Telemedicine Startup Pitfalls: An In-Depth Analysis of the Landscape, Unique Offerings, and Growth Potential

As telemedicine expands, it results in new challenges for software engineering companies, particularly in data security and regulatory compliance. Frequent breaches show the vulnerability of telemedicine solutions and online data transmission. Recently, Cerebral, a mental health service delivered through telehealth, has come under fire for sharing millions of patient data with advertising companies.

This article covers the features, technologies, and offerings of telehealth startups. Get insights into the current status and future potential of health startups to improve global healthcare accessibility and operations.

Why Do Health Tech Startups Fail?

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The road to success of medical startups has many challenges, as evidenced by the stark statistic that over 21% of such startups fail in their first year, 30% fail by their second year, 50% by their fifth year, and 70% by their tenth year. The renowned collapse of Babylon, once a nearly $2 billion enterprise that ended in bankruptcy, illustrates the dangers these companies face, such as financial mismanagement, operational issues, fluctuating markets, and strategic missteps. Babylon struggled with insolvency, internal governance problems, patient safety concerns, lost major contracts, failed acquisition talks, and experienced delisting of its shares from the NYSE, leading to its downfall.

Here are the main reasons behind startups failures, from the need for genuine value creation to the complexities of market fit, financial sustainability, and regulatory compliance. Each of these aspects is important to make a new product grow in a highly competitive telehealth market.

A Value Should be a Real Value

Digital health startups must ensure that the value they promise is tangible and far outweighs the costs. Consumers and businesses in the healthcare sector are becoming increasingly discerning and demand services that meet and exceed their investment. For example, if a service doubles the cost to end users, it must provide disproportionately large benefits, whether through increased convenience, improved outcomes, or both. Startups that fail to meet these expectations quickly find themselves behind competitors who offer better solutions.

Tip: Thoroughly test and validate your value proposition before scaling with pilot studies, user feedback collection, and iterative product enhancements.

Target Audience That Pays

Identifying and securing a target audience that is both willing and able to pay is crucial for the survival of any MedTech startup. Many startups fail because they either target an audience that is too broad or focus on a group that can ‘t afford their services.

Successful telehealth businesses find a sweet spot by serving niche markets that benefit greatly from their offerings and can support the business model financially.

Tip: Conduct detailed market research to define and understand the target audience accurately. Adopt value-based pricing models that align with the product’s perceived benefits to ensure it ‘s a good market fit.

No Short-cuts

Quality and compliance are non-negotiable in the healthcare sector. Startups that attempt to shortcut these essential aspects often face severe consequences, as in the cases like Zenefits. The company allowed unlicensed brokers to sell health insurance while its employees could cheat on an online broker licensing course. This resulted in a $7 million fine by the California Department of Insurance and the damaged business reputation.

Since regulatory bodies and patients demand high safety and quality standards, startups must invest in clinical trials, secure systems, and regulatory compliance. Moreover, the ethical implications of healthcare mean that startups that provide primary care solutions must also ensure a high level of integrity and transparency. Otherwise, they may face legal and financial consequences and severely damage patients’ trust.

Tip: Consult with professionals on how to achieve compliance and keep your operations transparent to go through audits and checks smoothly.

Weak Connections

Establishing solid connections with healthcare providers and patients is essential for telehealth startups. You must cooperate with large industry players to promote your products and reach more people on the one side. One to the side, you should continuously communicate with patients to gather feedback and improve your software.

Tip: Develop strategic partnerships and engage with the user community. It will help to integrate the services into a larger healthcare system and better coordinate patient care.

Unreasonable Costs Spending

Many telehealth startups burn through their capital on aggressive marketing and rapid scaling before establishing a proven business model. Some examples are startups that have raised significant funds only to waste them on customer acquisition and expansion without securing stable revenue. This behavior often leads to financial instability and, as a result, failure.

For instance, HealthSpot, a telehealth startup, raised $40 million but failed due to mismanagement and operational challenges. The high cost of operation and inability to scale effectively led to its shutdown.

Tip: Implement financial transparency and use data-driven decision-making to manage expenses based on reliable and updated information.

Confusion About How Payments And Reimbursements Work

Incorrect use of healthcare payments and insurance reimbursement is another critical mistake many startups make. They often underestimate the challenges of integrating billing in healthcare solutions. Such mistakes can result in delayed or denied payments, undermining a company’s financial stability and profitability. 

Tip: Engage experts in healthcare financing to analyze what billing services you should integrate for smooth payments and reimbursements.

Has A Steep Learning Curve For Integration

The integration of new technologies into existing healthcare processes can be challenging. Many healthcare providers follow traditional modes of operation and may be unwilling to adopt new systems. However, recent data shows considerable progress in this area.

As of 2021, nearly 96% of non-federal acute care hospitals and 78% of office-based physicians had adopted a certified electronic health record (EHR) system, a significant increase from 2011 when only 28% of hospitals and 34% of physicians had adopted such systems. It ‘s a substantial shift towards digitization in healthcare over the past decade.

