Ralf-Gordon Jahns [pictured on the right] is the managing director of market analyst and strategy consultancy company Research2Guidance. Since 2008, he strategically advises healthcare companies and startups to better understand the value of adopting digital innovations. Prior to founding Research2Guidance, Ralf was a member of the leadership team of Capgemini Telecom Media & Networks Strategy Consulting for over 15 years.
Are you in the digital health business? If you haven’t put Germany on your watchlist yet, you should. Late last year, the German parliament passed new rules supporting digital innovation in healthcare. These changes attempt to put Germany in the lead for digital patient-oriented healthcare globally. But there are some barriers left, which will challenge every digital health vendor’s business plan.
Nevertheless, it is a great time to look closely into the German digital health market opportunity. What changes are expected due to 'fast tracking' in the market of 82 million people, which hosts more than 400,000 healthcare professionals, around 300 health insurance companies and over 2,000 hospitals?
Here is what will change and how digital health solution providers can benefit:
'Fast track' allows doctors to prescribe low risk medical apps
Starting from the second quarter of 2020, medical apps that are CE-marked as Class 1 and 2a low risk medical devices can apply for 'fast track' market entry. The Federal Institute for Drugs and Medical Devices (BfArM) will decide about the application within a timeframe of three months. If they give a green light, the digital health solution can be prescribed by healthcare professionals. They, in turn, will get paid for services that they deliver with the help of the apps, such as remote consultations, diagnosing or monitoring. On the other hand, digital health solution vendors will get paid for their solutions based on their revenue model and proposed pricing. Digital companies have 12 months (if not done already before they applied) to provide evidence that their solution improves patient outcome or healthcare efficiency. If they can prove that their service works and passes final negotiations with the German regulatory bodies, they are in.
Telehealth consultations will get reimbursed
Heatlhcare professionals are allowed to actively promote their telehealth services to patients, for example, on their websites. Pricing for telehealth services is still negotiated, but is supposed to be approved soon. The list of certified telehealth providers is still not very long, leaving room for market entry if the market takes off. Currently, the German health ministry is promoting free telehealth services from licensed telehealth service providers to reduce healthcare professional office visits during the coronavirus crisis.
Electronic health records will be available for all statutory health insurance members.
By January 2021 every member of a public health insurance (72 million people) must have access to an electronic patient record. The landscape for digital health records is already crowded, but there will be opportunities for digital health solution vendors to dock onto the established EHR vendors over time. Partnership opportunities should exist especially for symptom checkers, healthcare professional finders, and digital therapeutic solutions.
Healthcare professional - patient communication and prescriptions are moved to electronic channels
Electronic prescriptions for medication, remedies and aids, doctor letters and certificates of disability for employers will now be allowed. Traditional fax communication is made less attractive. This will create market entry options for secure healthcare professional communication service vendors or appointment brokers, to name just two out of this broad area of potential digital health service opportunities.
Health insurance companies will be able to invest into digital health companies
German statutory and private health insurance companies are becoming VC fund partners. It is partly a unique risk-caped model, but it will mean additional market entry or financing opportunities for digital health startups in Germany. The investment fund includes €100 million from private insurances and €300 million from statutory health plans. Additionally, the German government prolonged the €200 million yearly funding programme for four years to support innovation projects in healthcare. There should be enough money!
Access to patient data from health insurance companies for research institutions will be eased
German public health insurance companies are forced to send anonymised member demographics and health data to a central database managed by the German government. Research organisations and universities can request access to data for research purposes. There are partnership opportunities for digital health solution providers to use member health and cost data to validate their service offerings.
This new regulatory environment will be further detailed in the next weeks and months. However, the current framework already shows that the door to the German health system for digital solutions has opened.
Despite new favourable rules, which will ease market entry for digital health solution vendors, there are still questions about how long it will take before they have a true impact on larger patient populations and a positive financial outcome. Many are to be answered, and here are some:
Selection of solutions: How efficient will regulatory bodies test new applications? Nominated bodies will have to organise and streamline their processes to cope with the high amount of incoming certification requests from medical app publishers.
Raise awareness of solutions: How do patients and healthcare professionals know which medical apps they can subscribe and for what? App trainings or even organisational integration support will be needed to support the adoption.
Reimbursement of costs: How will health insurance companies and hospitals manage the large ecosystems of digital solutions? Currently companies are partnering more on an ad-hoc basis, but they will have to switch to a more systematic approach to be able to manage dozens/hundreds of solutions and support their adoption.
Creation of evidence: How to prove the effectiveness of the medical apps within one year? This could be a very challenging task if adoption is low due to slow implementation of member onboarding, communication processes or success monitoring. After all, a year passes quickly.
But despite many challenges, both current and new ones, the German healthcare market should be ranked high again on the geographical roadmap of international digital health providers. Market entry options (see also How the German “Fast Track” for digital solutions impacts market entry channels) are better than ever before.
