Article originally featured in McDermott Will & Schulte‘s Health Highlights.
Introduction
Healthcare consumers increasingly expect the same convenience, accessibility, and personalization they experience in many other aspects of their daily lives. Whether ordering groceries, managing finances, or booking travel, consumers have grown accustomed to digital experiences that are seamless, intuitive, and available on demand. This was further highlighted in the recent exchange between the Federal Food and Drug Administration (FDA) and Whoop. Ultimately, the FDA dropped its enforcement action and Whoop was adamant that the company wasn’t going to back down. Whoop CEO, Will Ahmed, was quoted as saying, “We won’t let regulatory overreach dictate how people access their own health data.” As these expectations continue to shape healthcare, digital health companies have emerged as a primary driver of change, transforming how patients access, navigate, and engage with care.
Over the past decade, digital health organizations have introduced innovative technologies and care-delivery models designed to address many of the frustrations historically associated with the healthcare system. While early efforts were often focused on expanding access through telehealth and virtual care, today’s digital health companies are increasingly focused on improving the entire patient experience, ranging from initial engagement through treatment and ongoing support. In many respects, digital health companies have become the bridge linking healthcare consumers with a traditionally fragmented healthcare system, helping to create a more connected and user-friendly experience.
As these organizations continue to expand their role within the healthcare ecosystem, they are also creating new opportunities for collaboration among providers, health systems, life sciences organizations, pharmacies, and technology companies. These evolving business models are reshaping not only how care is delivered, but also how organizations structure the commercial relationships that support innovation across the healthcare continuum. As digital health companies continue to push the boundaries of how healthcare is delivered and experienced, they are also reshaping consumer expectations around access, convenience, personalization, and control. This evolution is redefining the role of the patient while simultaneously creating new regulatory and commercial questions as the distinction between medical care and wellness services continues to evolve.
The Rise of the Digital Healthcare Consumer
Patients are taking an increasingly active role in managing their healthcare. Rather than simply receiving care when needed, many consumers now expect healthcare services to be accessible, convenient, and personalized to their individual needs. As a result, healthcare decisions are increasingly influenced by factors such as ease of access, digital capabilities, responsiveness, and overall experience.
In response, digital health companies have developed care models that place the consumer at the center of the healthcare experience. These companies are helping reduce barriers to care through virtual access, digital communication tools, streamlined scheduling processes, and consumer-friendly platforms that make it easier for patients to engage with healthcare services. In many ways, digital health companies are helping healthcare evolve from a provider-centric model to a more consumer-centric one. This shift is occurring at a time when consumers have more healthcare choices than ever before. Virtual care platforms, digital pharmacies, and specialized digital health solutions have expanded the range of options available to patients seeking care. As a result, organizations are increasingly competing not only on clinical quality, but also on convenience, accessibility, and overall user experience.
Digital health companies have been particularly effective at identifying areas where traditional healthcare processes create friction and developing solutions designed to simplify the patient experience. As consumer expectations continue to evolve, digital health organizations are expanding beyond traditional care delivery by developing new service models, technologies, and collaborative approaches that support a more connected healthcare experience. These innovations are helping reshape not only how patients receive care, but also how healthcare organizations work together to deliver and support that care.
Transforming the Patient Journey Through Digital Health
One of the most significant contributions of digital health has been the expansion of access beyond traditional care settings. Historically, accessing healthcare often required scheduling appointments weeks in advance and traveling to a physical location. Digital health companies have helped address these challenges by enabling patients to connect with providers remotely, often with greater convenience and flexibility.
The impact of these solutions extends well beyond convenience. Expanded access can help reduce delays in treatment, improve continuity of care, and provide patients with greater flexibility in how they engage with healthcare services. For individuals managing chronic conditions or seeking specialized care, digital health platforms can offer more consistent access to providers and support resources than traditional models may allow.
Today, many digital health organizations are supporting patients throughout the care journey by providing services such as:
- Virtual access to providers and specialists.
- Care navigation and personalized treatment planning.
- Digital patient education and clinical support resources.
- Prescription coordination and medication adherence programs.
- Remote monitoring and ongoing patient engagement.
- Follow-up communications and personalized health reminders.
These capabilities reflect a broader shift away from isolated healthcare encounters and toward a more continuous, connected healthcare experience. Rather than focusing solely on the point of care, many organizations are investing in tools and services that help patients remain engaged before, during, and after treatment.
In addition, digital health companies are increasingly leveraging technology and data to create more personalized experiences. By utilizing patient engagement data, health information, and other insights, organizations can better understand patient needs and preferences and deliver more relevant support throughout the care journey. As these capabilities continue to mature, personalization is expected to play an increasingly important role in how healthcare services are delivered and experienced. Advances in data analytics are further accelerating this trend by helping organizations identify opportunities for more targeted communication, proactive outreach, and individualized patient support.
Collectively, these innovations are transforming digital health from a collection of individual technologies into an integrated model of care that supports patients throughout the healthcare journey.
What We Are Seeing In the Market
Across the digital health market, we continue to see organizations expand well beyond traditional virtual care offerings. While improving the patient experience remains a primary objective, many organizations are investing in comprehensive solutions that support patients throughout the entire healthcare journey. Rather than focusing on a single clinical encounter, digital health companies are increasingly developing integrated service models that combine technology, clinical support, operational services, and consumer engagement.
Across our work in the digital health market, several trends have become increasingly apparent:
- Expansion beyond telehealth into comprehensive digital care platforms.
- Greater collaboration among providers, health systems, life sciences organizations, pharmacies, and technology companies.
- Increased investment in patient engagement, education, and care navigation services.
