Digital therapy companies have a lot to learn from the mental health care industry they seek to disrupt
If you spend time at conferences, reading industry publications, or on Linkedin and Twitter these days, you’ll see an entire digital health industry chastising traditional health care for being disconnected, slow to innovate, and resistant to change. The reality (as is often the case), is quite different from the hype.
The fact is, the healthcare industry is an innovation machine, but it remains cautious of digital solutions for a reason. Unlike digital health companies, the success and failure of healthcare incumbents is not judged by their last valuation (promise), but by life, death, patient outcomes and costs (value). Promise and value rarely happen at the same time in healthcare, and the promise of digital health is still far from being realized.
In short, they’ve “seen” it before and are slow to jump on “innovations” that lack a clear need, clear value, and validation. This review is a good thing. One day we will all be patient and we will be better off.
A mental health crisis
Still, there are areas where digital health could help, such as mental health. America is in a mental health crisis. The national shortage of mental health professionals combined with an overwhelming need has made it painfully difficult to access timely and affordable care.
Pre-pandemic statistics reported that more than half of the 50 million Americans diagnosed with mental illness are not receiving treatment. For as many as 60% of people who receive care, it is only a prescription for medication – far too few receive psychosocial treatments that can teach them valuable skills and give them the confidence to navigate life daily, such as talk therapy or cognitive behavioral therapy. (CCT).
Digital therapies (DTx) – clinically validated medical interventions delivered via software – have the potential to help close some of this gap. Although still in the early stages of serious mental illness, there are a growing number of digital therapies targeting behavioral aspects of a wide variety of illnesses. For example, video games for children with ADHD or apps to provide cognitive behavioral therapy for people with bowel disease, heart disease and diabetes.
By extension, a picture is beginning to emerge where digital therapy could offer a cost-effective means of extending therapy that would be impossible to accomplish by relying on face-to-face interactions, whether live or via telehealth. Given the time required to recruit and train new clinicians, expanding treatment to include scalable DTx interventions seems like an obvious choice.
The conundrum of underutilization
In 2021, $29 billion in venture capital was spent on digital health, including $5 billion on mental health alone, more than any other disease category. Yet we rarely hear results stories or see case studies with large numbers of patients.
Even evidence-based digital therapies are massively underutilized. Providers and payers remain skeptical, driven by real and appropriate concerns about what is best for patients in light of the demonstrated lack of value beyond usual treatment.
Too many of these well-funded digital health companies use a “Field of Dreams” go-to-market strategy (if you build it, they will come) and spend relatively little time unboxing Why Where How? ‘Or’ What they need to scale and whether scaling would bring value in the first place.
This fatal flaw manifests itself in the linear way many DTx companies approach the market: identify a need, create a product, test it in a limited way, seek FDA approval, hope to receive coveted redemption codes, and then assume vendor adoption and sales will follow. When this is not the case, they fall back on the false assumption that traditional health care is cumbersome, slow to adopt innovation, or indifferent to new treatments rather than looking closely at what could be very good reasons why cautious healthcare players have been slow to adopt their products.
Adopt a values-based mindset
Instead, digital actors should embrace a value-based mindset starting with the humble hard work of understanding where your product and/or service capability is most valuable, for whom, when be used and where it fits into the patient’s life. Care course. This approach has the greatest chance of delivering real value in the form of better clinical outcomes, patient and clinician satisfaction, and net reductions in the cost of care.
Mental health disorders are complex and treatment pathways are long, complicated and often disjointed. The whole ecosystem must be convinced that the improvement that a digital treatment can offer is real and reproducible. A typical journey for a patient with schizophrenia, bipolar disorder, or major depressive disorder may include interactions with law enforcement, emergency, inpatient, residential, outpatient intensive care, virtual care, home care and often all of the above.
The billion-dollar question becomes: where does your treatment fit on this continuum to help patients? It’s up to the digital therapy company to answer that question, but many companies simply expect the ecosystem to suck their digital therapy to the appropriate place and/or rely on payers or employers for the TO DO.
Complicated economics
Over the past 15 years, I have worked closely with payers and providers to innovate and successfully integrate new technologies into the delivery of care.
The mental health industry is already aware of the harms of overprescribing and knows that evidence-based digital treatments can drive value. He also knows he cannot recruit, train, deploy, and pay enough therapists to meet the growing demand. Digital treatments are cheaper, standardize treatment delivery, and offer huge opportunities for health equity.
However, this promise is simply not enough. The world of digital therapeutics must prove that it is up to the task.
To say “PTSD is a $200 billion economic burden with few solutions” is not strategic market mapping. Build a detailed map of PTSD (for example), starting with an understanding of a patient and their life: what is the impact of PTSD on them and their family; where/when do they receive treatment; what the treatment looks like; and who provides it. What are the gaps and does filling these gaps provide opportunities for value creation? Ask who is paying for the treatment now and what value do they think. Is the change necessary? For example, if drugs are cheap and effective, why would anyone use or pay for a digital product instead?
Too many startups lack a real understanding of the complicated economics behind the models of care they are trying to disrupt. A granular understanding of how typical processing is performed and paid for is an essential first step in aligning your business model with that of your potential partners. From there, you can model the value opportunity created by your product and work to design what and how you price the product based on how your potential partner will benefit from it. Unless a company wants–and able– to do so, they will continue to fight an uphill battle and will be seen as another technological solution adding costs on top of processing for an ecosystem that already operates on extremely thin margins.
With each partner, map out each step of caregiving in their world. Don’t assume the industry will know how and where to implement your solution. If it can’t be implemented easily and seamlessly, it won’t be used, deployed or paid for – and the work to streamline this process needs to be done upfront and down to the smallest detail.
Get clinical use and membership whether or not there is a redemption code and great savings at the start. Without demonstrated use, it is almost impossible to obtain new products. Deployment of new treatments requires not only validation of results in controlled environments, but proof that they can and will be implemented. Often the best way to achieve this is with a low-cost proof-of-concept program with a defined scope, timeline, and value goals.
What we as health tech entrepreneurs view as game-changing innovations, healthcare incumbents view as barely validated treatments that create additional cost and implementation burden. Until this disconnect is repaired, digital therapies will struggle to achieve true adoption.
Mike Desjadon is Commercial Director at OxfordVR.
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