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Hospital and Physician EHR Adoption

Despite these advancements, the adoption of AI and other advanced technologies has been slower. According to a 2023 report by HealthTech, 85% of healthcare executives believe AI can significantly improve patient care, yet only 62% have seen performance improvements from AI and automation initiatives. This suggests that while many companies acknowledge the potential benefits of AI, its practical implementation faces obstacles.

Healthcare providers resist the change and need substantial investment in data management and cybersecurity. Startups must address these issues to achieve widespread adoption and utilization of innovative telehealth technologies.

Tip: Design intuitive technology and provide extensive training and support to encourage adoption and ease of the integration process.

Poor Health Plan Coverage

Last but not least, ensuring that health plans cover telehealth services is critical for the viability and accessibility of these innovations. Even groundbreaking telehealth solutions may struggle to attract and retain users without insurance coverage, as out-of-pocket costs can be expensive for many patients. Adequate coverage can help you engage more users and integrate the telehealth solution into healthcare systems, making them a standard part of medical care.

Tip: Engage with insurance companies and healthcare providers from the start to include your services in health plans. You must be ready to demonstrate the cost-effectiveness and health benefits of your app.

The path toward telehealth startup success is full of challenges that require careful planning and a strategic approach. You must understand the balance between innovation, market needs, ROI, and regulatory compliance. If you learn from others’ mistakes and constantly adapt to the healthcare landscape, it makes your product more likely to join the list of popular telehealth solutions.

Telehealth Companies to Watch

Among many telehealth startups, certain companies stand out for their groundbreaking contributions to medical practice and patient care. Empeek’s team follows health startups and has prepared an analysis of top virtual healthcare companies that shape the industry landscape and bring innovations.

Circle Medical

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Circle Medical is a US telemedicine company founded in 2015 with a strong partnership with the University of California, San Francisco (UCSF). As a primary care provider, Circle Medical offers in-person and virtual health services for continuous, comprehensive care. It focuses on the working-age population searching for convenient healthcare without compromising quality.

The company offers an intuitive app where patients can schedule visits, access their medical records, receive prescriptions, and get direct referrals to specialists, simplifying their journey through various levels of care. The company has received positive feedback for the convenience and efficiency of its services and the quality of care.

GetLabs

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Founded in 2021 in the United States, GetLabs addresses one of the most persistent challenges in telemedicine: laboratory testing. The company simplifies testing for many patients struggling to find the time or means to visit a lab. By offering laboratory visits in the home, GetLabs provides convenience and accessibility and improves patient compliance with treatment and its outcomes. 

The idea behind GetLabs is simple. Through their platform, patients can book appointments at their convenience. A certified phlebotomist then visits the patient ‘s home or office to collect samples, which are sent to partner laboratories for analysis. This service is perfect for people with mobility issues or busy schedules and helps to minimize the anxiety associated with visits to traditional labs.

The GetLabs platform stands out with its appointment booking system, real-time updates, and secure medical data management. The company enables patients and healthcare providers to track the testing progress efficiently and confidentially. Getlabs has recently expanded its services with Grail ‘s Galleri multi-cancer early detection test to make it easier for patients to access the Galleri test through a convenient at-home blood draw service.

Sprinter Health

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Sprinter Health was founded in 2021 in the United States to make health visits more convenient. The company serves individuals who need blood draws, vital checks, or vaccinations but cannot visit clinics due to mobility issues or lack of time. Sprinter Health sends medical professionals directly to homes or offices. 

Sprinter Health employs a team of mobile health professionals equipped with the necessary tools and technologies to do medical tests. The platform enables users to easily schedule appointments, view the profiles of visiting professionals, and check test results. Sprinter Health uses advanced data encryption to protect patient information and ensure data privacy.

Ora

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Ora Group provides specialty treatments and care for chronic conditions, reporting over 6 million patient interactions with +250K consultations. Ora Group operates globally, with the recent fundraising of $10 million to expand its telehealth services across Asia. 

The company addresses critical gaps in men ‘s health, female reproductive healthcare, and dermatological care. They cooperate with leading medical experts like Dr. Steven Tucker and Ms. Rddhi Naidu, who guide the company ‘s strategic direction, focusing on chronic diseases and nutrition.

Your next read: Top 10 Femtech Trends You Need to Know About in 2024

Patients can interact with healthcare professionals through various communication channels, such as video calls, voice calls, or text messaging. This flexibility guarantees that services are tailored to the needs of every client and ensures effective interactions.

Dialogue

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Dialogue is a Canadian telemedicine company founded in 2016 to improve employees’ work-life balance and retention. Their primary target audience are employers who invest in the health and productivity of their teams. 

The Dialogue app serves as a virtual healthcare clinic, providing users and their families access to a wide selection of licensed doctors, nurse practitioners, and healthcare specialists. Users can seek medical consultations through chat, audio, or video calls and access medical services from home, office, or while on the go.

It has been found that employers using Dialogue ‘s services see a 42% reduction in concerns about productivity and talent retention. Moreover, employees with access to Dialogue ‘s services report a 30% improvement in their work-life balance, which shows the tangible benefits of this telemedicine solution.

