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5 ways digital health startups can break from the pack

Brian Eastwood | Oct. 21, 2014
It's a good time to be a healthcare startup, as investors are pouring billions into the market. However, it’s a crowded field and to attract funding you have to stand out. Here are five tips to help digital health startups land venture capital.

Remy goes so far as to hire hackers to test his firm's apps, which provide secure texting, voice and photography in a hospital setting. His one bit of advice to digital health entrepreneurs: "Security first, security last and security always."

Look Beyond Reimbursement
Whatever business model healthcare providers adopt, they still rely on reimbursements to pay the bills. However, that doesn't mean startups need to focus their efforts on reimbursements per se. Save providers time with, say, secure messaging instead of a game of telephone tag, Remy says and they can take on additional cases and bring in additional revenue.

Mary Modahl, chief marketing officer with telehealth provider American Well, adds that providers today want to reduce the cost of managing care. Improving efficiency helps. Something as simple as letting patients fill out forms before they arrive as opposed to while they sit in the waiting room can save time and allow a practice to schedule more appointments.

Care quality represents another opportunity for digital health, Remy says. Since October 2012, as a result of the Affordable Care Act, HCAHPS patient satisfaction scores have affected providers' value-based incentive payments. Apps or services that improve patient engagement offer one way to boost satisfaction. For that matter, anything bringing innovation to healthcare IT should help.

Watch the Beltway
Healthcare IT's regulatory environment remains murky. On matters such as medical device safety, the Food and Drug Administration can do little more than offer guidance; the diversity of medical devices, as well as the environments in which they are used, makes official rulemaking difficult.

Startups looking to make their mark in digital health aren't helpless, however. Monica Chmielewski, special counsel with Foley & Lardner, advises startups to assess their product in terms of its audience and the type of data it will collect. This will determine whether HIPAA, the Stark Law or the Anti-Kickback Statute apply, she says, as well as whether the service is a device (and therefore regulated by the FDA) or a "health management system" (overseen by the Office of the National Coordinator for Health IT).  

Predict the Future
Easier said than done, to be sure, but past and current healthcare trends point to several future digital health needs:

  • Telehealth, in terms of both virtual doctor visits and coordinated care for patients with multiple comorbidities and, therefore, many specialists to see
  • APIs, which will help providers improve data exchange with themselves and with patients
  • Actionable data from clinical systems or medical devices that integrates with decision support and population health management systems, says Babatunde Akindele, managing principal of global strategy at Verizon
  • Access to care a hot-button issue in light of the Veterans Health Administration hospital wait time scandal


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