January 13, 2014

2014 Predictions - Growth of Niche Digital Health

Travis Good, MD

Co-founder & Chief Technology Officer

2013, and to a lesser extent 2012, saw the growth and success of niche-based health IT offerings. Both on the provider side, with specialty specific EHRs like those from Modernizing Medicine, and on the patient side, with apps and services like Telcare, Propellor Health, Ovuline, Direct Dermatology, and now Kurbo Health.

In 2014 we’ll see more and more niche-based health IT launches, in part because of the examples of the successes listed above, and in part because having a niche 1) helps vendors say “no” to things that don’t fit, 2) allows vendors to know customers and their needs really well (workflows, integration points, etc), and 3) helps vendors develop a go to market strategy and early champion customers; I think investors also like niche assuming the niche is large enough for the investor to have an interest.

Why do niche offerings make so much sense in health and wellness? Simply put, health and wellness is extremely broad. Focusing on a niche is smart, mainly for the following reasons:

  • Healthcare is increasingly specialized. Providers spend years in training to become experts in a very specific field. And the increasing popularity of fellowships makes medical specialties even more niche. It’s getting to a point where providers, and even clinics sometimes, are devoted to just one condition. This specialization results in medical fields that hardly resemble one another - in practice, workflows, data, and tools. One of the major gripes with meaningful use is that the targets were created by and for primary care, and don’t fit very well with many specialties. The reality is that the charting needs of an ophthalologist, who now could be either general, retina, oculoplastics, glaucoma, pathology, or corneal, are very different from those of a primary care outpatient physician (and a host of other specialties). Flipping the equation, the needs of the patients with these varying conditions are similarly different.
  • Targets are exceptionally diverse. Health and wellness cut across all segments of the population - from newborn to elderly, rich to poor, across languages and cultures, acute to chronic, and lifestyle to congenital. That means building one size fits all solutions is not only challenging, it’s pretty close to impossible. If you look at the provider side you see a range of users from tech savvy Twitter users in their 20s to 70 year olds that just want to get to retirement before they have to use an EHR.

The biggest problem with niche offerings and specialization in technology is that it leads to fragmentation in the market. It’s very hard for large enterprises, which are getting larger all the time, that are looking for one size fits all solutions, to consider a mashup of niche solutions. And if an enterprise has the confidence to try multiple EHRs and apps for its providers and members/customers, how much is it going to cost to integrate the data from all of those apps, whether those apps are on the provider side or on the patient side. Ideally more granular integration standards will emerge, such as HL7 FHIR.

So what niche offerings are most likely to see the largest interest? The most likely targets are common conditions like diabetes, conditions with limited access to resources like dermatology, high volume specialties where volume is king like dermatology and ophthalmology, conditions that can be treated remotely like psychiatry, and acute conditions with engaged patients like obstetrics and oncology.

A niche that’s exciting to watch takeoff is pediatric, or kids, health. Companies like Zamzee, Sqord, and more recently Kurbo Health are entering this niche. Pediatric health is a huge determinant of adult health, and early lifestyle inventions are very powerful.

Curious if others are seeing this niche trend in digital health? Is it sustainable?

Stay tuned for the rest of our coverage of 2014 trends. We’d love to hear your feedback and thoughts on the market. Please don’t hesitate to comment below.

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