While 60% of the B2C Digital Health companies converted to B2B, there are still questions being raised on the market focus

The digital health companies are changing business focus from B2C to B2B models, and at the same time adapting significant organizational and structural aspects of the healthcare technology B2B business.

A study conducted by Rock Health, an organization to support entrepreneurs working on health tech, stated that over 60% of the digital health companies that actually started as B2C companies have now become B2B models, making B2B dominant the digital health sector.

In 2017, the costs would be pushed if healthcare brands went directly to the customer – due to the rise in insurance and healthcare costs. The strategies were designed to allow consumers to take better control over healthcare spending choices. They also had the option of using apps making healthcare decisions based on algorithms. But clearly, that didn’t work.

The key findings of the ‘Patient Adoption of Mhealth’ report  by QuintilesIMS suggests that out of the 165,000 mobile health apps in the Apple Store and Android playstore, only a small number were clinically approved.

Experts believe that there is an enormous opportunity for digital health start-ups that are willing to commit themselves to the B2B landscape. Some of the top health tech companies that have attracted attention are actually in B2B space. These include IPG, a device management optimization solutions provider that helps reduce costs and improve quality for surgical procedures; Enlitic is one of the first (AI) medical companies to commercialize ML and bring AI to accurately assess radiology results; and Augmedix allows physicians to shorten the time they spent on updating patients’ EHR.

According to the Rock Health study, the healthcare categories of payers, life science companies and providers where each of these   have an individual industry structure working – whether it is  consolidated, fragmented, local or international. Some experts suggest that in the B2B space too, there are limitations. According to the American Hospital Association (AHA) out of the 5,564 registered hospitals in the US in 2017, 85% are considered community hospitals taking in patients in poor financial conditions. So, if the vast majority of hospitals in the US are not viable targets, then the addressable market can shrink for new technology solutions.

The biggest challenge is when the healthcare is considered a fee-for-service (FFS) industry. Clearly the increasing adoption of health insurance any, new solution looking for enterprise-wide adoption must align with the hospital’s reimbursement models.

Other than the management systems and AI in healthcare, the governments have also set aside fundings for the long-neglected areas like mental health and substance abuse programs. The US government also recently initiated schemes like the launch of the FDA pre-certification program for software as a medical device (SaMD), to accelerate innovation.

Most of the digital health start-ups are quite new to the B2B enterprise sales and are not familiar with the long sales cycles and the complex decision-making processes. The digital transformation of the healthcare sector is just in the beginning, though the scope seems low now, the right technology will have the power to disrupt the industry.