Impact of COVID-19 on Digital Health Startups

Updated on June 18, 2020
Pharmaceutical technician in sterile environment at pharmacy industry

Michael Yang, Managing Partner at OMERS Ventures, and Manish Shah, CEO of PeerWell, a Musculoskeletal surgery optimization platform, took some time out of his busy schedule to address a few questions about the ongoing coronavirus pandemic and its effect on today’s digital health startups. 

What do digital health startups need to be thinking about right now in light of COVID-19?

Michael: Any digital healthcare startup today must be able to put themselves in the shoes of the healthcare system and empathize with its practitioners, providers and people. As the startup’s founder or top executive, perhaps you believe your solution is a game changer, especially in the COVID environment, but it’s important to take a step back and ask whether it’s truly a  top 3, or even a top 10 priority. Instead, think about who has the time and availability to engage with you and why versus those who don’t. While some media may suggest every digital health company is benefitting from COVID tailwinds right now, that’s not the case. 

It’s also worth pointing out that the long engagement and sales cycles aren’t going to go away anytime soon, so make sure to think hard about your partner and customer engagement models in times like this.

Manish: COVID-19 has hit everyone, and it is creating large waves of change across every industry. For startups who still want to see growth right now, it’s important to quickly identify what opportunities are now actionable within time and budget constraints. Specifically in healthcare, there has been a mindset that large change is happening, just very slowly. We’ve been in a paradigm shift of data interoperability and value-based payment models and other large scale changes for the last 10 years. However, those changes were not moving fast enough for startups to take advantage of, and waiting five years for a new value-based payment model to take hold is far too long for a startup to take advantage of it. 

However, with COVID-19, healthcare is seeing years of change compressed into months and weeks. This doesn’t necessarily mean every  startups’ agenda will be top priority for its customers as it’s still risky for a large enterprise to take a bet on a small scale startup, especially in the middle of a pandemic. But digital health startups can balance their value proposition between being innovative and right for the current situation to emphasize its lasting impact for customers now and into the future.

What do you believe the implications of COVID-19 will be on the healthcare ecosystem, especially once the curve starts flattening?

Michael: We have a backlog of healthcare utilization right now.  The publicly traded health insurers have said this, and the hospital systems have said this.  I’m getting prolific amounts of email marketing from my provider and healthcare system encouraging me to come back in (in fact, I’m getting as many emails from my local healthcare providers as I am from airlines, all noting their updated cleaning policies).  Elective procedures are re-opening for business from an availability perspective, but the consumer patient is not mentally and emotionally ready yet.  We’re frozen because we have not adequately addressed environmental health and safety concerns, and we haven’t been able to guarantee to patients that they won’t contract COVID by coming in to see their physician.  Obviously, this is not optimal for the subset of patients who really do need to seek care and for whom – this protracted deferral is not good for their health.

Manish: The implications of COVID-19 are almost immeasurable, and everything is and will be different. For patients, there will be a resetting of how they feel about their care providers. First, they will question their safety when considering visiting clinics, hospitals, ERs, and Urgent Care centers, with many opting for remote care options, especially in the near term. Once they’ve tried telemedicine, there will then be a natural question of why this wasn’t always possible. Why was it required of them to drive to a clinic, sit in a waiting room, and then see a doctor for less than 20 minutes? The technology to deliver care in this way has been around for years. 

For providers, there will be a behavior change that will take its toll. Many providers will struggle with the requirement to deliver care remotely. Many will do it because there is no other option to see patients. Many will learn to adapt to the new modality and be fine. However, some will be waiting for things to return to the “old” way, only to realize that it is not coming back. Their patients are going to demand remote care options.

Insurers will also need to reevaluate their networks. Curating networks of providers will be much different when more care is delivered remotely. Regulations that allow providers to practice across state lines will completely change how networks are built, and payers will need to rethink how they create provider networks to serve their plan members.

What do you anticipate will be the primary challenges for digital health startups for the rest of this year?

Michael: False positives.  There will be many instances of really encouraging news for digital health startups – that regulatory constraints have been relaxed, that provider behavior has changed, that consumer patient behavior has changed, and that money is flowing to solve certain problems.  Certainly, there will be exemplary case studies of these scenarios taking place, but like any good scientist, we need more data to see if the trends sustain post-crisis.  Some behaviors will last, others will snap back to the way they were.  As a result, some healthcare startups may find prioritization and resource allocation decisions to be more challenging, with some big bets working while others won’t.  Startup founders are eternal optimists – they have to be, by nature.  But don’t overread the trend line from small sample sets.  Stay flexible as you always have to be prepared to zig and zag a few more times.

