Encore! EP355: The 5 Business Models for Digital Health Companies, With Nikhil Krishnan

The 5 Business Models for Digital Health Companies, With Nikhil Krishnan (Encore! EP355)

In this Encore, Stacey Richter revisits her conversation with Nikhil Krishnan, founder of the Out-Of-Pocket newsletter, about the five business models digital health start-ups eventually settle into — and why knowing who's paying the bills matters more than any clinical mission statement.

WHAT YOU'LL LEARN

✅ The five business models: cash-pay ecosystems, better middleware, serving incumbents, joint ventures, and old-school incumbents

✅ Why start-ups pitching "lower costs and improve patient care" as their whole pitch often get cast out by administrators who don't share that incentive

✅ Why so many digital health founders struggle to pinpoint who their actual paying customer is

✅ Why selling tech directly to large incumbents rarely moves the needle

✅ Why board-level focus on clinical outcomes, not just financing, separates the mission-driven companies from the rest

WHY THIS MATTERS

A digital health company's clinical mission means little if its business model doesn't match who's actually paying — and in healthcare, payers, providers, and health systems often have a financial stake in costs going up, not down. Knowing which of the five models a start-up occupies, and whether its customer's incentives are actually aligned with better patient outcomes, is the real test of whether it can survive and do good at the same time.

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

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00:00 Introduction

06:20 What are the different models of digital health?

08:05 What are the different motives for cash-pay digital health models?

13:54 "One of healthcare's original sins is that every solution deployed has been a custom solution for the end user."

14:19 How willing will these companies be to share their data with third parties?

18:07 "I don't think selling tech to large incumbents is going to move the needle."

21:14 "These companies, most of them are actually getting extra money for the more expensive stuff."

22:58 How did joint-venture digital health business models come about?

26:37 Why do you see partnerships more on the payer/provider side?

27:29 Who are the old-school digital health companies that could be considered incumbents?

29:36 Why do so many digital health start-ups have a hard time pinpointing who will pay for their services?

32:10 "The ability to go through the idea maze is way faster now."

34:55 "The field is wide open to help teach people how healthcare works."