The Pathway to Revenue
- patrickretif9
- Dec 23, 2024
- 3 min read
Updated: Jan 16
This company went the traditional route, producing clinical evidence, securing FDA Breakthrough designation, and launching its product to prescribers. It failed to gain traction until…
Many digital health companies get caught in the process of bringing an evidenced-based, regulatory cleared product to market. The spend precious resources and valuable time on studies to generate clinical evidence, pursue FDA clearance either de novo or via predicate, and wait until those processes are complete before validating product-market fit and identifying routes to revenue, eg, who pays and how much are they willing to pay?
The Challenge
While the industry has shifted to digital platforms, it didn’t happen to the degree that investors initially predicted. It’s been hard for companies to get funding because it's no longer an unknowable question on the adoption of digital health products. In many ways, we have the answer, and the answer is that patients reject a lot of these solutions.
There are so many early-stage healthcare technology companies that are offering something that’s more of a feature, not something that can be the basis of a company.
Employers pay for over 50% of all healthcare costs in the US. There has been rampant growth in the adoption of digital health tools with employers over the past three to five years, with lots of new solutions added to their portfolio of offerings to their employees. Many employers have been burned by some digital health companies that have essentially poisoned the well. They are now a little trigger-sensitive.
Digital health companies selling products to employers are now dealing with buyers who are frustrated with low usage rates, increased costs, and a minimal effect on outcomes. Utilization is the most frequent metric used to evaluate solutions among employers, followed by the financial impact. Digital health companies are failing across the board.
Digital health companies must STOP focusing on selling a product and START focusing on selling a solution, that just happens to include a product.
The Case Study
Over the course of 8 years, MIT spin-out, nQ Medical (a digital biomarker that has the ability to screen for neurodegenerative diseases, track disease progression, and measure the impact of therapy), invested in 7 clinical studies (some with the prestigious Cleveland Clinic), applied for and received FDA Breakthrough designation, implemented a solid patent strategy, and was prepping for a direct sales approach to neurology practices. Although it had raised ~$7M+, as it neared the launch of its product, it became apparent that the “Pharma-model” of training and deploying a field force to reach 9,000+ US neurologists was not feasible. It needed to either raise an enormous amount of capital to build its sales and marketing engine or find a different, less resource-intensive pathway.
nQ Medical’s launch coincided with COVID. Remote care, in many cases, was the only viable option for patients. Following COVID, many patients preferred the option of remote to in-person care. We did our homework and uncovered some facts that would define nQ Medical’s go-to-market approach:
Neurodegenerative disease patients often had difficulty traveling to the clinic for routine care, which often resulted in reports of minimal progress.
Many neurology practices were not offering remote care as robustly as their primary care and cardiovascular peers.
Although there were new reimbursement codes for remote care, many neurology practices were not taking advantage of them.
Many neurology practices did not have the wherewithal or resources to rapidly build and scale a remote care program. Thus, they would welcome a package solution whereby there were no upfront costs, operations were handled by a third party (under the practices’ medical oversight), and the practice would realize resulting revenues via revenue share.
The Solution
Working with KOLs from the Cleveland Clinic and Evergreen Health (site of nQ Medical’s pivotal trial), a remote care program called NeuroCare, was created, as illustrated below:
The Results
Thanks to the principals at a priori FLP, nQ Medical was structured to deliver the NeuroCare solution, mindful of using contracted healthcare practitioners licensed in each client’s state. A reimbursement infrastructure was created in collaboration with each client’s Billing Department, and medical oversight protocols were created and led by the client’s chosen medical director.
In its first year of availability, four health systems signed on and thirteen others were considering deployment at the time of nQ’s acquisition.
