The nice digital well being reset – and the way IT leaders ought to plan for what’s subsequent

Again in 2020, within the rapid wake of the pandemic, we had been celebrating the approaching of age of digital well being – the 25X to 50X improve in telehealth visits, the explosion in VC funding for digital well being startups delivering level options for digital engagement and entry to care, the sense of the daybreak of a brand new and thrilling period in healthcare.

Certainly, that sense of optimism would pervade the startup ecosystem for the subsequent yr and a half. Digital well being startup investments reached a brand new excessive in 2021, closing the yr with greater than $30 billion in enterprise capital funding. VCs couldn’t get sufficient, plowing huge sums into unproven corporations like Noom, which offered weight-loss recommendation and acquired $540 million in a mega-funding spherical in 2021.

Unicorns to ‘uni-gones'?

Over the previous couple of months, the sobering news of high-flying startups coming again to earth has been a gradual drumbeat within the background. Whereas corporations have continued to boost cash into the present yr, the prevailing sentiment is that we can't surpass 2021 funding ranges; actually, the opposite could be the case as VCs begin to pull again on funding. Nobody anticipated the sudden flip in fortunes for once-high-flying startups, particularly these anointed with “unicorn” standing. Many shall be gone quickly.

Let's take the instance of behavioral well being. The psychological well being disaster has been a pandemic inside a pandemic. Demand for psychological well being providers has shot via the roof as staff – particularly healthcare staff – struggled with elevated workloads and stress. Behavioral well being was probably the most funded phase inside digital well being in 2021, with greater than $5 billion, or one-sixth of the overall funding volumes.

As a number of startups emerged with fashions to offer psychological well being providers utilizing a digital care mannequin, well being methods have turned to those startups to increase their psychological well being providers to their sufferers and staff. Behavioral well being might be the one brilliant spot in digital care, as evidenced by a pointy rise in claims for psychological well being diagnoses since this yr.

However current data recommend that psychological well being app downloads have declined by a 3rd since final yr. A few the extra outstanding startups within the house have run into bother.

Earlier within the yr, psychological well being firm Talkspace disclosed challenges with declining income development for the enterprise, even because it confronted a securities-fraud class-action lawsuit. In early Could, Cerebral, one other psychological well being firm, got here below federal investigation for its prescribing of managed substances and subsequently ousted its founding CEO in a messy boardroom coup. Even high-profile unicorn Noom has laid off a lot of its employees members amid complaints of excessive charges for canned recommendation through textual content.

In the meantime, the presumably well-established telehealth and digital care corporations that went public have seen their shares decline, together with telehealth bellwether Teladoc, which is attempting to digest its $18 billion acquisition of Livongo whereas additionally coping with declining telehealth visits because the pandemic retreats.

Challenges, alternatives for IT leaders

At the same time as well being methods proceed to make progress with integrating digital modalities into their operations, they've needed to cope with the whiplash impact of the fluctuating fortunes of buzzy startups and extra mature tech companies alike. 

Healthcare CIOs and CDOs must now monitor the sector intently and continuously assess their threat exposures to startups and tech companies for indicators of bother. The signs vary from delayed product releases, flight of key expertise, monetary woes and extra. CIOs are responding in some ways – from initiating platform migrations to doubling down by taking fairness stakes in promising startups with the potential for funding positive aspects.

In an fascinating reversal of developments, some well being methods have chosen to go together with the reliability and security of their core platform companions, corresponding to digital well being file distributors. They're additionally turning to secure and deep-pocketed enterprise-class platform suppliers corresponding to Amazon, Google, Salesforce and Microsoft as these companies deepen their dedication to healthcare with industry-specific product and platform enhancements.

EHR distributors, for his or her half, are touting ease of integration as a lovely worth proposition, citing diminished friction and quicker deployment as a lever to develop into new areas, an instance being Epic's entry into the CRM house.

As healthcare CIOs look intently at their tradeoffs, many startups face the stark actuality that a) their gross sales cycles might simply get longer, and b) their options could also be changed when their purchasers consolidate know-how options below fewer enterprise-class platforms for improved interoperability and diminished vendor administration overheads.

The continuing consolidation amongst well being methods (SCL Well being, Intermountain, Atrium- Advocate Aurora) may even result in vendor consolidation at these enterprises, placing additional stress on marginal startups and know-how answer suppliers.

At the same time as they scan the market, CIOs and CDOs are trying arduous at their current investments in digital well being. They understand that there is typically extra payback in optimizing workflows and driving adoption charges for current digital well being applications than in launching new ones; that there are extra positive aspects from consolidating platforms than in shopping for new ones; there's extra profit to slowing down on multimillion-dollar know-how tasks to redirect a number of the funding towards pay will increase for loyal employees. 

For some, it could even make extra sense to attend for the red-hot expertise market to chill off or to shift work offshore. Massive tech corporations corresponding to Amazon and Salesforce are imposing hiring freezes that can act as a launch valve within the stress cooker of the present expertise market.

Nobody is aware of how lengthy the present inflation circumstances, provide chain bottlenecks and expertise scarcity will final. However one factor is for certain: Money, as at all times, is king. Well being methods with the monetary sources will have the ability to double down on accelerating transformational applications, simply as well-capitalized startups with market traction will pull forward within the digital well being sweepstakes.

The nice reset below method within the startup ecosystem could be the cleaning everyone seems to be ready for.

Paddy Padmanabhan is the writer of Healthcare Digital Transformation – How Consumerism, Know-how and Pandemic Are Accelerating the Future. He's the founder and CEO of Damo Consulting.