No Cure Without Coverage: Digital Health’s Reimbursement Riddle

When a small Berlin startup launched an obesity therapy app a few years ago, investors hailed it as a potential game-changer. With slick design and AI coaching, it promised to slim waistlines and fatten venture returns. The app’s code worked beautifully – but the business case didn’t. Germany’s public insurers were slow to pay for it, doctors were hesitant to prescribe it, and patients weren’t about to reach for their wallets. Earlier this year the startup, Aidhere, filed for insolvency despite its app being the top-performing product on Germany’s new digital health reimbursement platform (sifted.eu). It was a rude awakening: in digital health, building the technology can be the easy part – getting paid for it is the real ordeal.

This is a common prognosis in the healthtech world. Dozens of startups have burst onto the scene with clever apps, algorithms and gadgets, only to flatline when they collide with the glacial, convoluted reality of health care economics. Technophiles in hoodies are discovering what grizzled hospital administrators could have told them all along: innovation is lovely, but someone has to foot the bill. And in health care, that someone is rarely as straightforward as a user swiping a credit card. From Boston to Berlin to Singapore, digital health entrepreneurs face the same chronic condition: a reimbursement system that moves at the pace of a bureaucratic snail, even as their technology sprints ahead. As one industry insider admits, founders often “significantly underestimate the importance of reimbursement and how it may impact the viability of your startup” (linkedin.com). In the end, many a promising health app learns that CPT is not the same as MVP – securing a billing code or regulatory approval is no golden ticket, and certainly no guarantee that money will follow.

What makes getting paid for digital medicine so excruciatingly complex? Part of the problem is cultural. Tech entrepreneurs, raised on a diet of move fast and break things, have plunged into the world of doctors and insurers who move slowly and fix things only once they’re thoroughly broken. The result is a classic culture clash: startups focus on the “digital” and neglect the “health”, often realizing too late that cutting-edge code must navigate legacy systems of shocking antiquity. Europe’s hospitals famously still fax paperwork around; even in Germany – a country with “horrendous” healthcare budgets – many clinics lack stable Wi-Fi and rely on 20-year-old software (healthcaredebugged.com).

In such environments, a clever app can feel like a Ferrari trying to drive on cobbled streets. Health insurers, for their part, are in no rush to pave the way. These payers are slow-moving giants that demand mountains of evidence and years of negotiation before agreeing to cover a new tool. Germany alone has over 100 statutory insurers, each with its own agenda. “No matter how great your startup is, you are not going to quickly scale across 100+ insurance clients,” notes one venture capitalist dryly (healthcaredebugged.com). In the UK’s NHS – theoretically a single payer – a startup still faces dozens of regional boards and layers of hierarchy. And across the board, insurers’ priority is squeezing costs in the existing system, not adding unproven high-tech therapies to their tab. In other words, if you think you can disrupt healthcare as easily as hailing a taxi with an app, think again.

The Direct-to-Consumer Delusion

Faced with sclerotic insurance systems, many healthtech founders dream of simply selling their product direct-to-consumer (D2C). After all, if people happily pay for Netflix or the latest iGadget, why not a life-improving health app? Some U.S. startups have had modest success with out-of-pocket models for wellness or chronic care management. But in markets with universal healthcare, particularly Europe, the D2C approach often flops. European patients, spoiled by “free” care at the point of service, are notoriously unwilling to pay much out of pocket (healthcaredebugged.com).

In countries like France, Germany or the UK, only about 9–13% of total health spending comes directly from patients’ wallets – the rest is picked up by public insurance. For most Europeans, health care is an all-inclusive holiday: they’ve already paid through taxes or insurance premiums, and expect the buffet of services to come at no extra charge. Asking a German patient to spend, say, €20 a month for a health app is like asking an American to pay extra for ketchup at a burger joint – it prompts indignation or simply bemusement.

There are a few exceptions, of course. In poorer European countries, out-of-pocket spending is higher in percentage (often because public systems are underfunded), but those markets are small in absolute terms (healthcaredebugged.com). And for certain niches – think cosmetic dermatology or fertility – wealthy patients might splurge on the latest digital service not covered by insurance. By and large, though, a startup banking on Europeans’ self-payment is in for a brutal reality check. As one industry observer quips, European consumers will pay out of pocket only if there’s an immediate “wow” factor – often something vanity-related like a cosmetic procedure or perhaps a flashy fitness gadget – whereas for mundane health needs they assume the state or insurer will handle it.

