Digital health market is hot, but startups still struggle to create sustainable business models

In a short amount of time, digital health has gone from “new kid on the block” to the darling child of investors and providers alike. But now the industry is starting to think about how to implement sustainable economic business models.

“In the next five to six years or so, the market is estimated to be $120 billion,” said Santosh Mohan, managing director at the Brigham Digital Innovation Hub, said during a recent Enterprise Insights Forum series event, held in partnership with Rock Health and Google Cloud. “I think we are still in the early days and there are many unrealized expectations from digital health.”

While saying that digital health investment is not in a bubble, Mohan said that “digital health solutions have started to show value and we are moving beyond talking about who pays for the pilot, and talking about how do we build these sustainable economic models for digital health to gain revenue and gain scale.”

Even as digital health startups are starting to show value, entering a well-established industry like healthcare can be difficult. Startups may not easily be able to disrupt an industry that’s been established and developed for more than 200 years, but collaboration and co-design is one piece of the puzzle toward getting that buy-in. At Pivot Labs, for example, 75 percent of the team’s work is around co-development with partners in big pharma, medical technology, providers, and startups to get ideas flowing.

Provider innovation organizations aren’t the only ones seeking collaboration in order to figure out these new business models. Furthermore, the panelists said, there may not be a one-size-fits-all business model. The questions providers, payers, and startups ask about validation, value, and ROI are constantly shifting; however, the industry as a whole is now starting to see digital health tools as valid.

“When I joined providers would say, ‘Prove to me that digital health works. Prove to me the ROI. Prove to me it’s effective,’” Dr. Kamil Jethwani, senior director of Partners HealthCare PivotLabs, said during the panel. “Today, no one asks me that question. Today the question they ask is, ‘Can you prove to me that it is not going to add to my workload?’ Because everyone is convinced that it works—they just don’t think the how is figured out yet.”

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