For ages I’ve been saying that the term “digital health” should be retired – that it is a bit of a lazy term that evolved around 10-12 years ago at a time when technology and healthcare rarely appeared in the same zip code, much less in the same enterprise. At that time, it was surprising to find healthcare functions operating in a digital world.
To be clear, when I use the term “digital health” I generally have meant products/companies that primarily exist only in the digital world and, while they may have some services or some device associated with them, the primary engagement with the thing is through software, sensors and/or computing platforms or something similar; further, the technology contributes to doing something that is not otherwise readily doable in the traditional healthcare realm. Granted, this is my own definition that I use to distinguish digital health from other stuff in healthcare, but the act of separating these things has gotten too damn complicated. Narrow the definition and you leave out something critical. Expand the definition and you pretty quickly get to… healthcare. Thus, I declare that the day of reckoning has actually finally arrived for the term “digital health” and it is time just to say healthcare once again. I know no one will listen but hear me out.
Healthcare and technology are now, finally, inextricably intertwined across many fronts. Healthcare is a highly diverse category and for eons we have categorized healthcare companies into their rightful sorts, none of which were called “digital health.” I believe the rightful categories are:
- health services
- health IT/tools
- medical devices & diagnostics
- biotech & pharma
We can argue whether genetics/genomics belongs in its own new category or with pharma, but for the sake of this article, I’m lumping it into biotech. I think about health IT as technology-only used to facilitate other functions (e.g., EMRs, claims payment tech, analytics for business use, robotics/automation, tech platforms to facilitate discovery, etc).
There are two reasons I think that the digital health term has come to the end of its natural life. First of all, technology is pervasive across all of the four (five if you include genomics) categories noted above. It’s just a question of what kind and how much. Medical devices with sensors and data platforms are becoming common. Drug discovery tools and tech-enabled services are the norm now I spend half my life working with pharmaceutical companies to splice together drugs, digital engagement apps, services and I should throw in an egg roll for good measure. We have finally got to the point where virtually all health systems and clinics make use of technology and we have definitely gotten to the point where technology is a fundamental feature of pharma/biotech and medical device activities, biotech discovery, clinical trials and sometimes much more.
As for my second reason, take a look at this list of 12 companies, as identified by Rock Health, Fenwick and others, as the list of “digital health” companies that have gone public, via IPO or SPAC-attack, in 2021 so far:
- Signify Health
What struck me about this list, which I studied as I was preparing for a panel at the Policies|Techies|VCs – What’s Next for Health Care? Conference entitled “How Much are These Companies Really Worth/The IPO & SPAC Panel,” is that all of these companies leverage technology, but many of them would not even remotely match the concept of “digital health” that has generally been used by me or others over the last 10-12 years. Yet each of these companies has adopted or been coopted into this terminology. Is it because “digital health” has conveyed some particular cache recently, especially as spurred by the COVID pandemic? I say YES.
Before COVID, it was pretty damn hard to take a digital health company public; further, most people thought of most digital health companies as kind of cute, not like serious enterprises with big revenues. Only a few had made it into NASDAQ-land prior to 2019, when 6 “digital health” companies went public: Livongo, Health Catalyst, Phreesia, Change Healthcare, Peloton, and Progyny (frankly, I have a hard time including the last two in the digital health ranks… I say they are fitness and services…thoughts?). These companies made it through despite no such companies going public for the 3 years prior. In 2020 there were 6 digital health IPOs and SPACs.
Notably, there were something like 17 IPOs between 2000 and 2018 that sort of looked digital health-ish (like Teladoc and Vocera) – so an average of 1/year. These numbers might differ a bit depending on whose definition of “digital health” you rely upon, which is pretty much my point.
But after COVID hit us, digital became the rage. You couldn’t throw a rock without hitting a digital transformation project; if you couldn’t execute your business via the internet, a mobile phone or by posting it on TikTok, you couldn’t do business. Everything went digital, including companies that were only sort of digital-ish. And everything that wasn’t previously referred to as digital now felt that the path to success went right through that entry in the dictionary. Finally, finally, the digital health glitterati were validated. But if everything is digital health, is anything digital health?