This dynamic leaves digital health startups in Europe stuck between Scylla and Charybdis: the public insurer won’t pay until you prove significant benefit (which can take years and clinical trials), but consumers won’t pay in the meantime because they expect healthcare to be “free”. Little wonder many startups either pivot to markets like the U.S., or adopt B2B models – selling to hospitals, employers, or pharma companies – anything to avoid the dead-end of an uncompensated consumer app languishing on the app store.

The pandemic briefly upended this calculus. In the heat of COVID-19, even stodgy public systems embraced digital tools out of necessity – telehealth visits, remote monitoring apps, digital vaccine passes. Patients, too, showed they could adapt when needed, sometimes even paying for convenience. But as the crisis subsides, old habits reassert themselves.

European patients have slipped comfortably back into their no-pay mindset, and public insurers have returned to their usual skepticism. Startups that saw usage spike in 2020 are now grappling with the post-pandemic hangover: those downloads don’t translate into a sustainable business unless somebody – patient, provider, or payer – ultimately pays. The hard lesson is that healthcare is not a consumer market like any other. It’s a labyrinth of payers and gatekeepers. And in many countries, the ultimate customer is really the government. As a cynical saying goes, in healthtech your end-user might be a patient, but your true customer is often an insurance bureaucrat.

A Maze of Codes, Trials and Red Tape

At the heart of the problem is the convoluted process called reimbursement – how healthcare services get paid by insurers or governments. The very term can set startup founders’ eyes rolling back in their heads. It involves coding systems as byzantine as any Kafka novel. In the US, for instance, you have CPT codes for medical procedures, each essentially a billing barcode for a service.

If your app or device doesn’t have an appropriate code, good luck getting paid by Medicare or insurers. Entrepreneurs proudly brandish newly minted CPT codes in pitch decks as if they were Nobel Prizes – only to learn that “CPT ≠ Unicorn.” A billing code alone doesn’t guarantee anyone will use it or pay for it (linkedin.com). It merely puts you on the menu; you still have to convince payers that your dish deserves to be served and at a reasonable price. As one expert dryly notes, the existence of a code “does not mean you have a unicorn, or that you will even be reimbursed” (linkedin.com).

For software-based health tools, the challenge is even greater. Traditional reimbursement systems were built for drugs, surgeries, scans – tangible interventions with clear precedents. A purely digital therapy or AI diagnostic is an awkward fit. Insurers ask: is this a medical device, a service, or something else? In the U.S., Medicare famously couldn’t figure out how to classify prescription digital therapeutics like Pear Therapeutics’ apps for substance abuse. Lacking any better category, officials shrugged and said these apps failed to meet the definition of durable medical equipment or any reimbursable benefit class, and thus couldn’t be covered (politico.com).

By 2023 Pear – once a trailblazer with FDA-cleared digital therapies – was in bankruptcy. A former Pear lobbyist squarely blamed the lack of a reimbursement pathway: no code, no cash, no company (politico.com). Another investor described the gauntlet that digital therapeutics firms must run: “you have to go to the FDA, go to the insurers, then actually get people to use it to get revenue – that is so much friction to get a company off the ground” (politico.com). It’s a bit like a video game with three boss fights in a row, each tougher than the last.

Regulators and payers are starting to acknowledge this problem, albeit slowly. In the U.S., Congress has mulled an “Access to Prescription Digital Therapeutics Act” to explicitly create a category for software therapeutics (politico.com). Until it passes, American digital health startups tread water by selling to employers or using pharmacy benefit managers in creative ways. Over in Europe, some governments have decided that if the system has no place for digital health, they’ll invent one.

Germany was first out of the gate, launching a bold experiment to fast-track app reimbursement. France, Belgium and others are following with their own twists. Even Scotland’s NHS has gotten in on the act, striking deals to provide certain mental health apps free to citizens (politico.com). These moves hint at a possible future where a doctor might routinely “prescribe an app” just as they do a pill. But the early evidence suggests that turning that vision into reality involves as much bureaucracy as innovation.

