Healthcare & TechnologyWhy Digital Healthcare Products Fail, and How to Make Sure It Doesn’t Happen to You

October 26, 2022

The Covid19 pandemic has accelerated transformation across industries, everywhere around the globe, and healthcare is no exception. In fact, the past two years have placed massive pressure on the healthcare sector, and led to staff burnout and, in some parts of the world, the near collapse of the system. In this context, the need and urgency for digital transformation in the healthcare sector is clearer than ever.  

Digital change and adoption of emerging technologies and innovation are critical for the system to survive future challenges, and to assist prevention and treatment when in-person interaction is not possible. At the same time, integrating technology into existing systems can eliminate costs, employee burnout, and help streamline patient information across different channels and institutions.  

Top Reasons Why Digital Healthcare Products Fail

In the context of Covid19, and even before that, more and more healthcare startups started to appear on the market. However, not many of them managed to survive; in fact, a McKinsey report found that in traditional industries like healthcare and pharmaceuticals, the success rate of digital transformation rests between 4% and 11%. By comparison, the success rate in high-tech, media, telecommunications, and other digitally savvy sectors, was 26% – significantly higher. So, why do healthcare-related startups and products fail, and how can you avoid the same pitfalls when working on such a product?  

1. Taking cues from digitally savvy industries 

What might work for a ride-sharing app or a fitness app won’t work for a healthcare app. Many times, startup founders rely on their experience working on building products for other industries, and they expect the same results from the healthcare sector. Unfortunately, healthcare is a highly regulated, slow-to-change industry, so the startup mantra of ‘moving fast and breaking things’ is not the right recipe here. For a healthcare-related mobile product to be successful in the long run, it requires a solid understanding of the industry itself, and all its mechanisms.  

2. Focusing too much on B2C, and not enough on B2B 

Most of the apps we might find in app stores are built with the end user in mind. Fitness apps, ride-sharing apps, habit-tracking apps, photography apps, and so on – they are built for mobile users, so all the focus is on that target audience. When it comes to healthcare apps, however, the focus cannot be on B2C alone. In fact, 61% of digital health companies that start B2C end up shifting their focus to B2B, according to a RockHealth report. For a healthcare app to really work, it requires input not just from users, aka patients, but hospitals, medical institutions, doctors, caregivers, and insurers.  

3. Failing to take the time and do the research 

As we’ve just mentioned, building any kind of healthcare-related app will require knowledge of the industry, its requirements, current conditions and needs, and any upcoming changes in regulation. That’s why the product discovery and definition phase take a lot longer for healthcare apps – or so it should. To make sure that a digital health app will have a chance of succeeding and really making a difference in people’s lives, product teams will need input from doctors, patients, employers, and medical institutions. This can prove a painstaking process, but one that is absolutely necessary, because a healthcare product will have to appeal to various stakeholders, not just end users.  

4. Not allocating the right budget  

Given the time required for research, product discovery, and knowledge sharing, and considering the fact that any healthcare product will have to go through regulatory hurdles, developing a healthcare app is a lengthy process. Many things may change during the process, including industry regulations and requirements, so it’s very likely that the product will undergo changes and tweaks during this time. It’s important to set aside a budget that can cover unforeseen changes and modifications, and enough resources to ensure you don’t run out of fuel before the product is ready.  

5. Failing to really understand the problem you’re solving 

One of the biggest challenges that entrepreneurs and founders face when building a digital healthcare app relates to the problem they’re trying to solve in the first place. In fact, a 2020 survey of U.S. hospitals and health systems showed that less than 30% of professionals believe that their healthcare organization is providing a best-in-class digital experience for patients. Many healthcare-related products fail to gain traction because they are simply not focusing on the real problem that they’re supposed to be solving, or because they fail to fully understand what it takes to solve that problem.  

For instance, gamification is one of the most used strategies when building mobile apps. However, this concept does not work in the same way with healthcare apps. Gamification loss could have a negative impact on users, because patients with chronic conditions might not be able to use the app on a daily basis to add symptoms and log information. Gamification, in such cases, might cause unnecessary stress and lead users to uninstall the product completely.


The main lesson to be learned here is that building healthcare apps is not the same as building apps in any other industries. The industry has tight regulations and strict requirements in place, so business leaders will have to prepare to overcome various hurdles in the process, which could turn lengthy. What’s more, research is key, and input from patients, doctors, physicians, and caregivers is crucial to ensure that any digital health product has a chance at long-term success. Building a healthcare-related app requires insight into the industry and knowledge of behavioral science, neuroscience, bioinformatics, psychology, and more. It’s a slow, grueling process, but one that could prove incredibly rewarding and make a real impact on people’s lives. The key is to know that the healthcare industry works in a different way, and be prepared for all the challenges it poses.  


If you want to build a digital health product that can improve people’s lives, but are not sure where to start, contact the SMEDIX team and let’s start working on your product.