The digital health sector is currently navigating a challenging financing and funding environment. According to Michael Greeley from Flare Capital Partners who spoke at the recent HIMSS conference, the past year brought in $30 billion of capital to the industry and over a thousand companies were created – three times the decade’s trend. However, this rapid growth has created a saturated market and many new ventures, particularly those with narrower offerings, find it hard to gain traction.
However, two essential qualities have been identified that distinguish startups that manage to successfully fundraise in this era. The first one is the ability to prove Return on Investment (ROI) for customers swiftly, ideally within a year. This aspect has always been important, but in the current times, the demonstration of hard, measurable ROI has become crucial.
The second characteristic is the ability to show data which proves the product is creating a difference. Whether in terms of improved operational efficiency, reducing clinical burnout, or enhancing patient outcomes, the evidence of measurable impact is essential. For instance, given multiple vendors interacting with the patients, it’s becoming important for startups to prove the attribution, so they can take credit for their impacts.
Corroborating Greeley’s views, Robbie Freeman, chief nursing informatics officer at Mount Sinai Health System, stated that “ROI is paramount” for today’s health system leaders. Once a system decides to use a product, it sets up success metrics for the pilot and tracks them closely. If the system doesn’t experience ROI, the partnership with the vendor cannot proceed. Health systems interpret ROI not only in terms of cost savings but also improve patient health and enhanced safety.
Freeman further agrees with Greeley’s comments about many recent startups having narrow offerings. Most hospitals prefer “broader platforms that can deliver on many of our use cases,” instead of point solutions. To read more about the changing landscape of digital health startups, the original article can be accessed here.