By Skye Gilbert, Executive Director, Digital Square at PATH

“So you want private capital to invest in a suite of interchangeable, interoperable digital health products for low middle-income country markets, but your problem statement is ‘context-specific’, your product is ‘multi-faceted’ and your market size is ‘unquantified’.”

My brilliant friend, a former hedge fund partner now doing a startup, is trying to maintain an equanimous tone of voice while her eyebrows convey deep skepticism. In the course of our conversation, I come to understand her perspective; the return on investment (ROI) for digital health in low middle-income country (LMIC) markets remains uncertain from both a donor and investor perspective. Digital health in LMICs has enormous potential, but that potential hasn’t been clearly defined and the pathway to achieving it is murky; more information is needed to encourage investment in digital health.

The Promise and the Problems

In the right circumstances—when foundational components are in place, and digital health is able to amplify and accelerate an already-strong system—the gains are enormous. For example, the Digital Square partner Dimagi helped architect a RapidSMS system that showed the potential of a simple digital solution in improving adherence to treatment for a chronic condition in an LMIC. This and other examples—including decision support, telemedicine and supply chain management—were highlighted in the recently-published WHO Guideline, which provides recommendations on digital interventions for health systems strengthening. Healthcare is a growing business in wealthy countries, and digital innovations are playing a larger and larger role in health; whether enabling personalized medicine, empowering individuals to pursue their own wellness or deriving efficiency gains from AI-enabled analysis of health operations.

Despite that potential, the ROI even in philanthropic terms is difficult to pin down because digital health has had a history of mixed results. The WHO Guideline cautions that “digital health interventions are not a substitute for functioning health systems… there are significant limitations to what digital health is able to address.” Many drivers of successful digital health deployments—strong governance, clear data standards, local capacity to take action on the data and other foundational building blocks—are traditionally considered part of ‘health systems strengthening’. Without these foundational components, outlined in the WHO-ITU strategy toolkit, the ROI for digital health becomes less promising.

The ‘financial R’ in ROI is even trickier to discern. Can one profit—or even break-even—in serving families that live on less than $2 per day? What do we need to find out to make the case to investors that digital health in LMICs can be a good investment? History shows us that the global health community has successfully solved a comparable problem, providing a blueprint for answering these questions today.

The Precedent

Research we conducted on behalf of DIAL and Tableau Foundation revealed that within the vaccine market, pharmaceutical companies were able to find business opportunities in LMICs. UNICEF aggregated high volumes of demand from health systems serving low-income populations. A coalition of philanthropic and government stakeholders committed funds to ensure reliable purchases at high volumes, giving manufacturers the confidence to retool their production lines to meet a lower price point per unit. These efforts led to the formation of the now-famous GAVI Alliance. The coordinated efforts of governments, multilaterals, donors and the private sector can overcome the obstacles to scaling novel health interventions in LMICs.

The heterogeneity of digital health interventions, the stark differences in technical requirements across contexts and the opportunity cost of putting philanthropic dollars into digital health rather than a more traditional medical intervention; these are just some of the characteristics that make the digital health market unique. While the vaccine model is not a perfect analog, we can learn from the approach. Specifically, we can demonstrate digital health’s double bottom line by answering questions similar to those that the vaccine community asked 30 years ago:

• Is it possible to segment digital markets based on income, infrastructure and capacity considerations to arrive at segment-specific problem statements, building on tools like the Global Digital Health Index? Would this help digital health suppliers better understand the market potential for their product?
• If a country wanted to scale a package of digital health interventions that comprehensively covered all of WHO’s Digital Health Interventions, is there a price point that’s affordable for buyers and sustainable for suppliers?
• Given digital health’s market heterogeneity, how does the double bottom-line ROI vary across and within markets, or market segments? What does it take to reach a supply-demand equilibrium in each segment?

The Future

Digitally-enabled innovations in health can improve quality of life and extend life expectancy, and already are doing so for many people. If we act now to deepen our understanding of both the philanthropic and financial opportunity, by building the case for philanthropic and financial investments in digital health in LMICs, we will be able to extend the benefits of these innovations to all, and sustain the incredible gains in health equity we’ve made. Otherwise, market forces may result in increased health disparities.

Digital Square is an experimental initiative that coordinates investments from multiple philanthropists in service of a vision in which the appropriate use of digital technologies closes the health equity gap. Getting answers to the above questions will be crucial in determining how we can best serve the digital health community. For our supply side investments, market information could help inform both business models and technical requirements that would enable Digital Square-supported global goods to reach more people more quickly with impactful interventions. For our demand side investments, market information could inform curriculum development and capacity-building programs, tailored by context, to ensure that in all segments, decision-makers are equipped with the information they need to conduct the procurement and implementation processes that yield the results that they want.

Digital Square is working with groups who are interested in these questions and unlocking the potential of the next generation of health solutions. For more information, contact .