SteadyMD

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Based in the United States, SteadyMD was founded in 2016 by Guy Friedman and Yarone Goren to deliver a digital-first approach to primary care and align patients with doctors who best match their health needs. SteadyMD pairs each patient with a doctor based on medical needs, lifestyle, and personal preferences. 

SteadyMD goes beyond episodic care, offering comprehensive health management, from wellness to chronic condition management. The platform supports personalized care with video calls and messaging, helps to manage health records, schedule appointments, and order lab tests directly. 

How Empeek Helps Telemedicine Startups Grow

Empeek offers a custom suite of engineering services for startups that enable companies to release high-quality products faster and quickly enter the market. We can provide experienced engineers with unique healthcare software development expertise to work on your project. Check some of the solutions we developed below.

EHR for Behavioral Health

Our team of engineers developed a robust Electronic Health Record (EHR) system for Moodlifters, a program designed to enhance mental well-being through stress reduction and habit formation. This system supports both iOS and Android platforms and offers functionalities such as user-specific surveys, doctor appointment scheduling, achievement tracking, and rewards systems.

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UI of Mental Health EHR

It serves as a supplement to traditional therapy and is widely adopted across medical practices in the US, significantly improving patient engagement and treatment outcomes.

Remote Patient Monitoring Solution

Our team developed a cutting-edge Remote Patient Monitoring (RPM) solution that allows patients to send crucial health data like heart rate and blood glucose levels from their homes directly to healthcare teams. The RPM system utilizes cellular and Wi-Fi technology to ensure continuous, real-time health monitoring, which enables prompt responses from the medical team and reduces hospital readmissions.

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Remote Patient Monitoring Platform

Have a healthcare software project or idea? Contact Empeek for consulting and get help with requirements analysis, product discovery, UI/UX design, and development.

Final Thoughts

Telemedicine startups are not just part of the healthcare industry—they are transforming it. Each startup offers unique features, technologies, and specialties and bring innovation into telemedicine. From Circle Medical ‘s blend of in-person and virtual care to GetLabs ‘ at-home lab services, these companies demonstrate how technology can make healthcare more accessible.

As the telemedicine sector grows and receives investment, we can expect further advancements and new companies entering the field. The journey of telemedicine is far from over. It only starts and will continue with technological breakthroughs and greater transformations in healthcare.

FAQs

How much does it cost to start telehealth?

Launching a telehealth service can involve a wide range of costs, which can vary widely based on the complexity and breadth of services provided. Essential expenditures include software development, securing a compliant platform, personnel training, and marketing. Expenses might range from a modest sum for a minimal viable product to substantial amounts for a comprehensive setup with advanced features. For a detailed exploration of these costs, you can read more in our blog post “Cost of Implementing a Telehealth System”.

Is the telehealth business profitable?

Telehealth has the potential to be highly profitable, particularly as demand for remote healthcare services grows. Profitability depends on factors such as user acquisition, cost management, and effective monetization strategies. Successful telehealth services can benefit from recurring revenue streams, high customer retention, and scaling capabilities.

How does telehealth generate revenue?

Revenue in telehealth is typically generated through several key streams: subscription models, per-consultation fees, enterprise partnerships with health systems, and additional services like prescription fulfillment or medical equipment sales. Each revenue stream contributes to overall profitability by maximizing the value offered to users and partners.

What are the largest telemedicine companies in the U.S.?

Prominent telemedicine companies in the US include Teladoc Health, which offers a broad range of healthcare services remotely; Amwell, known for its virtual doctor visits; MDLive, which provides virtual urgent care, and Doctor on Demand, recognized for its on-demand and scheduled visit capabilities. These companies lead the market in terms of reach, technological innovation, and variety of services.

What are the challenges and opportunities in telemedicine?

Telemedicine faces significant challenges such as data privacy concerns, the need for technological integration with existing health systems, and varying state regulations. Conversely, the opportunities are robust, including the ability to extend healthcare access to remote areas, decrease healthcare delivery costs, and improve patient engagement through technology-enhanced services.

What are some startup challenges unique to the healthcare field?

Startups in healthcare encounter unique hurdles including stringent regulatory requirements, the need for significant upfront investment, and the critical importance of building trust with patients and healthcare professionals. Moreover, integrating new solutions into entrenched healthcare systems presents both a technical and cultural challenge.

What are examples of niche telemedicine companies?

Niche telemedicine companies focus on specific areas of health, such as Roman, which concentrates on men’s health; Maven Clinic, which caters to women’s and family health; and Talkspace, which offers mental health services through an online therapy platform. These companies tailor their services to meet the particular needs of distinct patient groups, filling gaps left by traditional healthcare providers.

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Written by:
Alex Shpachuk Alex Shpachuk CEO
Alex Shpachuk is the owner and strategic partner of Empeek. His effective leadership and a visionary approach to the future of healthcare turned the company into a dynamic environment attracting the brightest minds with the common vision for product impact and service excellence. With over a decade of experience in software engineering and comprehensive knowledge of designing and deploying tailor-made solutions for healthcare providers, Alex channels his passion for software development and consulting into the written word.

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