Germany’s DiGA: Apps on Prescription

When Germany unveiled its DiGA scheme in 2019, startup founders across Europe cheered (and perhaps scrambled to brush up on their German). DiGA stands for “Digitale Gesundheitsanwendungen,” or digital health applications – essentially, prescription apps. The idea, brainchild of former health minister Jens Spahn, was deceptively simple: any doctor in Germany’s public system could prescribe an approved health app, which the statutory insurers would then pay for.

With one law, Germany promised 73 million insured citizens access to vetted digital therapies, without each startup having to negotiate separately with 100+ insurers (sifted.eu). It was a “fast-track” to reimbursement: get your app on the national DiGA directory, and suddenly you’ve leapt the chasm from cool gadget to real medical product covered by insurance. Commentators hailed it as a catalyst for overdue digital transformation. Germany, land of red tape and rubber stamps, was miraculously handing a shortcut to agile startups – what could go wrong?

Plenty, it turns out. The DiGA process, while faster than traditional routes, is still no cakewalk. To get listed, an app must be approved by the health regulator (BfArM) and show at least “positive care effects” – evidence that it improves patient outcomes or processes. That usually means conducting a clinical study, albeit one less exhaustive than a new drug trial. Once on the directory, the app enjoys a grace period (up to 12 months) where the startup can more or less name its price and start getting prescriptions.

But after that year, hard-nosed negotiations with the national insurance association determine the permanent price. And here is where some dreams have died. Nearly every DiGA that has gone through price negotiations has faced a steep price cut – typically 50-60% lower than the initial price (sifted.eu). For Aidhere, the obesity-app startup, negotiations dragged on 18 months; in the end regulators slashed the price from €500 per course to about €218, retroactively creating an €8 million revenue hole that the company was asked to pay back (sifted.eu).

That was essentially a fatal bill for an early-stage startup. Another startup, Newsenselab – maker of a migraine app – suffered a similar fate and also filed for bankruptcy (sifted.eu). In theory, the price cuts reflect volume and value; in practice, founders complain that an arbitration board forces almost all apps into roughly the same €200 range, whether they treat mild insomnia or severe depression. “If all products end up within €50 of each other, that’s mighty strange,” grumbles Henrik Emmert, Aidhere’s co-founder (sifted.eu), noting that one would expect a spectrum of prices corresponding to clinical benefit. The one-price-fits-all approach, critics say, hardly rewards innovation.

Then there is the small matter of adoption. Getting on the DiGA list is only half the battle; you still need doctors to prescribe the app and patients to use it. This has proven a serious bottleneck. By late 2022, only about one-third of German doctors had ever prescribed a DiGA, and a similar share said point-blank that they wouldn’t consider doing so (sifted.eu).

Old habits die hard: many physicians either don’t know about these newfangled digital options or don’t trust them. Startups, meanwhile, lack the salesforce armies that pharmaceutical companies deploy to educate (or inundate) doctors. “For startups it’s extremely challenging to build a big enough sales setup to reach all doctors and inform them about our products,” admits the CEO of Selfapy, a mental health app with five DiGAs listed (sifted.eu). Unlike a drug, an app can legally be advertised directly to patients – yet few startups can afford splashy ad campaigns on TV or TikTok to spur patients to request prescriptions (sifted.eu).

“Even once you’re listed on the DiGA directory, nobody knows about you,” says the COO of Vivira, a musculoskeletal therapy app. Some have tried piggybacking on Big Pharma for marketing heft: Selfapy joined forces with Pfizer to promote its app, HelloBetter teamed with Ratiopharm (sifted.eu). These creative alliances aside, awareness remains limited.

And suppose a doctor does print out a prescription for an app – the journey isn’t over. In a scene only Kafka could love, patients must take that paper prescription, snap a photo of it, upload it to their insurance company’s portal, then wait (often several weeks) to receive an old-fashioned 16-digit activation code by postal mail (sifted.eu). Only with that code can the patient unlock the app and begin using it. Half of patients never bother completing this convoluted process, by some insiders’ estimates (sifted.eu).

One can hardly blame them – imagine if Netflix made you mail in a form and wait two weeks for a password. German insurers have shown little urgency to streamline this flow. In fact, some insurers actively throw sand in the gears, seizing the opportunity to dissuade patients. When an insured person inquires about their DiGA code, some health plans have responded by pitching their own proprietary wellness apps instead, which are cheaper for the insurer (and conveniently don’t pay revenues to the startup) .

