Digital health should brace for 'significant amount of churn' as hospitals reconsider COVID-era tech contracts

Digital health companies should brace for a shake-up as COVID-era contracts inked with hospitals will soon be up for renewal, according to the results of a recent survey.

A substantial number of hospitals are ready to rip and replace digital tools such as telemedicine and remote patient monitoring platforms that were rapidly adopted with the onset of the pandemic as many three-year contracts will soon expire.

“At a time when every second mattered, hospitals deployed new solutions quickly in order to support the health of both their patients and their teams,” Ryan Bengtson, president and chief operating officer of Panda Health, the healthcare digital procurement company that developed the report, said in a release. “They didn’t have the luxury of spending months evaluating options.”

Panda Health’s March survey polled 100 hospital and health system executives on how the pandemic influenced their adoption of digital health offerings. Of the 24 types of products the company assessed, respondents outlined 11 where adoption was most often tied to the pandemic and how much longer the contracts for those offerings would last.  

For the telemedicine solutions that drove massive spikes in virtual encounters during the onset of the COVID-19 pandemic, 88 out of the 100 hospital and health system executives polled by Panda Health said they currently were using the technology at their organization and near uniformly credited the pandemic for their adoption.

Nearly half said they were either “not satisfied” or “moderately satisfied” with their current platform, and 30% said those contracts are set to expire between now and the end of 2024.

Extrapolating the latter value to the total number of hospitals operating in the U.S. suggests that 1,693 hospitals will be in a position to decide whether they want to stick with their telemedicine platform, let the contract lapse or switch to something new by the end of 2024, per the report.

The other digital health tool category at the highest risk for churn before 2025 was remote patient monitoring. Half of executives said they were using the technology, with 82% saying they deployed their solutions in the time since the start of the pandemic.

Just half of those using remote patient monitoring said they were either “not satisfied” or “moderately satisfied” with their platform selection. Thirty-three percent said their contracts were expiring by year-end 2024, reflecting an estimated 1,058 hospitals poised to change their approach in the next year and a half.

Other digital health product categories widely adopted due to the pandemic and explored in the report include:

  • Digital care navigator/chatbot on website solutions (197 hospitals predicted to be considering new contracts before the end of 2024)
  • Patient engagement solutions (821 estimated hospitals)
  • Hospital at home (218 estimated hospitals)
  • Digital patient intake (179 estimated hospitals)
  • Patient and employee wellness (665 estimated hospitals)
  • Self-service patient scheduling (195 estimated hospitals)
  • Digital care coordination/care journey orchestration (66 estimated hospitals)
  • Data lakes and data fabric (183 estimated hospitals)
  • Patient acquisition and activation (138 estimated hospitals)

“Now time is on [hospitals’] side," Bengtson said. "With more knowledge about what they want, what they need and what they can expect from digital solutions, the industry should brace for a significant amount of churn.”