the health strategist
institute for
strategic health transformation
& digital health
Joaquim Cardoso MSc.
Chief Research and Strategy Officer (CRSO),
Chief Editor and Senior Advisor
September 3, 2023
What is the message?
The article, published by the Medical Device Network, underscores that despite the potential of healthcare apps to revolutionize health management, the industry faces substantial financial challenges.
Companies must not only develop cutting-edge products but also establish resilient financial strategies to weather the turbulence that can lead to insolvency.
Adapting to market shifts, regulatory changes, and reimbursement fluctuations is essential for healthcare app businesses to ensure their financial stability and long-term success.
One page summary:
The proliferation of healthcare apps in the midst of technological advancements presents a promising avenue for improved health management. However, beneath this optimistic facade lies a challenging financial landscape that healthcare app companies must navigate.
This article highlights the potential perils these companies may encounter, drawing attention to key cases and issues that could lead to insolvency.
The article cites Babylon Holdings Limited as a prime example, having recently filed for bankruptcy protection for its American subsidiaries.
This move signifies a struggle to secure operational financing and demonstrates the criticality of financial resilience in the healthcare app industry. The failure of a planned business combination with MindMaze adds to the predicament.
Notably, the financial viability of healthcare app businesses hinges on sustained investment in software development, quality control, regulatory compliance, and ongoing updates. Overshooting development costs or the burden of app maintenance expenses could jeopardize a company’s fiscal stability.
Pear Therapeutics serves as another case in point, with FDA-approved apps facing payment refusals from payers like Medicare. Despite considerable prescriptions, a significant portion remained unfilled, resulting in inadequate revenue recovery. These instances underscore the industry-wide struggle to monetize digital therapies and the associated financial implications.
The expansion strategies pursued by healthcare app companies to secure market dominance can exacerbate financial challenges, particularly with rising interest rates. The article highlights the need for these entities to establish sound financial strategies that account for potential market fluctuations and adverse financial conditions.
In conclusion, the promise of healthcare apps improving health management belies the financial uncertainties that lurk in the background. Robust financial planning and adaptability are paramount for companies in this sector.
Given the susceptibility to external factors like regulatory changes and shifts in patient behavior, healthcare app companies must remain agile to avert financial instability and ensure their long-term viability.
DEEP DIVE
This summary was written based on the article “Critical Financial Difficulties that Digital Health Apps Could Face”, published by the Medical Device Network, on August 22, 2023.
To read the full article, access: https://www.medicaldevice-network.com/comment/financial-difficulties-digital-health-apps/?cf-view
