Digital Health Is Far From Dead. If Anything, It’s Just Getting Started — Here’s Why

According to CNBC, since 2014, over $16 billion has been invested into 800+ digital health companies.

Unfortunately, the digital health space is far from flourishing. This article, in particular, highlights the various challenges digital health entrepreneurs have faced in overcoming healthcare’s longest standing obstacles — such as slow sales cycles, patient behavioral changes and engagement, and even governmental regulations with endless red tape.

All those things are true.

However, digital health, as an industry looking to create viable healthcare solutions, is far from dead. If anything, it’s still in its infancy.

What we’re witnessing is nothing more than a race for market share in an industry where rapid changes are few and far between.

In a way, all of this should be expected. What we’re observing in digital health is nothing more than the product of a trigger-happy ecosystem of venture capitalists who saw “unicorn companies” pop out of the tech scene and see an opportunity to engineer those same successes again in the healthcare space — a world ripe for innovation.

The problem is that when looked at from an overall numbers standpoint, so much money has already been invested that the gains would need to be exponential in order for VCs to reap the rewards they originally set out for. Based on the quoted article, for the individual investors and VC firms to generate the returns that they are expecting, the market cap of the digital health space would need to be tripled by 2021 — which is just not a realistic phenomenon to occur.

It’s not that digital health, as a solution, is dead. It’s that, economically speaking, the level of investment has turned from encouraging to borderline reckless. There have been very few successes in the space, and no “unicorns” to point to as hope for the future. Just a whole bunch of ideas with positive intentions, strangled by the same everyday healthcare issues that have been compounding for decades.

Unlike popular tech, there are no quick-fix solutions.

But again, that doesn’t mean the opportunity isn’t there. Healthcare simply requires different expectations.

The biggest reason why so many digital health entrepreneurs have failed is this:

It’s not that the 800+ digital health companies that have received health investments have been flops. Some have, but certainly not the majority.

The reason it’s so difficult for these platforms to build, attract a user base, survive, and eventually become profitable is because they have to integrate into the existing healthcare system. This isn’t about reinventing the wheel so much as it is understanding how to make it rotate more effectively — and in order to do that, digital health entrepreneurs can’t just see the opportunity. They have to be extremely familiar with every facet of the patient’s journey, and how the solution they’re building will integrate into the entire framework of their healthcare experience.

And while I might be both, a practicing surgeon and the developer of a digital health platform called Pulse, I fall into a very small category of healthcare entrepreneurs. Many have never worked within the healthcare system, let alone understand how their platform will operate outside the realm of theory.

Second, healthcare solutions take time — a long, long time to grow a significant user base.

Which means these digital health startups require funding that will last them years — not months. In popular tech, apps and platforms can go viral and attract massive user bases very quickly, proving market demand and either turning profitable or warranting larger and larger valuations with each funding round. In healthcare, it’s the opposite. You’re not going to win the battle in a year or two. Which means digital health entrepreneurs will need money to last longer, and have the foresight to know how their integration into the system needs to happen — now, and later on. Also, growth requires real data. Healthcare is an area where blanket claims cannot be made without real data, and real data showing that a solution has truly moved the needle often takes a long time to come by.

But now is not the time to give up and call the space “dead.”

It’s extremely difficult to change bureaucracies. But if something is hard or slow to change, does that mean it’s “dead” and time to give up?

Absolutely not.

Healthcare will begin to shift as a whole when it sees viable solutions that fit within their already-established infrastructure. As entrepreneurs, then, it’s our job to learn how to speak their language, and frame our solutions within the context of how things are — not how we wish they would be.

It’s worth noting, however, the startups that are in progress now are doing some incredible work. They are creating fantastic, viable solutions to solve real problems in healthcare. The past few years, especially, have revealed a lot about what patients are struggling with and what needs to happen in order to encourage behavioral changes. This, along with huge technological advancements has created a seismic shift where now, patients, provider networks, health systems, and insurers are more open to technology than ever because the true value is becoming more and more defined.

What needs to happen is a shift in expectations.

The solutions we’re all working toward won’t reveal themselves overnight. They will take time to develop, and to integrate into the system.

But when they do grab hold, they will be powerful.

And that’s what we’re all working toward.