Digital health and its big challenge
Building a company is hard, every startup founder would agree with that. Having co-founded Mimi Hearing Technologies and helped building it during the last 5 years, I can very much relate to that. This article is about things that make it even harder sand why you shouldn’t worry too much about regulatory questions, including the new Medical Device Regulation.
Why is it hard to build a digital health company?
Building a health tech or digital health company is even harder for at least two reasons. The first reason is the regulatory side. Besides special rules in GDPR for health data, you have, depending on the risk of your product, more laws, regulations, and norms to follow. You may also need to work with a notified body to actually be allowed to put your product into the market. And if you want to be active in the US, you have HIPAA to follow reg. your data and generally need to be compliant with FDA regulations. Most other regions or countries have some kind of similar setup.
Besides the regulatory side, you are often also not dealing with a direct to consumer market where the consumer also pays for your product. Healthcare is often involving many more stakeholders, such as doctors, clinics, health insurances, and authorities. That means that the user of your product may not be the person or organization that pays for your product. And it often needs to be embedded in clinical or other workflows or be compliant with very specific regulations for people to use your product and to get reimbursed for it.
The last years in digital health
The last years have shown that there’s plenty of interesting topics and fields that can be improved with digital products. Lots of companies got founded and offer a plenitude of digital health apps and products. Early examples are Klara (previously Goderma), Mimi, mySugr, Clue and others. Organizations such as Bundesverband Internetmedizin were very helpful for guiding those companies through the complex regulatory field.
So far companies had to be really creative to actually build a business around their products. This definitely applies to Germany with its healthcare system that is very much centered around health insurances that usually pay for most of healthcare. In other systems with a more private part of healthcare spending it’s a bit easier to build a business. Thus some companies re-focussed their business from Europe to the US. Companies that are still active in Germany and work with public health insurances usually have some kind of marketing based contract, a contract centered around a prevention case, or a special agreement with individual health insurances (in German Selektivvertrag).
Potential of digital health
There’s lots of regulatory hindrances for a reimbursement via the regular healthcare system. Though digital health makes it possible to have a much stronger interaction and involvement of the patient or user. With that prevention, screening, and aftercare can be done much more easily. Also treatments that take longer or treatment of chronic diseases can be done in totally different ways. The goal should be to have digital health products in parallel to all normal kinds of health products, also in Germany. Fingers crossed that the activities of the current Federal Minister of Health in Germany, Jens Spahn, pay off and introduce a more predictable and reliable pathway into the healthcare system.
You use SaaS, PaaS, IaaS or DBaaS because running servers is not the core of your business. Neither is regulatory compliance. Consider Regulatories as a Service (RaaS) for your company.
What should you focus on?
If you’re building a digital health product, you need to focus on your product and how to establish it in the market to get reimbursed for it. The regulatory side with medical product certification and data protection is important, but shouldn’t be your biggest worry. You probably don’t have physical servers in your own office and (at least in the beginning) didn’t do the whole accounting in-house, especially the annual financial statements (in German Jahresabschluss) of your company. So why should you do all regulatory, especially with the new Medical Device Regulation that’s coming next year, work in-house? You should focus on the core questions of your business. Please feel free to reach out how I can help you with your quality management system, technical documentation, or other (technical) questions. Looking forward to hearing from you.