The digitization of healthcare has begun, and the demand that COVID-19 triggered for solutions that address scale, cost and effectiveness is here to stay. The pandemic has been the ultimate draining of the U.S. healthcare pond, exposing and amplifying capacity imbalance, regulatory hurdles and mismatched incentives; challenging patient and provider experiences and access inequalities and stressing the ability to deliver at extreme scale, speed and cost.
These problems are suited for technology-led innovation, and digital health companies have answered the call. Telemedicine has seen a surge in adoption. Behavioral health is another good use case. BigHealth, a digital health company, added 2.2 million users to its mental health services in a mere 30 days. Other opportunities in virtual care include remote monitoring, home diagnostics, disease management, population screening and virtual pharmacy. CMS has relaxed restrictions on telemedicine, and these changes are expected to have staying power beyond the crisis, at least through the next 18-24 months. Additionally, the regulatory pendulum has started swinging towards greater access, particularly where concerns over product safety are limited, such as the FDA guidelines for digital mental health. Finally, data sharing barriers are being lowered in lieu of population health benefits – conditions ripe for digital health to grow.
While digital health solutions have the promise to address needs at a national level, most solutions are still a long way from the scale they need to make meaningful impact. For instance, even proven solutions critical during the COVID-19 crisis, such as digital diabetes disease management services such as Omada and Livongo are less than 1% penetrated amongst indicated U.S. patients – meaningful for those who have access to it, but too small to have a population-level impact. More capital is not the answer. Digital health has enjoyed record breaking investments over the last seven years, even as recently as the first quarter of 2020, attracting a record $3.1 billion in venture investment. Future money flow must favor those who have the ingredients to scale up over those who are busy looking for their “better mouse trap” in saturated market segments. When the U.S. Department of Health and Human Services has deemed even Skype and Facetime acceptable for telehealth, technology differentiation is unlikely to encourage adoption and scale. Here are four key ways digital health companies can win now:
- Create an amazing patient and provider experience: While telehealth companies have rushed to meet the surge in demand, many still have poor experience and user awareness. One of my colleagues shared a story of how his wife attempted telehealth for COVID-19, got bounced around from video, to phone, to drive-through test sites and waited hours before getting treatment. Similarly, user experiences on telehealth platforms are highly variable due to inconsistent guidelines and clinical protocols. Beyond simple conditions such as a cold or a sore throat, virtual care still has a way to go from delivering a seamless experience that users love and are loyal to. Digital health companies that partner with the healthcare ecosystem to create a delightful patient and provider experience will win. Those that lack integration into patients’ life flow and providers’ workflow will struggle.
- Automate and augment human capacity at scale: Workflow solutions to take HCP notes, remote monitoring for chronic disease management and mental health coaching all depend on the human touch, a key ingredient for success for pioneers such as Livongo and Omada. Such solutions will struggle to scale their workflow and operations. Telehealth companies, for example, are running out of provider capacity faster than they can hire. Several companies are moving towards fully automated communication solutions such as chatbots, but user adoption is low, unless used during appropriate moments of a treatment journey. By increasing their machine-to-human ratio and finding ways to scale up operations via flexible resourcing, like a gig economy, companies will be positioned to overcome this.
- Focus on platforms instead of standalone products: Certain digital health markets – such as telehealth and mental health, where demand is significant and barriers to entry are relatively low – are getting saturated. According to estimates, there are over 275 virtual care companies in the U.S. offering a variety of solutions to connect doctors to patients. However, post-COVID-19, comprehensive platforms that offer a broad range of digital care services will fare better than standalone solutions with niche value propositions. For instance, a person with diabetes is at a higher risk for worse outcomes from the virus, and few would argue the benefits managing such patients via a single virtual care platform solution vs. fragmenting across multiple apps – one for diabetes and the other for COVID-19 triaging. To achieve scale, standalone products should look for partnerships or merge with a platform company. Designing for channel integration, both in the product architecture and business model, will help companies take advantage of upcoming consolidation trends.
- Create a valuable B-to-B business model: The extraordinary financial strain the crisis has put on the healthcare system is making things worse for health systems that historically operated on slim margins. Payers are also expected to increase premiums and cut benefits. In the new environment, digital health solutions have to either be must-haves or reduce costs by paying for themselves. Disease management, virtual care and workflow automation companies that have a track record of selling short-term value propositions and getting paid from B-to-B customers are likely to succeed. Those that are expecting new fee-for-service reimbursement with a promise of clinical benefits and unclear near-term economic benefits, such as digital therapeutics, will likely face continued challenges. Find ways to emphasize cost savings, quickly launch and drive usage and evidence, even if it means settling for lower reimbursement levels in the short-term.
Manufacturers of digital solutions need to ride the upcoming wave to lead the industry into the next phase – the digital phase – of healthcare. Can we imagine what the impact could have been had digital solutions been at scale? How would we have fared as a nation if we had connected IoT for outbreak tracking, digital assistants for self-diagnostics, CDS tools to triage and manage utilization and digital monitoring and therapeutics for chronic condition support? Moving more quickly down the path of digital health adoption could be one of the positive outcomes of this crisis. Now is the time for the digital health industry to reassess and re-chart its path to scale.