Healthcare Podcast Episode

Digital Health Trends and Commercial Model Implications

Tray Chamberlin and Ann Marie Verhamme of the Alexander Group discuss the latest trends and commercial model implications in the digital health space based on recent research, events and client work.

Ann Marie Verhamme: Hello and welcome to our podcast. My name is Ann Marie Verhamme and I’m a director at the Alexander Group and leader of our healthcare practice. At the Alexander Group, as Revenue Growth Consultants, we focus on issues of top line growth, and today we are going to discuss the latest trends and commercial model implications in the digital health space.

I have the pleasure of welcoming my colleague, Tray Chamberlain, a principal and leader of our digital health practice to discuss. Tray, you recently attended both of the Premier Industry events for digital health, Vive and HIMSS. Any key takeaways from the event?

Tray Chamberlin: Absolutely, and thank you Ann Marie. As attendance for in-person events continued to rebound after the pandemic, it was certainly great to get back in person and connect with colleagues and hear more all about the great work that’s occurring within the digital health industry.

There were a myriad of topics that continued to be brought to the forefront of the conversation. Primarily health equity, value-based care models, advances in teleservices, and of course the inclusion of AI and machine learning. However, given that at the Alexander Group we focus on revenue growth, three key trends emerged in the commercial space.

First diversified product offerings are replacing single-threaded best-in-class products. Secondly, and although in many cases product differentiation remains high levels of service and post-purchase support is a key value driver. And finally, interoperability is key.

Ann Marie Verhamme: And Tray, we recently conducted a digital health study to quantify these trends.
Can you share some of those learnings?

Tray Chamberlin: Absolutely. We went out and, and surveyed, about a hundred digital health companies in the U.S. Marketplace and learned a couple things. First and foremost, we talked about it increases in product offerings or diversifying product offerings. Many companies are doing this via inorganic growth levers or simply put acquisition of other companies with complimentary or sometimes competing products.

In that survey, about two thirds or 64% of respondents reported a merger acquisition just in the last 12 months. The primary driver for the M&A activity was to insert a new product into the company offerings with only about a quarter of respondents citing that sites of care entry with existing products is the primary rationale for these investments.

Simply put, companies are able to buy products in enter markets to satisfy buyer needs in a quicker manner via M&A versus traditional product and development pathways. As customers increasingly seek single vendor purchases across the suite of products, we believe merger and acquisition activity and digital health will be a large influence on commercial models.

Secondly, we mentioned the emphasis on service, or post-sales support. This can be summarized very quickly by looking at the prevalence of a single role in the commercial model: the customer success manager. Only in about 12% of respondents in the Alexander group’s recent digital health market trends study said they did not have a customer success manager role in their organization. While we know that the term customer success manager or CSM can describe several versions of the post land activities, the data support inclusion of this role to meet customer needs. In fact, CSMs are the number one service investment area for digital health companies in 2023.

And finally, interoperability. The need to ensure that all systems, programs and data lakes connect and provide healthcare professionals with the full picture of a patient to drive optimal treatment pathways and therefore outcomes. While this is typically an issue reserved for the product team within digital health companies, the value proposition around ease of integration and implementation is falling onto the sales team.

When we land an account or even expand within existing accounts, interoperability often supersedes price in terms of purchase decisions.

Ann Marie Verhamme: Let’s focus on that first point a bit. It sounds like there’s a lot of M&A activity going on. How should organizations operate under these conditions?

Tray Chamberlin: Most digital health companies have their eye on M&A options in the marketplace. Although digital health m and a deals are down in both volume and deal size year over year, most organizations can’t afford to turn a blind eye to this opportunity. With that being said, M&A objectives have to be strategic against persisting economic headwinds.

It’s simply not enough to grow with the market, nor can mergers and acquisitions be deployed as a scale for scale’s sake. Instead, digital health companies must craft a strategy that creates ongoing cashflow to ensure growth and profitability. Deal and operating teams need more than thoughtful investment themes to unleash potential investment decisions requires found analytical approach communicated via data backed organic growth stories.

These analytical insights identify opportunities and pitfalls specific to each investment, and often commercials leading that charge In this strategy. What is a commercial footprint? What is the value of the sales and size of the marketing teams? What’s the cost of sales metrics or market penetration rates, et cetera.

These are all questions that are playing increasingly important roles in M&A decisions. Companies in digital health just can’t buy better products anymore. So with all that said, there’s obviously some significant implications for how companies should focus their go-to-market efforts. Ann Marie, I’d be interested, what have you seen to be successful in your engagements in projects within digital health?

Ann Marie Verhamme: As we’ve partnered with digital health organizations, we’ve seen a few key trends emerge knowing that leadership is looking to make sure that their go-to-market strategies are designed to outperform the market. So a few key areas of focus.

First is organizations need to define and deliver a differentiated value proposition.

So what that means is making sure that you understand and can message a unique value that you’re providing to the market, and ensuring that the commercial org, so sales, marketing and service, can deliver that message. And as part of that with, as you mentioned, the M&A activity, making sure that we have a coherent and cohesive message.

So what’s the holistic offering that we’re making to the market, but then also specific values for our particular products.

The second piece is that organizations need to identify resource and prioritize their expansion and conversion targets. What that means is organizations need to conduct a share of wallet analysis to understand which segments, which accounts are under penetrated, and ensure that you’re deploying your resources against the biggest opportunities to create the market and steal share.

And the third piece is deploying the customer success role, like you mentioned, to drive NRR and retention. In order to focus your sales team on the expansion and conversion motion, it’s crucial to make sure that retention is effectively driven by that other resource. And what’s also crucially important is that organizations define the rules of engagement.
So when does sales end and customer success take over?

Tray Chamberlin: Ann Marie, thanks for chatting today. Always wonderful to talk about the dynamic world of digital health. For our listeners, if you’re looking for more insights in digital health, specific benchmarks for your teams, information on upcoming Alexander Group events, or want to get involved in our community of digital health thought leaders, visit and scroll to our digital health landing page for more information.

Thank you, and we look forward to connecting again for our next podcast episode.

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