To be able to create real value for patients, physicians and payers, digital health needs to focus less on disruption and more on understanding the dynamics of this complex sector and on building relationships with its players.
If we’re talking about business or product development, for the last few years Silicon Valley’s famous “move fast and break things” approach seems to have been the only game in town. New and established organizations have fallen over themselves to be “disruptive”, with greater or lesser success. Meanwhile, the Lean Start-up methodology, which turns on businesses getting a Minimum Viable Product (MVP) to market quickly, then iterating or pivoting depending on feedback, has become the dominant paradigm, at least in the technology sector.
A cursory glance would suggest that this logic applies as much in digital healthcare as in other digital spheres. After all, a 2018 IQVIA study counted over 318,000 different health-related apps available to customers, with 200 new ones being added every day.
However, look behind this impressive number, and a different story emerges. According to a University College London study, only 20% of health apps were developed with participation from health experts.
This is a reflection of how the digital health space has developed. The “first wave” of development consisted almost exclusively of apps directed at the end consumer (B2C), providing convenience and novelty, and enabling them to be better informed about their lifestyle — in 2015, more than 75% of health apps were focused on exercise, wellness or nutrition. The “second wave” of apps shifted its target to administrative tasks in the medical office or the hospital. Now, according to industry experts, we are at the threshold of the “third wave”, as disease-specific apps that provide medical and even therapeutic value start to come to market. This third wave may actually represent 80% of total digital health value, according to a study by Bain and Co.
Over the last few years, a variety of digital health startups have tried to turn their tech smarts into value for their customers and long-term gain for themselves, only to discover that the lean start-up paradigm didn’t work in a very complex, highly regulated market like health — or only to develop products typical of the first two waves. In 2017, a report by Rock Health discovered that over 60% of digital health ventures originally directed at consumers had ended up changing their models to B2B or B2B2C. The disruptive models imported without much thought from tech-industry simply cannot cope with healthcare’s highly regulated, fragmented and complex environment. In fact, as the third wave of digital healthcare continues, pursuing traditional tech-industry formulas and ignoring healthcare idiosyncrasies may come with a high price-tag.
For any app to be successful, it needs to bring novel functionality. But once we move into the health space, it needs a lot more. Experts list a minimum of five critical success factors: clinical outcomes, regulatory and access, medical education, integration and connectivity.
Carefully balancing the clinical and bureaucratic pathways of the application is critical in a complex industry with multiple stakeholders. Digital health application developers are not just “selling their wares” to the consumer, or in this case patient, but to regulators, doctors, payers and insurers, each with different needs, concerns, motivators and intricate industry structures. To have even a chance of playing in the market, a new entrant needs to be able to navigate the regulatory situation, to understand and align themselves with payer priorities, and to stay religiously up to date with a constantly changing policy environment.
Overlay this with local and regional differences in healthcare, as well as cultural traits, and it’s easy to see the disadvantages for developers more used to working directly with consumers. Says one industry insider, “Over the last few years, the industry has been getting it wrong. We should be using a paradigm closer to developing a new drug or med-tech device, not developing a new app”.
Another crucial aspect is education at the physician and consumer level. Digital health solution developers have the challenge of communicating the benefits and functionality of their complex, and expensive, products, to a range of stakeholders.
To take an example: an individual physician in Latin America could be working with over 20 different payers, working in multiple locations, with up to 2,500 patients. He or she needs to understand quickly the value that a certain app will bring, and how it will fit into his or her workload and professional life: “If we can’t make that clear, and make the process easy for them, they won’t be interested.”
Integration and connectivity are where digital health applications really come into their own. The third wave (sometimes referred to as “transformational models”), such as digital medicine or digital therapeutics, create much of their value by generating rich, actionable information using data from multiple sources. This means that they need to integrate and be integrated with, for example, clinical records, laboratory results, and data provided by other apps. In an industry that has been notoriously slow to go digital, this is no mean feat.
Far from the fast build, test and learn cycles advocated by the Lean Startup methodology, the healthcare sector involves heavy regulation, long sales cycles and complex decision making.
It’s early days yet for the digital health market. While its impact is expected to be huge, it’s still uncertain how exactly the impact will manifest itself and how different players will be involved. But one thing is for certain — it won’t make that impact by blindly following tech rules.
Copyright 2020 Axenya Holdings Inc.