UKRAINE - 2021/08/02: In this photo illustration a Zocdoc logo seen on a smartphone and a pc screen. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)

SOPA Images/LightRocket via Getty Images

During the Great Depression, New York’s streets turned chaotic. Thousands of unemployed residents, desperate for work, began running unlicensed cab services in their own cars, crowding intersections and undercutting one another for fares. Safety was nonexistent, and competition was ruthless. In 1937, the city signed the Haas Act, creating a new system that capped the number of taxis and required each vehicle to display a medallion, which granted the exclusive right to pick up passengers in New York City.

This medallion system reigned for three-quarters of a century.

Then, in 2011, Uber launched in New York City and changed everything.

With little regard for existing city, transportation and labor regulations, Uber clashed with officials New York and most every city it entered. Cease-and-desist orders and lawsuits piled up. But as demand for Uber continued to surge, regulators eventually caved and created new frameworks to legitimize app-based ride services.

Uber’s experience brought simmering tension to the surface: regulations are designed to protect the public, but can unintentionally stifle competition and innovation in the process.

If there’s one industry that highlights these tensions better than any other, it is healthcare. Privacy, security and trust are paramount, and human lives are at stake, and so individual and industry activities must be overseen. A substantial state and federal regulation has developed accordingly. However, the resulting byzantine system is one that seemingly serves no one well: it can be fairly characterized as an outrageously costly, bloated, and sclerotic.

How can and should innovation in healthcare occur amid this tension?

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The Model That Made Uber Soar Nearly Sank Zocdoc

In many ways, Zocdoc is the Uber of healthcare. Founded in 2007, Zocdoc launched a digital marketplace that helps patients find doctors and book appointments online. Said another way: they connect consumers to doctors, just as Uber connects riders with drivers.

Zocdoc’s value proposition is straightforward: enable consumers to see real-time availability, compare providers and schedule visits online. Its business model was straightforward too: charge doctors a fixed monthly subscription fee to be listed on the platform.

This worked at first, but as the company grew, its business model began to show strain.

High-volume providers who filled many appointments through the platform were effectively getting a bargain with their fixed rate. Low-volume providers, on the other hand, struggled to justify the high cost. Over time, Zocdoc’s subscription fee led to high churn and stagnant revenue. The company faced an all too familiar dilemma for healthcare platforms: a pricing model misaligned with value.

Zocdoc’s leadership knew that a transactional model, in which providers paid only when a patient actually scheduled an appointment, would better align incentives and scale more efficiently. After all, this has been a tried and true model for Uber, Amazon, and many other platforms.

“We weren’t oblivious to the fact that a per booking model would be better. We just didn’t see a path to this when we got started.,“ explained Zocdoc CEO and cofounder Oliver Kharraz.

And this was because Zocdoc operated in healthcare.

While transaction-based fees exist in the administrative plumbing of healthcare, such as for claims or e-prescribing, they’ve been off-limits in many areas of clinical frontlines, specifically for patient access and care coordination.

Zocdoc’s per-booking model risked violating one of healthcare’s most powerful and long-standing laws: the Anti-Kickback Statute (AKS).

As Kharraz put it, “We got caught up in laws that were created in 1972 when the fax machine was the hot technology of the day.”

The Anti-Kickback Statute: Protecting Patients, Blocking Progress

Like the Haas Act of 1937, the AKS was enacted in 1972, long before the advent of the internet and modern digital technologies.

AKS is a federal criminal law that prohibits offering or receiving anything of value in exchange for referrals of services covered by federal healthcare programs, such as Medicare or Medicaid. Its intent is unambiguous: to prevent fraud, overutilization and corruption in a system where public funds and patient well-being are at stake.

The logic is sound. A specialist shouldn’t be able to pay a primary care doctor for referrals. A skilled nursing facility shouldn’t be able to pay a hospital for priority discharge placements. And no party should be incentivized to steer patients toward care that isn’t medically necessary.

The statute has been an essential guardrail against abuse for decades. But as technology has transformed how care is accessed, coordinated and delivered, AKS has also created a choke point for legitimate innovation.

Jonathan Bush, CEO of Zus Health, has argued that the law’s rigidity is inadvertently stifling progress. “Kickbacks exist in almost all supply chains, except for healthcare,” he recently wrote. “Travel aggregators like Kayak deliver consumers to airlines in return for a small cut of the profits. Kickbacks motivate people and businesses to connect with each other.”

In other words, transactional incentives are not inherently corrupt; they’re foundational to efficient markets.

Healthcare, however, is different.

It’s a fragmented and yet heavily siloed system of systems where data exchange is the lifeblood of coordination: booking appointments, sending referrals, transmitting prescriptions, ordering lab tests, sharing histories. Every handoff requires trust, precision and timely exchange. Yet the very companies that could help streamline those exchanges often feel their business models are handcuffed, wary that per-transaction payment structure could be interpreted as an inducement.

As Bush noted, this makes it “harder for companies to build viable business models for their data solutions.”

The result has been predictable. Most digital health platforms default to suboptimal subscription models, which don’t align with the outcomes they create. Others confine their models to commercially insured patients, sidestepping AKS entirely but excluding Medicare and Medicaid populations who could benefit most.

Either way, innovation stalls. Patients lose. Providers lose. And the industry remains cut off from the efficiencies and network effects that have transformed nearly every other sector of the economy.

