In 2021, the digital health market seemed unstoppable, with growth-driven startups attracting major funding. This uptick in activity began in response to COVID-19 when demand for tech-heavy services like virtual care prompted significant innovation.
But no industry can stay white-hot forever, and with digital health, the cooling period has been particularly rapid.
Just 1 year after these companies raised a record $29 billion and some even went public, demand dropped so precipitously that widespread layoffs have now become common.
This industry shakeup doesn’t affect only smaller startups, either. Other examples are well-known companies such as Calm, Pear Therapeutics, and Noom, which have all experienced notable layoffs in the past 6 months.
In general, there are numerous reasons why digital health is dealing with slowdowns, according to Forbes. These reasons include inflationary pressure and compressed profit margins. But some of the blame falls on the entrepreneurs, Forbes notes.
Building a company for fast profit and funding rounds, with tech that’s more geared toward glitzy user interfaces than true usability, has put many of these companies on thin ice.
The silver lining? These digital health market shakeups have led organizations to focus on the value of finding solid partners who offer a real product-market fit.
Here are the 5 factors to consider for ensuring you align with partners who can reliably deliver.
No matter how infused with innovation a company might be, you need to be assured that it will be around next year—and the year after that—to protect your investment.
The fact is that about 90% of startups fail, according to one estimate, and although most weather the first year in operation, a staggering 70% will be gone within 5 years of being founded.
At the EX Program by Truth Initiative, a digital heath platform that helps people quit smoking, vaping, and nicotine, we know what it takes to stay solid for the long haul. We have over 20 years of experience in helping people live tobacco free.
Without longevity, it’s nearly impossible to provide data on treatment outcomes. There simply hasn’t been enough time or enough participants to supply this kind of evidence. Yet, this is an incredibly important aspect of choosing a solid digital health platform.
In addition to longevity, the EX Program has a large and rigorous research portfolio, with data collected over many different trials. The same is true for its clinical partner, Mayo Clinic, which has demonstrated the effectiveness of its evidence-based model in assisting individuals in identifying their values, transforming those into action, and creating lasting change over time.
Having a standout program doesn’t matter if it goes unused. Innovation in the digital health market is crucial to move the industry forward, but if participant engagement is lacking, then return on investment sputters.
That’s why it’s essential to evaluate the adoption rate among a population. For example, the EX Program has research showing an increase in digital adoption of quit-tobacco support. Each month over 2,000 people register for EX, signaling that it’s serving an important—and lifesaving—need.
The layoffs at digital health companies may have a longer-term effect of increasing turnover and decreasing productivity—those are 2 well-known repercussions that tend to follow significant workforce downsizing. For example, Harvard Business Review notes that layoffs of just 1% can result in 31% staff turnover within the next year, and a 20% decline in job performance.
At the EX Program, our employee numbers have grown steadily as we continue to expand our reach into the employer and health plan markets. This allows us to stay nimble and efficient to meet changing needs—and just as important, it allows our workforce to stay focused on our clients.
As the Forbes article noted, many digital health platform startups falter when management focuses more on obtaining VC rounds than creating a long-term, robust solution that changes healthcare.
Because we’re a nonprofit, the EX Program doesn’t have shareholders and doesn’t need to keep score with funding levels and valuations. Instead of courting investors, we’ve built an evidence-based, mission-driven, client-centric, and stable organization.
Entrepreneurship and innovation are critical when it comes to driving meaningful engagement and outcomes in a digital health solution. But when it comes to selecting a digital health partner to help achieve those goals, a proven track record of rigor and quality is equally important.
To learn more about the people and organizations behind the EX Program, visit our About Us section. To see how the EX Program effectively engages tobacco users in quitting, please connect with us today to see a demo and start a conversation.