Key takeaways from the PHTI State of Digital Health Purchasing Report

On October 10th, Peterson Health Technology Institute (PHTI), which provides independent evaluations of innovative digital health technologies to improve health and lower costs, announced the findings from their first annual Digital Health Purchasing Report.  

The 26 page report includes findings from 332 digital health decision-makers who are responsible for purchasing decisions in health plans, employers, and health systems who were surveyed between July 16 and August 15, 2024. The questions focused on three main topics:  

• Current Approach: Which digital solutions purchasers currently offer and why 
• Contracting process: Approach to contracting with digital health vendors
• Future plans: Goals and objectives for future digital health purchasing practices 

Meg Barron, Managing Director, Engagement and Outreach at PHTI shared, “PHTI convenes a Purchaser Advisory Council that consists of decision makers from employers, health plans, and health systems where we have the opportunity to hear directly from purchasers regarding the hurdles they face as they assess digital health options for their members and patients. The overall goal of sharing these learnings is to better align solution offerings with these needs so that additional access and improved outcomes can be achieved. We look forward to conducting this research, and sharing the findings, on an annual basis.” 

Key takeaways from the 2024 Digital Health Purchasing Report 

Current approach: Which digital solutions purchasers currently offer and why  

• 75% of purchasers increased spending on digital health solutions over the past 2 years.  
• The most common clinical indications targeted by purchasers of digital health solutions are diabetes (average of 65%), primary care (62%), and mental health (56%.) Women’s reproductive health and fertility are the least offered solutions at an average of 39% of purchases investing in that space, but it still made the list.  
• 99% of purchasers want digital health solutions that improve health outcomes, speaking to the need for evidence-based products and services. Stakeholders hope to save money by improving health outcomes. Healthy people take fewer sick days — benefiting employers — they utilize fewer resources — benefiting health systems — and cost less — benefiting health plans.  

Contracting process: Approach to contracting with digital health vendors 

• Employers have the most standardized purchasing criteria at 90% responding in the affirmative. Surprisingly, only 48% of health systems said that they standardized criteria. The data reflects a possible relation to procurement processes varying across clinical departments and different hospitals within a health system network. Additionally, some health systems engage in creative contracting agreements with outside companies through paths like innovation centers, hospital investment funds, or per-user vs. flat rate agreements.
• When health plans, employers, and health systems are evaluating purchasing digital health solutions, evidence and outcomes, ROI, and ease of use are all top priorities during the evaluation process. 98-99% of purchasers want the solution to improve member, employee, or patient health.  
• 59% of contracts are for one to two years, 36% are for three to five years, and 3% are for over 6 years. To put it simply: digital health technology space is rapidly changing and companies have a short window of time to prove their value.
• 79% of respondents indicated that cost of solutions is the primary motivator for purchasers to change solutions, followed by user satisfaction or needs at 63%.  
• Most purchasers used risk-based contracts for at least some of their solutions.  

Future plans: Goals and objectives for future digital health purchasing practices 

• 84% of health plans, 97% of employers, and 86% of health systems are planning to either maintain or increase their digital health offerings over the next year. The future is bright for companies selling.  
• With competition in the market, 80% of health systems are looking to improve patient experience. This could drive an increase in important metrics like lifetime patient value and patient satisfaction scores.  

Digital Health Solutions companies selling in B2B markets should read the full report to inform their business development strategies. View the 2024 PHTI State of Digital Health Purchasing report here.  

Katie D. McMillan, MPH is the CEO of Well Made Health, LLC, a business strategy consulting firm for health technology companies. She is also a curious researcher and writer focusing on digital health evidence, healthcare innovation, and women’s health. Katie can be reached at katie@wellmadehealth.com or LinkedIn.