The bubble forms

The COVID-19 pandemic triggered a seismic shift in the healthcare landscape, compelling providers to adopt telehealth and other digital health solutions at an unprecedented pace. Before the pandemic, telehealth was a growing but relatively niche sector, primarily used for remote consultations in areas with limited access to healthcare. However, as the virus spread rapidly, health systems worldwide faced overwhelming challenges, including limited hospital capacity, concerns about infection transmission in healthcare settings, and the need to prioritize care for COVID-19 patients.

Telehealth emerged as a critical tool in the fight against the pandemic, allowing healthcare providers to deliver care to patients remotely, reducing the risk of exposure to the virus for both patients and providers. This sudden surge in demand led to a rapid expansion of the digital health point solutions ecosystem. These solutions, often referred to as point solutions, are specialized digital tools designed to address specific healthcare needs, such as chronic disease management, mental health support, or medication adherence.

The pandemic accelerated the adoption of these digital health solutions, as healthcare providers sought ways to continue delivering care to patients outside of traditional clinical settings. This rapid expansion of the digital health point solutions ecosystem was further fueled by the relaxation of regulatory barriers and increased reimbursement for telehealth services during the pandemic. These changes created a fertile environment for innovation in digital health, with many startups and established companies launching new products and services to meet the growing demand for telehealth and other digital health solutions.

How did the market react?

Employers offered point solutions in response to growing employees expectation to access to these services. People were aware that there were now better ways to screen for cancer or receive care at home. Reacting to this demand, employers sought ways to support the health and wellbeing of their employees during the pandemic, especially given health plans took time to integrate telehealth and point solutions into their offering.

Employers embraced this buffet of solutions but this rapid expansion led to a complex and overloaded, bloated benefits stack.

They began to face growing administrative burden, risks with data privacy issues and confusion for employees, hindering the production of value.

Venture capital played a significant role in fueling the growth of the point solution ecosystem. This influx of capital led to a proliferation of digital health point solutions, each targeting specific aspects of healthcare delivery. These solutions ranged from telehealth platforms and remote monitoring devices to wellness apps and personalized health programs.

What happens next?

There are various theories and predictions about what will happen to the bubble.

One prevalent theory is that the bubble may burst, leading to a consolidation of the market as weaker players are weeded out. This could be driven by factors such as unsustainable business models, lack of differentiation, or failure to demonstrate value to users and investors.

On the other hand, some experts predict that the market will continue to grow and evolve, with innovative infrastructure or "picks and shovels" solutions emerging to support the expanding ecosystem.

What do we think?

The current scope of the point solution ecosystem is unsustainable and there will - and should - be consolidation.

Dominant players bring immense value to many lives and this consolidation should strengthen their holistic capabilities.

There is also an important place for smaller players to add new, unique flavors to existing health and wellness categories. This competition is critical to continuous innovation. Our platform is designed to accommodate all of the above - consolidation and discoverability, and enhanced interoperability to facilitate access and utilization of more solutions, seamlessly.

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