Alex Fairweather explains why digital health leaders need to keep patient safety and funding in their minds.
As digital health platforms reshape the landscape of medical care, their sustainability is under scrutiny. These platforms promise efficiency, accessibility and innovation, but their long-term viability depends on navigating unique challenges in healthcare’s complex environment, supported by long-term sustainable funding.
Successful examples in digital health
Digital health platforms use technologies like artificial intelligence, telemedicine, and data analytics to transform healthcare delivery. By adopting platform-based business models, they connect patients, physicians, and service providers through unified interfaces. Notable examples include Teladoc in the US, Kry/Livi in Europe, and JD Health in China.
These platforms go beyond simple video consultations and offer services such as chronic disease monitoring and AI-driven patient-provider matching. This enables more precise diagnostics, triage, and treatment planning, improving interactions and outcomes for patients and clinicians. However, transitioning traditional healthcare to digital platforms – known as platformisation – is particularly slow and complex in this sector. Unlike other industries, healthcare’s shift involves replacing established public or private providers with digital intermediaries, fundamentally altering how care is delivered.
What’s special about the digital healthcare context
Implementing platform strategies in healthcare is uniquely challenging due to the sector’s characteristics. While healthcare systems differ globally, several factors consistently complicate digital transformation.
At the company level, organisations must manage sensitive patient data and adhere to strict ethical standards. The diversity of medical conditions means that no single platform can offer the full range of services provided by a hospital. Risk aversion is high, especially given the need for continuous care for chronic patients, which can conflict with the transactional focus of many digital platforms. Additionally, healthcare cannot be fully digitised – physical examinations and in-person consultations remain essential, requiring seamless integration between online and offline services.
At the ecosystem level, healthcare involves a complex network of public and private hospitals, clinics, insurers, technology firms, and regulators. Integration and collaboration among these actors are challenging. The sector is also highly regulated, with strict entry requirements and a limited supply of highly trained professionals.
Notable failures of digital health providers and platforms
Despite early successes, several digital health platforms have faced high-profile failures. Apricity Fertility, launched in 2018 as a virtual fertility clinic in the UK, offered online consultations and at-home testing. After securing €17 million (£14.3 million) in Series B funding in 2022 and reporting rapid growth, Apricity encountered unexpected financial troubles in late 2024 when a planned investment fell through, exposing its fragile financial position.
Similarly, 23andMe filed for bankruptcy in March 2025, with its valuation plummeting from $6 billion (£4.4 billion) to under $50 million. The company’s reliance on one-time genetic testing sales proved unsustainable, and efforts to diversify into subscriptions and therapeutics failed to deliver profitability. In hindsight, the business model itself could have been more heavily scrutinised before such a large-scale investment.
Other notable failures include Forward, which shut down in 2024 despite $100 million in funding for its AI-driven clinic model, and Babylon Health, which declared bankruptcy in 2023 after overestimating AI revenue and facing an unsustainable cost structure.
Ex-Babylon executives also cite high-level pressure to diversify services and geographical reach without first perfecting their technology and core proposition.
Challenges
Healthcare regulations, designed for traditional providers, often do not align with digital models, creating regulatory grey areas and unclear accountability. Jennifer Reynolds, a healthcare policy researcher, notes that digital health companies frequently operate without clear standards for patient protection.
Governance issues that precipitate failure
Several governance problems commonly undermine digital health startups:
- Poor board oversight and lack of accountability, leading to ineffective management and strategic missteps.
- Executive leadership failures, including weak planning, mismanagement, and ethical lapses, undermine long-term goals.
- Misalignment between corporate culture and healthcare values, as the tech industry’s “move fast and break things” ethos clashes with healthcare’s “first, do no harm” principle.
- Unsustainable business models that prioritise user growth over profitability, leaving companies vulnerable when investment slows.
Effective strategy for digital healthcare
Digital health platforms hold significant promise for improving cost, productivity and access to healthcare. They can complement traditional services, especially in specialised areas like chronic disease management.
To succeed, digital health leaders must focus on organisational learning, systematic integration with existing healthcare systems, and distributed ecosystem management. Financial strategies should emphasise sustainability over rapid expansion, with realistic milestones that account for healthcare’s slow adoption cycles.
Above all, patient care and safety must remain central. No matter how advanced the technology or how strong the financial backing, platforms that neglect this core value risk failure. As the sector matures, learning from recent setbacks can strengthen future innovations, ensuring digital health fulfils its potential to deliver high-quality, sustainable care. Is it enough to solely connect patients with providers? Or enough to provide digital alternatives to traditional care pathways? Pertinent questions need to be asked by digital health startups that keep patient care at their core, even if at the expense of a founder’s ideal vision.
