How the German “Fast Track” for digital solutions impacts market entry channels

Germany’s new “Fast Track” for digital health applications will also have a positive impact on other market entry channels. Health insurers and hospitals will professionalize their digital health offerings to stay in the driver seat. The direct-to-consumer channel will support HCPs’ uptake.

Starting from April 2020, patient-oriented digital health applications can apply for this new “Fast Track” market entry (see also Why Germany becomes a top country for digital health solutions). If accepted by the BfArM, HCPs will be able to prescribe BfArM-listed apps. HCPs will get paid for services that they deliver with the help of the apps, such as remote consultations, diagnosing or monitoring. Digital health solution vendors will get paid for their solutions based on their revenue model. Even if digital health solution vendors are not able to provide upfront evidence that their solutions either improve patients’ outcome or increase efficiency of the healthcare system, they can still get accepted. Yet they would have to provide this evidence within the first twelve months after approval.

A lot of hype has been created around this new “Fast Track” into the German healthcare system for digital health solutions. Its direct impact will nevertheless be limited at least in the next two years, as a result of :

  • The limited number of solutions that will get accepted by the regulatory institutions within this timeframe (currently these are just a limited number of certified Class 1 and Class 2a solutions), as well as limited expected capacity within the regulatory institutions.
  • Expected slow adoption of HCPs who would incorporate digital health solutions into their daily routines.
  • Concentration on evidence creation on the vendor side rather than upscaling in the first years.

The “Fast Track” will define market entry options for digital health players, which target health insurance companies, hospitals, and consumers.

Market entry channel “health insurances”: There are around 300 private and statutory health insurance companies in Germany. Their current digital offering is to provide mostly member support features, such as claims management, behavior change, telehealth, EHR or some condition-related offerings, such as diabetes logbooks. With few exceptions, health insurers have not been able to reach significant adoption rates within their member base for digital services yet.

The main tool of building their digital eco-systems is selective contracting. This has allowed them to be in the driver seat and decide which digital health solution they would offer to their member base. With the new “Fast Track”, health insurance companies will lose control and have to pay for digital health solutions which they have not chosen. It is likely that some of the statutory health insurance companies will now recalibrate their digital health initiatives and give them a push. This will create better market entry opportunities, especially for non-certified (such as behavior change, reward systems) and higher risk, class 2b+, digital health solutions (such as sensor-based solutions, connected insulin pen solutions).

Market entry channel “hospitals/HCPs”: Hospitals and HCPs have so far been a tough and costly market entry channel for digital solution vendors, both in Germany and worldwide. Out of more than 2,000 German hospitals, only large hospital chains, such as Charite or Vivantes, have experimented with in- and outpatient digital health solutions for a while. They have even started to use common tools like accelerators, hackathons or VC outlets to collaborate with digital solutions companies. So far, the vast majority of projects have been in pilot stage or discontinued. Similar to health insurance companies, hospitals / HCPs will have to professionalize their digital health partnership efforts to stay in the driver seat. See also R2G’s global study results on digital health partnerships and its success factors.

Efficiently selling directly to 72,000 doctor’s offices will remain a challenging task for digital health solutions providers. The first listings of “Fast Track” digital health solutions will also create a pull for other healthcare apps. However, new approaches (such as sales communities, partnerships with pharma companies or bundling tech platforms like Solera Health for HCP solutions) are needed to make HCPs become a profitable market entry channel for digital health offerings.

Market entry channel “consumers/patients”: The direct-to-consumer channel for digital health solutions (mainly via app stores) is already today an efficient distribution channel to target around 52 million Germans with a capable device. Around 8% of Germans use medical apps on a regular basis today. Market leaders can get more than 10,000 new customers/patients per month (new installations) for their digital health services. Companies that are listed as “Fast Track” solutions will use this seal of quality to boost their installations and create a push effect towards HCPs (patients recommending apps for prescription to their HCPs to access premium services and content). The patient push might become the most effective access channel for “Fast Track” digital health solution vendors in the next 2 years. For vendors that are not listed in “Fast Track”, the consumer channel remains important for building its user base, raising awareness for the solution, and strengthening its negotiation position against more active health insurers and hospitals.

Other channels like pharmacies, employers or rehabilitation centers will be affected as well. Digital health vendors addressing these channels will have to rethink their offerings, messaging and business models to benefit from the increased awareness of digital health solutions in the German healthcare system, resulting from the “Fast Track” push.

Get in touch to discuss your market entry options for the German healthcare market.