Healthcare systems worldwide are facing significant challenges. The aging population, rising chronic illnesses, workforce shortages, and increasing costs force systems to rethink how they deliver care. The potential of digital health—using technology to enhance care delivery, improve patient experience, and boost system efficiency—is more critical than ever. However, implementing digital innovations in healthcare is one of the most challenging tasks in any industry.
A recent study by Founders Intelligence, part of Accenture, highlights the barriers that prevent remote care solutions from being widely accepted. Based on insights from over 30 founders, investors, corporate leaders, and healthcare professionals in Europe, the UK, and the US, the report examines why healthcare innovation often struggles. It also offers practical advice for startups, corporations, and providers to overcome these challenges.
Read on for a detailed analysis of this report and learn why scaling digital health remains difficult, the current state of funding and market activity, and explore practical strategies for overcoming the barriers to widespread adoption.
Why Scaling Innovation in Healthcare is Uniquely Hard
Adopting new technologies is tough for any industry, but healthcare has specific challenges. There are clear obstacles, such as strict rules, old systems, and differences in how care is provided in different areas. Nevertheless, there are more underlying problems. Change management can be complex in most healthcare organizations, where decisions are usually made with clinicians, as dictated by their cultural norms. The gradual evolution of medical treatment over the years has led to fragmented systems that are unclear and refractory to rapid changes.
Innovation in the care delivery sector is primarily focused on research and development (R&D). Startups are required to widen this attention to digital and business model innovation. This transition can correct operations issues, improve patient outcomes, and reduce large-scale costs.
Digital Health Venture Funding: A Cooling Market
Digital health is facing tough times as funding has dropped sharply since its peak during the pandemic in 2021. Global investments in this sector fell from $52.7 billion in 2021 to just $13.2 billion in 2023.
The number of big funding rounds has also decreased significantly. In early 2021, deals over $100 million comprised 62% of total funding, but by late 2023, this number fell to only 17%. The average deal size for late-stage startups went down from $75 million in 2021 to $28 million at the end of 2023. However, early-stage startups performed better, with average deal sizes increasing from $2.1 million to $2.5 million during the same period. This shows investors are still interested in early-stage innovations, but are more cautious.
The challenging funding situation has led to fewer remote care unicorns, dropping from 97 to 94 in 2023. Listings on the public market have also become difficult, and there have been just four digital health Initial Public Offerings worldwide in 2023 compared to nineteen in 2022. Meanwhile, there has been growth in mergers and acquisitions as companies desperately seek to perform in a poor economic climate and bad public market conditions.
The Scaling Problem of Europe
The challenge of scaling past the early adopters is still high in the case of digital health startups, especially in Europe. Although median deal sizes in the region are at $3.2 million, equivalent to the US ($4.6 million) and Asia ($3.7 million), they remain below. Given that the continent has developed solid research capabilities and a higher level of funding activity, less than 10 percent of all the remote care unicorns worldwide are located in Europe, which is significantly lower than in other technology industries.
This situation is primarily attributed to the lack of a coordinated healthcare delivery structure, dissimilarity in modes of reimbursement, and highly differentiated regulatory environments across countries. As a result, European startups often struggle to extend their innovations beyond pilot projects or localized health systems.
The Six Barriers to Scaling Digital Health Innovation
According to Founders Intelligence, six main challenges often slow the progress of digital health solutions. These challenges occur at different stages of a startup’s journey, from developing ideas to getting products into the market.
Insufficient Real-World Proof
Many remote care solutions are launched without proper testing or proof that they work in real life. This situation leads to pushback from healthcare providers, insurance companies, and regulators.
Investor Pressure vs. Market Reality
Investor demands for fast growth can conflict with the cautious nature of healthcare markets. Overly ambitious growth goals have contributed to several high-profile failures in recent years.
Fragmented Market Landscapes
The environment is multifaceted and disjointed because of disparities in health care regulations, purchase schemes, and medical habits between the national and regional levels. Startups have difficulties navigating this situation.
Limited Industry Expertise
Most entrepreneurs lack the expertise necessary to work in a controlled care delivery setting. Similarly, bigger firms might find it hard to develop digital health expertise in their organizations.
Cultural Resistance to Change
Change negativity is commonly experienced in healthcare organizations because of their established cultures. Changing such perceptions requires time, trust, and a demonstration of the positive advantages.
Narrow Pathways to Scale
Even when a digital health solution can succeed, business expansion opportunities tend to be scarce. Insurers and care providers usually lack the infrastructure or the incentives to incorporate new offerings into routine care.
A New Role of Digital Health Requires Rethinking Pharma
Another interesting aspect of Founders Intelligence’s report is the changing relationship of pharmaceutical companies in the sector. In the past, these companies primarily regarded digital health-related tools as a means to promote their products and reach out to patients. Nonetheless, this type of tunnel vision does not reveal some valuable benefits that collaboration can provide in remote care.
Pharma businesses are well-connected to the healthcare system, familiar with laws and regulations, and have business acumen, which many digital health startups do not. Pharmaceutical companies can be strategic facilitators to unite digital innovators, care providers, and payers.
Many pharmaceutical enterprises are establishing special teams and departments that deal with virtual services to create innovative forms of care delivery. Companies incorporating modern solutions into their innovations will excel in a competitive industry where results are becoming increasingly important.
Moving Forward: Practical Recommendations for Stakeholders
The report also offers practical suggestions for participants in the healthcare innovation field:
Startups should focus on validating their ideas in clinical settings early on. They must understand reimbursement and purchasing and partner with established clinics.
Companies, like pharmaceutical firms and insurers, should create special teams for innovation, build relationships with new businesses, and support pilot projects that can grow.
Medical treatment providers must create a culture that encourages experimentation and risk-taking. This requires leadership support and clear paths to adopt digital solutions.
Investors should lower their growth expectations for digital health startups. They must recognize the unique rules, cultures, and market conditions in healthcare.
Conclusion: A New Era of Digital Health Maturity
The remote care industry has made significant progress in recent years, but it is now at a crucial point. The excitement and growth of the pandemic period have shifted to a more careful, evidence-based approach to market development.
To fully realize digital health’s potential—improving patient outcomes, lowering costs, and addressing backlogs in chronic care—the industry must overcome deep-rooted structural, cultural, and business challenges. Success will depend on ongoing teamwork among startups, large companies, healthcare systems, and regulatory bodies.
As the report shows, the increased adoption of virtual services isn’t just about immediate change; it’s about fostering long-term improvements across the care delivery system. Those who focus on building evidence, skills, partnerships, and trust will shape the future of healthcare innovation.
