Why investors are leaning into direct-to-consumer health

Direct-to-consumer health seemed to come out of nowhere. Once an overlooked category, looked down upon by many traditional health care funds, it’s now proven to be one of the most promising go-to-market strategies in digital health.

There are a few reasons for that. Founders have spent the past decade selling into the employer market, which is now overloaded. These days, benefits managers are utterly overwhelmed by point solutions. Meanwhile, companies like Ro, Curology, GoodRx and others have taken off like a rocket ship by building products that consumers pay for out of their own pocket.

But there are some big (but not insurmountable) challenges with D2C health in the long-run, which is a major reason why a portion of these companies end up selling into payers. Arguably, these products and services are less affordable as they cater to those who can afford to pay cash. Costs to acquire patients have gone up substantially, particularly in the past year, for a variety of reasons. Another problem is that investors will look at the value of a patient over time and aim to maximize that metric, but some users only really need one or two visits. There’s also the role of the clinician to consider as some D2C brands will try to improve their efficiency, which may be ideal for some patients but not others.