upfront about pricing, which, in theory, could drive down costs over time—particularly as we see new entrants like Amazon start to get in on the action.