- Growing use of data, analytics, and digital infrastructure to personalize the patient experience.
- Continued development of integrated care models that extend beyond the traditional point of care.
These trends reflect a broader transformation occurring throughout the healthcare industry. As organizations continue investing in digital capabilities, they are also developing new ways to collaborate across the healthcare ecosystem to improve patient access, engagement, and continuity of care. In many cases, the patient experience is no longer supported by a single organization, but rather by a network of providers, technology companies, pharmacies, life sciences organizations, and other healthcare stakeholders working together to deliver more coordinated care.
As these collaborative models continue to evolve, they are creating increasingly sophisticated business relationships designed to support innovation, improve patient outcomes, and enhance the overall healthcare experience. This evolution is reshaping not only how healthcare is delivered, but also how organizations structure the commercial arrangements that enable these innovative models of care.
The Friction Between Innovation and Operating In a Highly Regulated Healthcare Market
Digital health and other innovative healthcare companies often operate with an ethos like traditional tech companies and have a “move faster” mindset. Many founders and operators who have transitioned from traditional technology companies are not used to operating in healthcare. Healthcare, on the other hand, is one of the most highly regulated industries in the country. Scaling like a traditional SaaS company doesn’t work in healthcare. This friction won’t go away, so many organizations have learned to navigate and not fight the friction.
Delivering a seamless digital healthcare experience often requires collaboration among multiple organizations, each having distinct clinical, operational, technological, or administrative capabilities. As digital health companies continue expanding their role within the healthcare ecosystem, they are increasingly partnering with providers, health systems, life sciences organizations, pharmacies, payors, and other technology companies to create more connected and consumer-focused models of care. As such, successful digital health organizations must treat compliance as a core capability, not a limiter. Early adoptions lead to increased execution and creative collaboration models.
Recent federal guidance also reflects the growing attention being given to digital health and other technology-enabled healthcare arrangements. As innovative business models continue to evolve, government agencies have increasingly provided guidance addressing online healthcare marketplaces, telehealth platforms, technology-enabled patient engagement, and other collaborative healthcare arrangements. While each arrangement is evaluated based on its specific facts and circumstances, this guidance demonstrates the importance of thoughtfully structuring innovative relationships in a manner that supports applicable healthcare regulatory requirements while continuing to promote patient access and innovation.
Federal fraud and abuse laws and state-level legal issues are some of the biggest “hidden constraints” shaping business models, partnerships, and growth strategies. Collaborative arrangements in consumer facing healthcare can implicate several federal and state laws, in particular, federal fraud and abuse laws (Stark Law and Antikickback Statute), State Corporate Practice of Medicine (CPOM), and state privacy laws. These collaborations frequently extend well beyond traditional professional service arrangements. Today, organizations are entering into increasingly sophisticated contractual relationships designed to support innovation across the patient journey. Examples include:
- Management services agreements (MSAs),
- Platform and technology licensing arrangements,
- Data reporting and analytics services,
- Technology implementation and systems integration,
- Patient engagement and education programs,
- Marketing and consumer outreach initiatives, and
- Clinical support and care coordination services.
While these arrangements are designed to improve patient access, engagement, and continuity of care, they also create unique business and regulatory considerations. Organizations should thoughtfully evaluate how these financial relationships are structured to help support applicable healthcare regulatory requirements, including fair market value and commercial reasonableness principles where appropriate. As digital health business models continue to evolve, balancing innovation with sound valuation and compliance practices has become an increasingly important component of developing sustainable healthcare partnerships.
These innovations and partnerships have introduced increasingly sophisticated financial relationships among healthcare providers, health systems, life sciences organizations, pharmacies, technology companies, and other participants within the healthcare ecosystem. Unlike many traditional healthcare arrangements that primarily involve professional services, digital health collaborations often combine multiple service components including things like technology platforms, software licensing, implementation services, data analytics, patient engagement initiatives, operational support, and clinical services within a single contractual relationship.
Because these arrangements frequently involve participants across the healthcare delivery system, organizations should carefully evaluate the commercial objectives of the relationship, the respective responsibilities of each party, and the structure of the associated financial arrangements. Thoughtful consideration should be given to applicable healthcare regulatory requirements, including fair market value and commercial reasonableness principles where appropriate, while remaining mindful of federal fraud and abuse laws.
Evaluating these arrangements requires more than applying traditional healthcare compensation benchmarks. It requires an understanding of evolving digital health business models, the operational and technological resources necessary to support them, and the unique value drivers that distinguish these collaborations from more conventional healthcare arrangements. As digital health continues to mature and evolve, organizations increasingly benefit from experienced advisors who understand both the healthcare regulatory environment and the complexities of technology-enabled care delivery.
Conclusion: Balancing Innovation and Compliance
Digital health has evolved far beyond expanding access to care. Today, it is reshaping how patients engage with healthcare, how organizations collaborate across the healthcare ecosystem, and how innovative services are delivered throughout the patient journey. As these business models continue to mature, the relationships supporting them are becoming increasingly sophisticated, creating new opportunities for collaboration while introducing important valuation and compliance considerations.
Organizations that successfully balance innovation with thoughtful commercial structuring will be well positioned to develop sustainable partnerships that improve patient access, engagement, and outcomes. By combining innovative digital health solutions with sound valuation and compliance practices, healthcare organizations can continue advancing patient-centered care while supporting responsible growth across an increasingly connected healthcare ecosystem.
If you have questions about digital health arrangements, fair market value, commercial reasonableness, or structuring innovative healthcare partnerships, please contact the team at Pinnacle Healthcare Consulting!
