EP355: The 5 Business Models of Digital Health Companies, With Nikhil Krishnan

The 5 Business Models of Digital Health, With Nikhil Krishnan. Why Digital Health Companies All Eventually Land on One of Five Business Models. Episode 355.

Stacey Richter talks with Nikhil Krishnan, founder of the Out-Of-Pocket newsletter, about the five business models digital health companies eventually settle into—and why knowing who's actually paying the bill matters more to a startup's success than any promise about improving patient outcomes.

WHAT YOU'LL LEARN

✅ The five business models digital health companies eventually fall into: cash-pay disruption, middleware, incumbent-serving front doors, joint ventures, and legacy incumbents

✅ Why "who is paying" drives a digital health business's viability far more than patient outcomes do

✅ Why pitching lower total cost of care doesn't work with payers or provider organizations that don't bear that risk

✅ Why so many digital health founders struggle to identify their actual customer before building their product

✅ How joint-venture digital health models emerged and where they tend to show up on the payer/provider side

✅ Why mission-driven healthcare companies still need a sustainable business model to keep serving patients well

WHY THIS MATTERS

Founders who build for "lower costs and better outcomes" as an abstract mission, without identifying who actually pays and what that payer's incentives are, routinely get cast out of the rooms where healthcare buying decisions get made. Understanding these five business models gives investors, operators, and health system buyers a shared vocabulary for evaluating whether a digital health company's model can actually survive contact with how healthcare money really moves.

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

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00:00 Introduction.

05:31 What are the different models of digital health?

07:17 What are the different motives for cash-pay digital health models?

13:08 "One of healthcare's original sins is that every solution deployed has been a custom solution for the end user."

13:31 How willing will these companies be to share their data with third parties?

17:20 "I don't think selling tech to large incumbents is going to move the needle."

20:27 "These companies, most of them are actually getting extra money for the more expensive stuff."

22:11 How did joint-venture digital health business models come about?

25:50 Why do you see partnerships more on the payer/provider side?

26:41 Who are the old-school digital health companies that could be considered incumbents?

28:48 Why do so many digital health start-ups have a hard time pinpointing who will pay for their services?

31:22 "The ability to go through the idea maze is way faster now."

34:08 "The field is wide open to help teach people how healthcare works."