Zocdoc’s Long Road to Legal Reinvention

Zocdoc could have taken the easy route. It could have rolled out its per-booking model only for commercially insured patients, where AKS doesn’t apply. But that would have left tens of millions of Americans—and a massive segment of the healthcare market—behind.

“We took the hard way,” Kharraz said. “We could have said, ‘We’ll only do this for commercially insured patients, and the regulatory environment would’ve been dramatically easier.’ But we wanted to make the tools available for all.”

So Zocdoc did something almost unheard of in digital health: it went straight to Washington.

In contrast to how Uber fought regulators, Zocdoc decided to work with them. The company undertook a formal, collaborative process to gain approval for a new kind of business model.

The company engaged with the Department of Health and Human Services’ Office of Inspector General (OIG) to request a formal Advisory Opinion—a process that allows organizations to ask, in advance, whether a proposed business model would violate AKS.

It was a first for a digital health marketplace.

What followed was nearly two years of legal review, iterative design and structural safeguards to ensure full compliance. The outcome was transformative.

In an Advisory Opinion issued in 2019, OIG formally approved Zocdoc’s shift from a flat subscription model to per-booking and per-click fee structures, finding that the design, when implemented with strict safeguards, did not pose a significant risk under AKS.

Four years later the OIG revisited the model to assess new features such as “spend caps,” which prevent providers from buying their way to the top of search rankings. The agency again found the structure compliant, underscoring that Zocdoc’s model preserved patient choice and fairness.

The rulings didn’t change the law, but it set a powerful precedent for how others could operate within it.

What Zocdoc’s Approval Actually Means

OIG advisory opinions apply only to the party that requests them. But in practice, they function as guideposts for the entire industry, showing what’s possible under existing law.

Zocdoc’s favorable opinions made one thing clear: it is legally permissible for a digital platform to charge per-referral or per-booking fees, as long as key safeguards are in place.

Those include:

• Preserving patient choice: the platform cannot steer or recommend providers.
• Ensuring fair market value: fees must be flat, pre-set, and not tied to downstream revenue.
• Maintaining transparency: paid placements must be clearly labeled as “sponsored.”
• Displaying multiple options: patients must always see comparable providers.
• Preventing inducements: no payments can flow to referring parties such as primary care providers or hospitals.

It’s a narrow path—but a transformative one.

By demonstrating that transactional monetization can coexist with AKS compliance, Zocdoc effectively rewrote the playbook for healthcare marketplaces. The implications extend far beyond appointment scheduling.

The Market Opportunities Now in Play

Just as Uber’s regulatory aggression created a massive new market for on-demand platforms like Lyft and DoorDash, Zocdoc has too paved the way for future innovators in healthcare.

Zocdoc’s regulatory success reveals a broader truth: transactional, outcome-aligned models are not only possible in healthcare, but they may be essential for scaling access and efficiency.

Across multiple segments of the healthcare system, similar structures could unlock enormous value if built with the right guardrails.

1. Patient Appointments

Each year, the U.S. sees more than one billion outpatient visits, according to the CDC. Yet patients often face long wait times and limited transparency, while providers grapple with underutilized capacity.

A compliant, pay-per-booking structure—mirroring Zocdoc’s model—could allow platforms to charge providers only when an appointment is successfully scheduled or attended, aligning fees directly with value. The model promotes fairness, scalability and sustained patient autonomy.

2. Specialist Referrals

Roughly 100 million specialist referrals occur each year, but nearly half are never completed. Manual processes, fax-based communication and poor tracking result in lost patients and fragmented care.

A neutral platform could charge receiving providers (e.g., specialists) a flat fee per confirmed visit, without any payment flowing to the referring party. Such a model would improve coordination while staying within AKS boundaries.

3. Care Coordination and Post-Discharge

The U.S. sees about 35 million hospital discharges annually, and nearly half fall under some form of value-based arrangement. Yet transitions to skilled nursing facilities, home health agencies and primary care often break down, driving costly readmissions.

A legally structured platform could coordinate these transitions and charge downstream providers per completed handoff—again, with no inducement or referral fees. The result: better outcomes and stronger economic alignment under value-based care.

4. Diagnostics and Clinical Trials

Americans undergo roughly 14 billion lab tests each year, along with 90 million CT scans and 38 million MRIs. Further, 2.8 million subjects are sought for active clinical trials. Delays, lost requisitions and low trial enrollment remain pervasive.

Platforms could enable diagnostic centers or research sponsors to pay per scheduled or completed appointment, provided they preserve choice, neutrality and fair-market-value pricing. The same compliance principles that guided Zocdoc could open a new frontier for precision medicine and research recruitment.

Innovation Within the Rules

Entrepreneurs don’t need to break healthcare’s rules to modernize the system. Understanding how today’s technology and consumer expectations have moved beyond sometimes outdated regulatory constraints, and how to work within those constraints, can create opportunities.

Zocdoc’s model shows that with the right safeguards, transactional incentives can coexist with patient protection. It also gives regulators a roadmap for how innovation can be encouraged, not penalized, when it serves the public interest.

For digital health entrepreneurs, the implications are profound.

We may well look back on Zocdoc’s advisory opinions as the quiet inflection point that brought healthcare into the age of consumerization, with enhanced patient access, efficient care coordination and seamless information sharing.

Just as Uber forced cities to redefine transportation, and Plaid helped banks rethink data sharing, Zocdoc has shown that paradigm shifts and breakthroughs are possible even in the most tightly regulated markets.