In 2020, 90,000 health apps were launched — nearly 250 a day. Especially in the wake of the COVID-19 pandemic, which elucidated room for improvement in health care delivery and led to a rapid increase in telehealth use, health tech is a very popular sector for product development.

Preparation is key in a space with such intense competition. Health care organizations must be selective when partnering with digital health initiatives, and tech companies need to be prepared to navigate the obstacles inherent to the health care space. Having a robust understanding of the health care system and its unique challenges will help technologists and product developers succeed.

In a webinar presented by the Harvard Medical School Office for External Education, Joseph Corkery, MD, gave his viewpoint on what technologists need to know about health care, and vice versa. As a longtime Google employee and HMS graduate, Dr. Corkery brings a dual perspective to the question.

Here are four things he thinks are important to know about the intersection of health care and technology.
 

1. Hospitals and payers are often hesitant to test new digital products and health apps.

In general, health care organizations tend to be more conservative and risk averse due to serious digital risk, gaps in training and onboarding and strict compliance regulations. Payers and hospitals have a low tolerance for pilot, alpha and beta products, in part because a mature product shows commitment to the space and an ability to comply with nuanced health regulations.

Health care products face more privacy requirements than other industries. In the US, the main regulations include the Health Insurance Portability and Accountability Act (HIPAA) to regulate the protection of personal health information, the Federal Food, Drug, and Cosmetic Act (FFDCA), which regulates the use of medical devices, and the Payment Card Industry Data Security Standard (PCI DSS), which regulates the protection of financial data. Veteran products that have a longstanding history of compliance with regulations can seem like the safer choice to payers and hospitals.
 

2. The “users” and “buyers” of products are often different people.

The technology that is intrinsic to a hospital’s functioning — like Electronic Health Records (EHRs), paging systems and much more — are used by physicians and other health professionals, but are purchased by the hospital system. Digital health products used by patients — like at-home EKGs or fitness apps — may be purchased or subsidized by health insurance providers. In both of those cases, the individuals using the products are not the ones shopping around and ultimately making the decision to buy them.

Product developers need to understand the requirements of both the users and buyers in order to convince organizations to purchase the product and entice individuals to use it. The buyers — including hospitals and payers — are looking for tried and true, reliable products that drive cost savings and improve patient health. Health tech companies should demonstrate and quantify the impact of each product to get buy-in. To attract users, companies should emphasize health improvement, convenience and integration with the larger hospital or payer system. Addressing the needs of both the users and the buyers will give health tech companies a competitive advantage.
 

3. The model of health care reimbursement is in flux, moving away from fee-for-service toward value-based care.

Fee-for-service (FFS) care, the traditional healthcare reimbursement model, rewards providers for each service they perform — so there’s no incentive to limit tests, procedures and other services. In fact, FFS may lead to over-caring for patients and ratcheting up health care costs for payers. With value-based care, providers are instead rewarded based on the quality of care provided to patients. This is measured by certain metrics, such as hospital readmissions, quality of preventive care and the use of particular kinds of health technology. The growing adoption of value-based care will help incentivize the outcomes that patients, payers and hospitals desire — high quality of service rather than high quantity.

It's important for technologists to understand the health care reimbursement landscape so they can optimize for health metrics that matter to hospitals and payers. Technologists can measure the success of digital health products based on the key performance indicators that determine care reimbursement and use that lens to prove the products’ importance to health organization leadership.
 

4. Health care organizations expect to pay for products.

In light of the value-based care model, health care organizations expect and are willing to pay for products that move the needle on metrics they care about. After all, the goal is that these products will save the organization money in the end. That payment also shows the organization’s commitment to a specific product, and vice versa — it represents an agreement between the parties that the product developers are committed to surviving in the space. But first, health tech developers need to capture the attention and interest of health care organizations.

To do so, and ultimately win the investment of hospitals and payers, technologists need to speak the language. Clinical trials with significant, quantifiable impacts carry more weight than other arguments when it comes to proving viability to health care organizations. It’s important that product developers approach organizations with the same rigorous evidence that health professionals would expect before adopting new medical treatments or approving drugs. Hospitals and payers want to see statistics and research that prove the products’ worth.

When people in health care and technology work together, the opportunities for innovation and breakthroughs are endless. Understanding the constraints and norms of both industries is an important first step to allow for that collaboration.

To hear more perspectives on the intersection of health care and technology, watch Dr. Corkery’s webinar.