After the exhilarating burst of adoption of Digital Health technologies through the global pandemic, the reality of Digital Health’s initial promise is normalizing. The bar has been raised to demonstrate the impact of Digital Health. The advent and growth of value-based contracts heightens the need to demonstrate the role of Digital Health in improving the quality and cost outcomes intrinsic to value-based models. This article focuses on the challenges and opportunities for Digital Health technologies to clearly demonstrate value in a world of value-based contracts and models.
Expectations beyond Adoption
The category of Digital Health represents a wide range of technologies and services, leading to some uncertainty about what “Digital Health” means. For the purposes of this article, Digital Health includes all the following: telehealth, remote monitoring, digital therapeutics, digital patient/member engagement platforms and similar solutions.
In our current environment, buyers of Digital Health solutions show signs of re-evaluating the purchases that drove the wave of adoption. One survey of health systems by Panda Health showed a high rate of potential change in Digital Health vendors. For example, 78% of Digital Care Navigation are up for renewal in 2024 and 2025, and more than half of those buyers are dissatisfied or only moderately satisfied.
The enthusiasm about generative AI connected to digital solutions may generate new waves of Digital Health investment and buyer adoption. Nevertheless, we believe this will not relieve pressure on existing Digital Health solutions to demonstrate value. The healthcare world has shifted from adoption because “we have to be in the game” to “let’s only keep and adopt what really works”.
Quantifying real impact.
What does it mean for a solution to have impact? It’s useful for both buyers of Digital Health and those delivering solutions to step back and address the fundamentals. In our work, we have used the following framework that includes a broad range of types of impact that a Digital Health solution can demonstrate.
Given the need to focus on delivering impact, it is surprising how often we see Digital Health solutions with incomplete or even missing value narratives. Too many companies have proceeded without developing and proving a clear value hypothesis, much less a demonstrated return on investment.
To this point, one fascinating study of Digital Health companies revealed that an astonishing 43% of the companies make no quantitative public claims about impact. We believe that this oversight is a fatal flaw because demonstrated value will be the key differentiator that makes a company stand-out as buyers re-evaluate their Digital Health partners.
On the other hand, we have seen many companies who have made powerful cases for value. Two specific examples can be found in a hybrid model solutions in behavioral health that shares specific data demonstrating better usage of high-value care modalities compared to benchmarks. Another example is in virtual physical therapy that used a ‘matched cohort methodology’ to show equivalent outcomes for a virtual vs in-person model which demonstrated the value of a lower cost virtual model. The ability to make specific claims has contributed to new and stronger client relationships for these companies.
Raising the Stakes for Digital Health in Value-Based Care.
The absence of demonstrated value is particularly acute as Digital Health solutions look to enter value-based contracts. In these models, demonstration of outcomes goes beyond impacting a buyer’s selection of a partner. Meeting specific outcomes metrics in fact ties directly to revenue earned. The lack of a value proposition with quantifiable and direct outcomes is not sustainable for even the most technologically sophisticated Digital Health solutions.
Even for digital solutions with a strong value story, there still exist execution challenges. In the rush for growth and generating new adoption, excellent technologies can underperform if they don’t execute in terms of fundamental processes and disciplines. We have found what is missing is a roadmap across several common areas of execution critical to success in Value-Based Care including:
There is no doubt that the recent acceleration of adoption of Digital Health has been impressive. Additionally, the prospects for continued technology evolution – perhaps powered by Generative AI – are truly exciting. But the path toward success in an environment with an increasing focus on value-based models requires a disciplined approach to value definition and execution. Without a robust execution roadmap, money may be left on the table. The opportunity is to close operational and contractual gaps to ensure good outcomes leads to full realization of potential revenue. The companies that invest in these areas will distinguish themselves and grow. The ones who don’t will be left in the dust.
Management consulting for healthcare