The document discusses the forces driving healthcare transformation including payment reform, consumerism, digitalization, and emerging data sources. It notes the US healthcare system spends the most per capita but is highly fragmented. Digital health startups have an opportunity to engage patients, enable caregivers, and increase efficiencies. However, adoption faces challenges like data security, interoperability, and suboptimal experiences. The document maps the technology vendor landscape and where funding is going in digital health. It concludes with strategies for market development using an Acquire, Defend, Expand framework.

1. © Damo Consulting 2018
Making Money in the New
Healthcare Economy:
digital health startup primer
Paddy Padmanabhan
paddy@damoconsulting.net
San Antonio| May 12, 2018

2. © Damo Consulting 2018
2@paddypadmanabha

3. © Damo Consulting 2018
3
The most expensive health care system on the
planet
We are at the cusp of an unprecedented opportunity to transform healthcare
- Ed Marx, CIO Cleveland Clinic
@paddypadmanabha
$10,500 (OECD average $ 3200)
3.3 trillion economy, highest per capita costs in the world
Over 5500 hospitals, consolidation under way
Highly fragmented
Engage patients, enable caregivers, increase efficiencies, improve outcomes
Quadruple aim drivers
Foundational platforms, data, analytics, digital health
Healthcare IT spend growing

4. © Damo Consulting 2018
4
The forces driving healthcare transformation
Payment
reform and
Value-based
care (VBC)
Healthcare
Consumerism
Digitalization
across value
chain
Emerging
data sources
We need to let consumers determine value by shifting our system toward a more
competitive, free market
– Alex Azar, Secretary, HHS
@paddypadmanabha

5. © Damo Consulting 2018
5
Healthcare Payment Models
Fee-for-service: exactly what it sounds like – healthcare providers get paid for providing a service, such as a blood
test, a doctor office visit, or an MRI.
Accountable Care Organizations (ACO) : groups of providers who take on performance goals for healthcare
outcomes for a patient population, and in return earn incentives based on improved outcomes (they can also face
penalties if they miss their targets)
Bundled payments : A healthcare bundle is an estimate of the total cost of all the services related to a certain
problem, like a knee or hip replacement. Providers can improve margins on the procedure by keeping their costs
under control.
Patient-centered Medical Homes (PCMH) : A PCMH comprises of highly coordinated teams of caregivers that
works closely to improve care coordination for which an additional payment is layered on to compensate for the
extra effort of care coordination.
The Department of Health and Human Services (HHS) has set a goal of tying 50% of Medicare fee-for-service
payments to value through alternative payment models (APM) by 2018.
@paddypadmanabha

6. © Damo Consulting 2018
6
The digitalization imperative
Patients
Caregivers
Organization
Stakeholders Focus area Opportunities
Health education Wellness portal
Appointment scheduler
Cost estimator
Scale
Workload & Burnout
Health outcomes
Virtual consults/eConsults
Remote monitoring
Real-time insights
Efficiency
Labor costs
Productivity
OR/ED utilization
Automation
Collaboration tools
Provider-focused solutions have the most capital invested, with functions focusing on
administrative workflow and clinical workflow. – Startup Health Q1 2018
Access
Healthcare Costs
@paddypadmanabha

7. © Damo Consulting 2018
7
…and the forces restraining it
There are some 318,500 mobile health applications available to download. A mere 41
apps with over 10 million downloads each account for nearly half of all app downloads
-IQVIA Research
Market maturity
The teacher is ready –
what about the
student?
Data security
and privacy
IT security, HIPAA
regulations,
ransomware
Interoperability
Silo-ed proprietary
systems, poor data
quality
Suboptimal
experiences
Non-user friendly,
high adoption
thresholds
“Two-canoe”
syndrome, low
awareness of
market threats
No urgency
@paddypadmanabha

8. © Damo Consulting 2018
8
Where is all the money going ?
#
On average, $5.2 billion was invested in the U.S. Health IT market in each of the last 5
years.
-Healthcare Growth Partners, Jan 2018
@paddypadmanabha

9. © Damo Consulting 2018
9
Technology vendor landscape*
The custodians
The enablers
The arbitrageurs
The innovators
@paddypadmanabha
* From The Big Unlock: Harnessing data and growing digital health businesses in a value-based
care era

10. © Damo Consulting 2018
10
Custodians: We have the data and the workflow
The Custodians
@paddypadmanabha
Electronic Health Record (EHR) systems
Clinical workflows and patient records
Proprietary systems with low interoperability
The InnovatorsThe Arbitrageurs
The Enablers
Trying to catch up to the digital transformation wave
Major companies

11. © Damo Consulting 2018
11
Enablers: We built it, you can rent it
Platforms with extended range of capabilities
@paddypadmanabha
Configurable for a wide range of solutions
Technology stacks that include integration and analytics
The Custodians
The InnovatorsThe Arbitrageurs
The Enablers
Usually leave last mile to partners
Major companies

12. © Damo Consulting 2018
12
Arbitrageurs: We can do it for you (and for less)
@paddypadmanabha
Global technology consulting firms
Custom development of solutions
Value prop based on labor and information arbitrage
Often include startup solutions in service bundle
The Custodians
The Innovators
The Enablers
The Arbitrageurs
Major companies

13. © Damo Consulting 2018
13
Innovators: we have a whole new way of doing it
@paddypadmanabha
The Enablers
The Arbitrageurs
The Custodians
The Innovators
Struggle to gain traction due to perceived risk and lack of scale
Major companies
VC-funded startups
Typically focus on a specific problem
Often funded by healthcare innovation centers

14. © Damo Consulting 2018
14
Following the money
70% of digital health pilots turned into paying customers in 2017.
– Rock Health survey
@paddypadmanabha
Enormous market opportunity
Healthcare is ripe for change. What
specific problem are you solving ?
Revenue models
OK, you have great business model.
What is your path to revenue ?
The funding environment
VC’s put $11 Bn in digital health investments in
2017. What is your path to funding ?
Marketing and sales
So you have a great product. So what ?

15. © Damo Consulting 2018
15
MARKET DEVELOPMENT: ADE FRAMEWORK*ADETM Growth strategy framework
Growth
levers
Strategies
o Portfolio governance
o Customer success & value
capture
o Product/Service
improvement
Acquire :
new logos
Defend: current book of
business
Expand: adoption and
enterprise footprint
o Messaging and
positioning
o Branding/marketing
o Inside sales/field sales
o Opportunity mapping
o Account based marketing
(ABM)
o M & A
Strategic
relationships
Market entry
and revenue
diversification
Revenue
sustainability
and stickiness
@paddypadmanabha

16. Damo Consulting is a growth strategy and digital advisory firm
that works with healthcare enterprises and global technology
companies. We help develop and implement digital
transformation strategies and enable market growth strategies.
We specialize in thought-leadership led brand transformation
and actionable healthcare market intelligence
USA
One Lincoln Center, 18W140
Butterfield Road
Oakbrook Terrace Suite 1500
Oak Brook, Illinois, 60181
Phone : (630) 613-7200
INDIA
Mariam Center, 7M - 302,
3rd Floor, HRBR Layout,
Bangalore - 560 043
Phone : +91 8064051999
Email : info@damoconsulting.net | Website : www.damoconsulting.net
https://www.damoconsulting.net/book-the-big-
unlock/
https://www.cio.com/blog/healthcare-technology-trends/