Viewpoint: Are all digital health startups becoming clinics? 

Digital health startups continue to expand across the industry, with many shifting focus to providing care on their own rather than selling services to healthcare organizations, according to Jonathan Slotkin, MD, and Chrissy Farr. 

Dr. Slotkin, vice chair of neurosurgery at Danville, Pa.-based Geisinger and CMO at Contigo Health, and Ms. Farr, a health tech investor at Omers Ventures, penned a Nov. 30 op-ed exploring the future of digital health startups for Ms. Farr's Second Opinion newsletter.

Six insights from Dr. Slotkin and Ms. Farr on digital health startups' push to become providers: 

1. The progression of digital health startups becoming providers versus selling to hospitals, health systems and other practices is "a progression that makes a lot of sense for all sorts of reasons," the co-authors wrote. 

2. One driver of the shift is the long sales cycles involved with selling providers digital solutions, which have gotten even longer as providers pivoted to mission-critical solutions during the pandemic. 

3. Getting buy-in from care teams, such as through convincing clinicians to use an app to improve a patient's heart failure or diabetes, is also a challenge for startups. Even if clinicians do adopt the technology, some startups still struggle with providers when determining who pays for the digital products and how to incorporate them into daily workflows. 

4. There is also a "significant sunk cost fallacy" around investments in EHRs for health systems, as many have implemented an EHR-first approach to adopting new technologies rather than partnering with outside vendors or developing homegrown tools. 

5. At large hospitals and health systems, administrators typically make purchasing decisions for new tech rather than clinicians, which also could influence clinicians' choice to join startups, Danish Nagda, MD, CEO of Rezilient Health, told Second Opinion

"That's why digital health tools that solve problems physicians face are better off focusing on recruiting physicians directly and building their own care delivery systems," he said. 

6. While there are various factors at play influencing the growth of digital health provider groups, the industry must continue innovating the integration of tech and healthcare, Dr. Slotkin and Ms. Farr wrote. 

"In our view, it's essential that going forward we don't just 'tech enable' existing broken healthcare processes," they wrote. "And that we take pains to ensure that we're migrating over (and in many cases improving or making new) the best of the care quality measurement approaches that we expect from in-person care to digital solutions. That shift is still nascent."


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