Which takes me back to my beef. Of the companies that have made it to the public market in 2021, only a few would meet my digital health definition or any of the other more common ones. The rest fit squarely into the usual suspects when it comes to categories, aka health services, health IT, medical devices or biotech/genetics/pharma. And there is literally nothing wrong with that at all. Digital things aren’t bullet-proof and they are only intermittently cool – just ask the stock market. I think it’s super interesting that the price of “digital health” stocks took a nosedive this summer for the 11 seconds when we thought we were out of the COVID woods and that people might leave their homes and see other actual people with our actual eyes, not through Zoom. And then we returned to this special hell of hiding from the virus and digital is back in vogue.
But really, here’s the thing. Technology has pervaded practically every aspect of life and certainly many aspects of healthcare. Before 2000, this wasn’t true at all. But now it is. Is it reasonable to call Butterfly Networks a digital health company? Or is it an ultrasound/imaging company that has leveraged new technology to enhance a traditional medical device function? Is it reasonably to call Privia a digital health company or is it really a health services company that uses technology to optimize operations? Is Neuropace a digital health company or a company leveraging technology to improve an implantable medical device? Agilon looks like what we used to call a practice management company (services). What is and isn’t a digital health company at this point? Is LumiraDx, a pending IPO (via SPAC), a diagnostics company or a digital health company?
The answer is, who cares? Let’s just stop it already with the digital health moniker. We have reached the moment when it all blurs together, and that’s great. Guess what fellow digital health friends – we won! Time to stop banging the semantic drum. Let’s go back to defining the healthcare companies by what they do (provide services, pharmaceuticals, testing, etc) rather than by the fact that they are smart enough to use technology to do it better, differently, more efficiently, whatever.
Now granted, a lot of people have invested heavily in making this “digital health” moniker relevant. It’s fair to say I am among them. And yet, it’s kind of like saying that Whole Foods is a digital company because it is owned by Amazon. Nope, still a grocery store. Is Salt & Straw a digital company because you can order online? Nope, still an ice cream shop. By the way, Salt & Straw’s current Camp flavors are the bomb-dot-com, even if it’s not a digital company. Cowboy Coffee Grinds & Bourbon? There is a God.
Interestingly, stock performance across the group of “digital health” companies is a mixed bag, despite the alleged hipness of the term. A few are doing well compared to their initial IPO price, but most of those look an awful lot like traditional health services companies to me (Agilon, Privia). A lot of them are down considerably from their IPO price, like 23andMe, UpHealth and Talkspace. So being a digital health company, at least from a stock performance standpoint, isn’t necessarily an asset. Granted, once companies become public, they graduate from being judged on Field of Dreams criteria to Fundamentals criteria (or at least growth rates), so being called “digital health” isn’t a real variable in financial analyst land. Yet some people must have thought it would be because why else choose that label when you are really in a more traditional line of healthcare business?
It will be interesting to watch as some of the high flying, yet-to-see-much-revenue “digital health” companies emerge into IPO territory. When will these companies cross over to being tracked on their performance vs. their promise? In some cases, those lines will merge. In others, not so much. Just like other companies. Funny how the light of day makes everything look exactly like it is.
Anyway, just say health. Save the syllables. Technology is all around us and it is a tool to make healthcare better, not an end in and of itself.
Ps: the Policies|Techies|VCs – What’s Next for Health Care? Conference panel entitled “How Much are These Companies Really Worth/The IPO & SPAC Panel” includes me plus fellow panelists Emily Evans, Managing Director, Hedgeye Risk Management LLC; Matthew Holt, Publisher, The Health Care Blog; Bill Taranto, President, Merck GHIF; and Jessica DaMassa, Host & Executive Producer, WTF Health. The actual panel will be broadcast at the conference on September 10 at 1:00pm ET.