Despite more than £3 billion invested in digital health companies to support their growth, it can still be incredibly difficult for young businesses to build sustainable solutions. Little progress has been made towards streamlining the landscape to make it easier for startups and scale-ups to thrive and the likes of Push Doctor, Hospify and Pando are just a few startups that have hit the headlines in recent months as a result of this struggle.

Below, I've outlined why many new startups are finding it so difficult to survive in the competitive market, and what needs to change to help them thrive - much of which will be discussed in greater detail at HIMSS22 Europe.

• New innovators need more support from the centre throughout their journey

As healthtech has become a trendy topic in recent years, I'd urge caution over senior figures rushing to promote the use of digital health without seriously thinking about measures needed to ensure high quality products are embedded in the NHS for years to come.

Action needs to be taken to change the way startups are supported, as they are often driven by phenomenal teams with the ability to bring great products to market. However, many lack the right guidance on how to navigate the complicated regulatory landscape and successfully commercialise their offering. Organisations like Loop are helping companies to do this and DigitalHealth.London are supporting in areas such as building evidence, yet still so many programmes are contingent on already having a pilot site or existing customer to gain further traction.

Stronger commitment from the Department of Health and Social Care (DHSC) and the NHS to create sustainable programmes that will drive up the evidence base around what startups can deliver and support the introduction of new companies into health care is what’s needed.  And whilst NHSX - Matt Hancock’s passion project geared towards creating digital innovation in the NHS - made some progress, it’s simply not been enough in the long-term.

• Seek investment from those who understand healthcare

A lot of startups seek investment in venture capital (VC) – a form of investment for new businesses that have strong growth potential, which is usually earmarked for the technology sector.

The problem is VC’s have an incredibly fast funding cycle, which compresses time and puts immense pressure on entrepreneurs to build a sustainable business quickly, not always taking into account that most healthcare startups will not turn a profit early on in their lifespan.

This is further exacerbated by VCs that have don’t have experience in healthcare – we're increasingly seeing VCs with a background in property or construction investing in digital health.

It’s well known that launching or even scaling a product in the NHS isn’t a fast or easy process – often taking three to five years – what’s more, the revenue sacrifices startups have to make to gain traction in the NHS is a very real issue, whether that’s reducing pricing, tailoring solutions or trialling products.

Unrealistic revenue expectations fast become a problem for healthtech companies. They are put under incredible amounts of pressure to build awareness, secure partnership deals, distribution deals, develop sales direction in a short space of time – often being set up to fail.

• Suppliers need to fully understand NHS finances before starting their journey

Many of the best and brightest new startups have exceptionally talented individuals but that doesn’t mean that they immediately understand the cultural and political idiosyncrasies across the health and social care system, and, more specifically the complexity of NHS funding.

Understanding the funding models and the way the NHS wants and needs to buy is fundamental for new businesses. For example, the majority of NHS organisations still buy from their capital budgets and whilst many new startups provide flexible buying options this can sometimes be seen as a downside for organisations need ongoing cost certainty.

Larger and more established companies know how to navigate such complexities (and have the time and resource to do so) so can often win contracts even when a startup offering is far more compelling. More insight and education around funding is needed and more opportunities to have direct conversations with individual organisations is what’s needed.

• New companies should be realistic about the task ahead

Startups need to be realistic about what it takes to work with the NHS and be in it for the long haul. Having a compliant product with a compelling proposition, developing an evidence base and getting a space on key frameworks is just the tip of the iceberg - unfortunately the leads are unlikely to just start pouring in.

Spending time building brand awareness, credibility, profile raising and establishing a strong network of colleagues, influencers and advocates takes time and commitment but is essential to gaining market traction.

Keen to stand out in an incredibly competitive landscapes, new companies can over-hype themselves and what they are able to do – resulting in difficult situations when they are unable to deliver what they have promised. Creating a solution to a real, immediate problem and having a deep understanding of what that problem is (and whether there is funding for it) is where the opportunity is.

The future of the digital health startup

Digital health startups have a huge opportunity to overhaul the way healthcare is delivered but if this trend is going to continue then they need to receive support throughout their journey to ensure they survive in the sector. If not, we run the risk of innovators becoming frustrated by the endless number of barriers to enabling their business to grow, in turn taking their ideas to other sectors or countries. The supplier sector could face a talent drain and the NHS could be left with less choice and the same legacy products it has always used.

Prof Sam Shah, Founder Faculty of Future Health, CoMD with Ulster University, visiting faculty UCL Global Business School for Health and advisor to Silver Buck will be speaking at the HIMSS22 European Health Conference and Exhibition, which is taking place 14-16 June 2022.