The ridesharing company submitted its S-1 filing Friday, listing the potential revenue opportunities and financial risks associated with its entrance into healthcare.
Lyft, Inc. took the latest step towards its long-awaited initial public offering (IPO), filing a form S-1 with the Securities and Exchange Commission on Friday.
While many observers have examined the document for details concerning the financial future of the ridesharing giant as it goes public and the ongoing rivalry with Uber, there are key aspects to the filing that describe how Lyft views itself as an emerging player in the healthcare market.
In S-1 filings, companies must provide a comprehensive overview of business operations, including any potential risk factors to the enterprise as it prepares to be publicly traded.
Considering the ridesharing industry's clear move into the healthcare sphere, Lyft will be among the leading companies straddling the line between providing strictly transportation services and assisting in the clinical or operational ends of the patient experience.
Below are some highlights from Lyft's S-1 filing regarding financial challenges the company could face in healthcare as well as some opportunities that could present themselves.
Lyft has established healthcare partnerships
In its filing, Lyft acknowledges the company's partnerships with health systems as well as technology network companies (TNCs) that enable patients "to get to their critical appointments on time."
Lyft cited its relationship with Allscripts as one such example, adding that providers can request rides for approximately 16 million patients through their digital platforms.
Through Lyft's relationships with TNCs like Circulation, ridesharing has become an established avenue for health systems across the country to provide patients with affordable transportation options so they don't miss out on appointments and systems can save money as a result.
A much-discussed JAMA study from last year argued to the contrary, however, stating that despite being offered free Lyft rides, the missed appointment rate among Medicaid patients was "not significantly different" compared with the control group.
Concierge to save the day?
Lyft's Concierge offering, which allows partner companies to "manage the transportation needs of their customers and employees" by ordering multiple rides, is one of the pillars of the organization's burgeoning healthcare strategy.
Among the other capabilities that Concierge provides are real-time ride tracking, 24-hour customer support, and reduced cost of transportation. Lyft collects on Concierge usage by charging a platform fee.
According to the company, "thousands of organizations thousands of organizations are using Lyft for healthcare related rides," and its success has begun to spread beyond the industry.
The company states in the filing that its partners primarily utilize Concierge to "simplify transportation for businesses" and "improve healthcare."
The company once again argued that Lyft has a future in healthcare by reducing the amount of missed appointments for more than 3.6 million Americans, which provides both a clinical and financial incentive for providers to embrace ridesharing into their respective business models.
Losses could exceed insurance reserves
Though Lyft sees opportunity in expanding its operations, the ridesharing giant remains well aware that external factors such as fluctuations in healthcare costs might cause losses for the company.
One downside to further expanding its Concierge service is the potential that Lyft might be subject to compliance requirements under HIPAA, which contain "substantial restrictions and requirements regarding the use, collection, security, storage and disclosure" of protected health data.
Through a 2009 amendement to HIPAA, privacy and security requirements apply to business associates of covered entities, a discrepancy that could include TNCs using Concierge, raising the potential liability faced by Lyft in the case of a security breach.
Lyft further details how remaining compliant for the sake of the customer could lead to higher costs for the company and how a data breach could make the ridesharing giant vulnerable to approximately $1.5 million in civil penalties.
Additional regulations or failure to comply with them could hurt the business
Beyond the data concerns, Concierge could subject Lyft to additional laws and regulations that could impair the business.
These include requirements to fingerprint, drug test, and conduct specialized training with hired drivers, which result in supplemental costs.
Lyft cites concerns over the potential for additional requirements related to payment processing and systems infrastructure design as outstanding factors that could also lead to an increase in costs.
Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.
Photo credit: New York, March 11, 2017: A pink car with Lyft logo is driving along 14th street in Manhattan. Lyft offers a convenient way to hire a ride using a smart phone. - Image / Editorial credit: Roman Tiraspolsky / Shutterstock.com
Lyft's IPO filing came before its rival Uber and is valued at up to $100 million.
The company has already established relationships that should make for a relatively seamless transition into the healthcare market.
However, the ridesharing company may be subject to increased costs and data security scrutiny with regards to HIPAA.