Manish: The amount of change taking place is unprecedented. Startups will need to remain flexible and listen very closely to their customers. However, the experiences of one customer may vary significantly from another. Startup leaders will need to figure out what is true and what is not and do their best to avoid confirmation bias, or it may lead them off the edge of a cliff.

Also, digital health companies will face the challenge of being new and risky amidst a risky environment. It will take more time to convince customers (employers, payers, providers, etc) that they are worth a “bet” when bets are more expensive. It may lead to even longer sales cycles, smaller or no budgets for “pilots”, more risk-averse pricing, longer implementations, etc. All of which cost time, the one resource startups do not have plenty of.

What about the primary opportunities?

Michael: The biggest opportunity is to rethink healthcare as a seamless multi-modal, omni-channel system, like we have achieved in other facets of life.  Because COVID has denied the provider-patient, in-person experience, we’ve had to rely on telehealth overlays and workarounds. The idealized workflow has not been redesigned for experiential optimization yet.  That comes next in a more steady state, calmer regime.  If one could rethink managing musculoskeletal pain, would it involve e orthopedic surgeons and in-person encounters, followed by physical therapy sessions thereafter alongside the hope that there would be no rescissions, no opioid addiction?  Or could one stylize a new clinical workflow that included tele-therapy, remote patient monitoring, virtual visits with coaches and counselors, and a steady diet of patient education in the proper bite sizes?

Manish: We have an opportunity to completely leap frog to a new way of delivering care, much like developing nations can start with better technologies and not have legacy costs to bear. Every facet of healthcare delivery has been impacted and people are adapting. This goes way beyond just making video visits available. When the dust settles, we will realize we can be doing much more for patients, and it will all cost much less. In MSK, we can begin to ask and answer questions like, “When is it appropriate to see an orthopedic specialist for this shoulder pain?” or, “Have we tried all the other modalities?”, “What does the data tell us: is range of motion getting better overtime, is pain still high, or is strength returning?”, and, “Can we predict long term injury risk? Can we predict surgery risks?”

We can actually do all those things today without a single in-person visit, with devices ubiquitously deployed, from the comfort of peoples’ homes. Patients will be more informed the whole way through since they will now be in the driver’s seat, not a passive participant.

What does the future of digital health look like beyond 2020? / What are you most excited about when it comes to the future of digital health?

Michael: The future is very bright, possibly never brighter than before because the stark inadequacies of today’s healthcare paradigm have been laid open for all to see.  From the tenuous tether of employer-sponsored healthcare, to inequalities and social determinants of health, to business models predicated on utilization, to staffing imbalances throughout the system, we have seen so many opportunities for digital health to potentially play a role.  I’m intrigued with the advances of proptech (technology for the real estate industry) being brought to bear to reimagine new physical medical facilities so that we never have to see another U.S. Navy ship sail up the Hudson as a back-up hospital.  I’m fascinated with the job boards and recruiting marketplaces that can more readily match supply and demand of medical professionals such as front line nurses, home health aides, and telemedicine-trained physicians.  I’m interested in next-generation testing technologies that not only test persons,  but physical spaces as well, and as a corollary, bring the lab or the test to the in-home market.  So as you can see, there is much to do, and much for digital health to help solve in the future.

Manish: It is without a doubt the most exciting time to be working in digital health. While many have been toiling away at trying to show the world a new way of doing things through the lens of an existing system, the world has now woken up and is demanding a new way. We are going to rewrite the entire healthcare delivery operating system. 

We will be exploring every aspect to think differently about how it can be done differently. How do we run clinical studies in a fully remote/distributed model? How can we facilitate “just-in-time” interventions based on real-time data. Imagine a patient days before a major surgery needing behavioral health counseling, and then getting it within minutes? How can we include caregivers and extended family into the experience? Imagine a person seeing their parent’s range of motion recover from across the country and knowing they are able to move as they once did. The concept of digital health as we know it today is almost too small, constrained by what has been possible to do within the old delivery system. With a new set of rules, the concept of digital health will expand as startups break through. 

This is a special moment in time where we can impact every person, in every stage of life, get access to healthcare in a new way. This is the type of hyperbole that startups thrive on, and it’s now our reality. 

The Editorial Team at Healthcare Business Today is made up of skilled healthcare writers and experts, led by our managing editor, Daniel Casciato, who has over 25 years of experience in healthcare writing. Since 1998, we have produced compelling and informative content for numerous publications, establishing ourselves as a trusted resource for health and wellness information. We offer readers access to fresh health, medicine, science, and technology developments and the latest in patient news, emphasizing how these developments affect our lives.