Economic Realities in Digital Health: Costs, Reimbursement, and Patient Willingness to Pay

Turning a health app into a certified medical device is a lot like trying to run a marathon through a maze, exhausting, confusing, and littered with obstacles you didn’t even see coming. If you ever thought that building a health app was simply a matter of coding something useful and throwing it into an app store, buckle up. It’s going to come as a rude awakening, especially if your ambition is to create a medical device that actually improves patient outcomes and is recognized as such.

So what does it really take to get from a cool health app idea to a medical device that doctors prescribe and insurers pay for? More blood, sweat, tears, and bureaucracy than you probably imagined.

It starts with the basics, scientifically proving your app does what it claims. You can’t just say “Hey, this app will reduce your back pain” and expect anyone to believe you, least of all regulatory authorities. You have to back it up with evidence, clinical trials, and a mountain of documentation detailing every step, every decision, every safety check.

This is the hardest part for many startups. Before you even think about launching, you need to conduct a systematic literature review. That means scouring through hundreds of scientific papers to see what’s already been done, what evidence supports your approach, and where your app fits into the big picture. You can’t just reinvent the wheel or ignore decades of research. The groundwork alone takes months of dedicated effort.

Once you’ve scoured the science and confirmed your approach has potential, the real grind begins. Setting up a clinical trial for a medical device is no walk in the park. It involves drafting a detailed protocol that spells out every aspect of the study, how patients are selected, how long the treatment lasts, how success is measured, and so on. Then comes the ethical committee approval, which can feel like trying to convince a brick wall that your app is not going to harm anyone. And yes, you have to get approval from multiple committees if your trial spans regions.

Recruiting patients is another comedy of errors. Patients need to be identified, informed, given time to think about participating, and then randomized into control or intervention groups. Doctors or physiotherapists need to be on board, motivated (which, spoiler alert, is hard because they’re already overloaded), and trained on the study’s specifics. It all needs to be documented to the letter, every interaction, every questionnaire filled, every adverse event logged. And if you think Excel can handle this like a boss, think again. You’ll quickly drown in a sea of data points with no lifeboat in sight.

Here’s the kicker, clinical trials don’t come cheap. Depending on the scale, you’re looking at a minimum of 200,000 euros for an adequately powered, randomized controlled trial. And that’s just the trial. That doesn’t include developing and maintaining the app, managing quality and information security systems, marketing, or keeping your team paid. This isn’t your side hustle; it’s a full-time juggling act with financial stakes that can make or break your company.

But even then, following the rules doesn’t guarantee success or even market access. The regulatory landscape for digital health devices is still evolving and, frankly, a bit of a mess. Low-risk apps might get away without a notified body’s scrutiny, but once you dip your toes into diagnostics or personalized recommendations, you’re in a higher risk category with exponentially more hoops to jump through.

And there’s an ongoing debate whether some apps that are currently class one really belong there or if they should be bumped up to class 2A, which triggers a whole new level of regulatory oversight. The complexities increase because your app’s classification affects how much clinical evidence you need, how rigorously you need to apply quality management, and how closely regulators watch your every move.

This rigidity has a strange consequence. Despite the demand and clear patient benefits, many startups either get scared off or have to look abroad for a more forgiving market before they dare tackle Europe. We shout for innovation but structure the system in a way that slows it down to a crawl.

And who ultimately pays for this? Not the patient, at least not directly. The healthcare system or insurers bear the brunt, and they want proof. Not only that the device works, but that it actually improves care in a cost-effective manner. Meaning, even if your app can reduce back pain, if it doesn’t translate into fewer doctor visits or better health outcomes that save money, insurers won’t pay. You’re not only battling regulations but also the economics of healthcare.

So what about going direct-to-consumer and skipping the whole mess? You might think, “Why not just build a class one medical device, avoid the clinical trials, and sell it to patients directly?” The answer is it’s not as simple as it sounds. While direct-to-consumer apps exist, if you want to claim medical benefits and charge a decent price, you still need the evidence and certifications. And those pesky regulations apply no matter who you sell to.

Patients are notoriously unwilling to pay out of pocket for even a modest digital health app. Would you happily fork out 50 euros for a 12-week rehabilitation app? I would, but I have a science-y background and understand the value. The vast majority of people won’t. Keep in mind that all those fancy support teams, IT, clinicians, regulatory experts, marketers, need to be paid. You either charge a price nobody can afford or you settle for a fraction and hope volume saves you. Neither sounds like a great business plan.

This also creates a weird paradox where patients pay a tenner or two for a fitness app with no claims and no regulatory burden but if you want to provide something genuinely therapeutic, you’re suddenly in the 200-euro range or more. Meanwhile, the same patients might only pay 35 euros co-pay for actual physiotherapy with a real person, in a room, giving them undivided attention.

We seem to have upside-down priorities. Care providers are underpaid, digital health apps are overregulated into oblivion, and patients get caught in the middle, not fully trusting or not wanting to pay for either. On top of that, the system demands you prove your worth in long, expensive clinical trials that resemble pharmaceutical drug approvals, except the market is smaller and more fragmented.

And usability? Forget about it if your app requires logging in every few minutes with complicated two-factor authentication that locks out elderly users who barely manage to switch on their smartphones. Regulation tries to protect data, which is crucial, but it often turns into unnecessary hurdles that discourage real people from using the devices that could help them.

Digital health promises so much, especially in an overwhelmed system where doctors and therapists simply don’t have enough time for every patient. It could be a game changer for prevention, education, and ongoing care. But right now, the regulatory, financial, and cultural barriers make it feel like science fiction rather than accessible healthcare.

If you decide to build a medical device, my advice is simple but brutal: know exactly who your patients are, what their needs are, and deeply understand the regulatory and economic mountain you’re about to climb. Talk to healthcare providers, insurers, and patients early and often. Don’t underestimate the challenge of clinical trials, quality management, and data protection. And don’t expect to get rich quick, or even at all, without stamina, money, and a rock-solid plan.

This is not a market for the faint-hearted, but if you’re in it for the right reasons, improving patient care, pushing boundaries, and fighting the uphill regulatory battle, there is room to make a real difference. Just don’t kid yourself it’s a quick win or an easy road.

Because if we want digital health apps to be more than glorified step counters, we have to fix the system that turns them into a bureaucratic nightmare. Otherwise, the best ideas will end up gathering dust or worse, never leaving the lab. And that’s a sad state of affairs for everyone.