Transparent communication, clinically-validated technologies, addressing real-life clinical needs; these might sound like no-brainer components to a digital health company since they are working in the healthcare sector. It is also a rapidly expanding one where investments were heavily channeled into during the pandemic.

However, some estimate that 90% of digital health startups will go bust or be ‘acqui-hired’ within a few years of being founded. If digital health represents the future of medicine and healthcare, it is important to understand why this is the case. 

We previously dissected the reasons as to why digital health startups go bust and the human element that jeopardised promising digital health tech. So in this article, we decided to go back to the dissection room to explore the anatomy of a good digital health company. So let’s take our digital scalpel and get to the task!

Features of a good digital health company

Scalpel equipped and ready? Follow along the incision lines and you’ll find that a good digital health company will have the following elements:

1. Transparent communication through social media

In the age of the internet, social media is where a company can reach out to most people. By leveraging this reach, companies can build trust in their products/services through transparent communication. However, going against this trend doesn’t bode well for the company and its audience. 

Take for example Nima. The startup launched two promising portable food sensors some years ago. We tested both the peanut sensor and the gluten sensor and found them to be accurate and very practical to use.

But since our reviews in 2018, Nima hasn’t released any new products and went silent. Online, users are reporting a lack of the availability of testing capsules required for the devices and a lack of communication from the company itself. And they are already blaming the new management for these issues.

2. Showing their claims through evidence-based studies

Given how digital health companies operate in the delicate area of healthcare, backing the claims of their tools through research will make them more noteworthy. For example,  Nightingale uses nuclear magnetic resonance and its proprietary software to analyse numerous biomarkers in a single blood sample. But unlike Theranos and its false claims, Nightingale teamed with researchers to be more transparent about their tech. Now, over 300 studies have applied their method.

3. Meeting real life clinical or patient needs

For a technology, and subsequently, the company behind it, to be successful, it should integrate into the practical reality of healthcare. 

For example, during the pandemic, telemedicine presented itself as a ready-made option that surged during the pandemic. Companies offering such services saw a boom in adoption. Amwell’s telemedicine app usage went up by 158% in the U.S. and appointments through PlushCare increased by 70%. In comparison, only 1 in 10 U.S. patients had used telemedicine services before the pandemic.

4. Catering to niche areas

The more niche of an area that a digital health company focuses on, the higher its chances of success. Austrian startup mySugr is an example of this. Their app helps diabetics reinterpret the condition as a “monster” that can be tamed through their app. Through motivating challenges, personalised insights and a scoring system, it encourages patients to “tame the monster” by keeping their glucose level at a desirable one. 

Pharma giant Roche even saw the potential in mySugr’s gamified approach and acquired the startup in 2017. It paired the mySugr app with its existing Accu-Chek Guide glucose meter to create the mySugr Bundle; thereby augmenting diabetics’ management of their condition.

5. Adoption of patient design

Often left out of the equation are patients who, conversely, are often the end-user of digital health services. Their input can be paramount in developing products attending to their medical needs. Incorporating a patient advisory board and including patient design can help a digital health company stand out from the crowd.

The #wearenotwaiting movement from diabetics illustrates this. With the artificial pancreas not available on the market due to lagging regulations, the diabetics’ community designed their own DIY one that works. After two years since the DIY version was freely available, the FDA finally approved of an artificial pancreas. If a company integrated a patient advisory board, leveraged its insight to develop such a product and pushed to have it approved, it would have a significant edge over other competitors.

The importance of good digital health companies

Now that the dissection is complete and the anatomical components of a good digital health company are identified, we can turn our attention to an actual example of such a company.

For this purpose, we’ll look at the path taken by manufacturers of portable ECG monitors like AliveCor. Since releasing its first FDA-approved portable ECG device in 2012, the company has pushed to have its devices tested in clinical trials while refining their design. By 2020, AliveCor’s products were tested in more than 40 clinical studies, integrated technologies like A. I. and their device was deemed comparable to a traditional (and bulky) 12-lead ECG by a study. By getting their products validated and pushing for good digital communication, the device can become part of everyday practice.

When venturing forth into the digital health industry, companies have to dream big as they intend to disrupt the healthcare industry. AliveCor and Fitbit are examples of such companies that dreamt big and delivered on their promise. They are surely not the last ones to find success in this industry.

But companies that tend to fly too close to the sun by overpromising and under-delivering make it hard to identify good companies. Some like Theranos build on hype and overclaims but turn out to be scams that leave a sour taste in investors’ mouths. This can impede progress in an otherwise promising sector. Also impeding progress is mismanagement like in the case of Proteus and the development of digital pills. While the technology is sound, the human factor ultimately led to its bankruptcy.

As such, we hope that this anatomy will help you discern digital health companies and the services that they offer that are worth your while from those that aren’t. This anatomy is also important for us because of the selection process of the top 100 digital health companies. We build a database from scratch, from interviews, from horizon scanning, from reports, from news analyses that we publish every year. And in doing so, it can help us bring the most relevant digital health news to you.

Written by Dr. Bertalan Meskó & Dr. Pranavsingh Dhunnoo

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