“Insurers see DiGAs as a threat and are putting stones in our way,” says Vivira’s COO bluntly (sifted.eu). One cancer care app called Mika even withdrew from the DiGA program entirely, opting to sell its platform to pharma companies for patient support, after growing frustrated with such insurer roadblocks (sifted.eu).

To its credit, the German health authority has noticed some shenanigans. In mid-2023 the regulator warned insurers not to offer patients alternative digital programs if a doctor has prescribed a DiGA. There are also plans afoot to digitize the prescription process itself – allowing doctors to issue e-prescriptions for apps that could be redeemed instantly online, mercifully axing the postal code ordeal.

Such changes can’t come soon enough. The concept of “apps on prescription” is genuinely innovative, and Germany’s scheme has inspired copycats abroad. But thus far, DiGA’s outcomes have underwhelmed. By September 2022, only about 203,000 app prescriptions had been issued in total (sifted.eu) – a drop in the bucket next to the 440 million conventional drug prescriptions Germany sees each year. The hoped-for explosion in usage is looking more like a sputter. “A lot of people assumed that growth would be higher by an order of magnitude,” observes Hannes Klöpper, CEO of HelloBetter (which commendably has six mental health apps on the DiGA list). If prices stay low and prescriptions scarce, “a lot of companies will struggle to make it work,” he warns (sifted.eu).

Investor sentiment, unsurprisingly, has soured on this model. Many VCs now avoid startups whose revenue hinges on DiGA reimbursement alone. They prefer platforms that can aggregate multiple apps or sell internationally – anything to reduce reliance on a single country’s bureaucracy. Heal Capital, a German healthtech fund, openly admits none of its partners have backed a pure DiGA-dependent startup, citing the lack of any breakout commercial success to date (sifted.eu).

It’s a classic chicken-and-egg: without big success stories, investors remain wary; without capital, startups struggle to achieve scale that might make for success. One founder likens it to a marathon: “there is resistance from stakeholders – but that happens with any change in healthcare,” he insists, counselling patience (sifted.eu). Perhaps, but startups have only so much runway, and patience is not typically a virtue rewarded by venture capital.

Nonetheless, Germany’s bold experiment has cracked open the door. It proved that reimbursing digital therapeutics on a national scale is possible, even if the first iteration has wrinkles to iron out. Over 50 apps have been listed so far on DiGA (icthealth.org), providing real-world evidence that may eventually strengthen the case for digital therapies. And in the long run, Germany’s head start could turn into an export advantage.

As other countries develop their own pathways, German DiGA veterans like HelloBetter or Selfapy could expand abroad armed with data and experience (sifted.eu). It helps that France, Belgium and others are crafting similar frameworks – likely with an eye to not repeating Germany’s mistakes. In an ironic twist, Germany’s slow adoption at home might nudge its startups to seek growth elsewhere, essentially using DiGA as a springboard to international markets. For the German health ministry, that’s probably not the intended outcome – but from an investor’s viewpoint, revenue in France or the US spends just as well as revenue in Bavaria.

Vive la Différence: France’s PECAN and Friends

Leave it to the French to name their app reimbursement scheme after a dessert. PECAN, which charmingly stands for prise en charge anticipée numérique, was introduced in 2024 as France’s answer to DiGA. Like the German model, PECAN offers a fast-track pathway to get digital therapeutics (DTx) reimbursed by statutory insurance for a limited time (icthealth.org). France, with roughly 60 million insured souls, realized it had been largely ignoring digital health tools – an irony in a country with world-class healthcare.

Prior to PECAN, if you invented a brilliant health app in Paris, you basically had two choices: sell it to the few patients willing to pay out of pocket, or leave France and chase markets abroad . The national insurance simply had no mechanism to pay for software therapies, and conducting full clinical trials like a pharmaceutical was out of reach for most startups. In other words, the French healthcare system treated a proven diabetes app or insomnia program as hors d’œuvre, not part of the main course of care. PECAN is meant to change that, bringing these digital petits-fours onto the reimbursed menu.

The French drew heavily from the DiGA recipe – apps on prescription, provisional reimbursement without prior full evidence, then a requirement to prove effectiveness for long-term coverage. But naturellement, they added their own flair and stricter ingredients.

PECAN covers not only pure apps but also telemonitoring systems (remote patient monitoring), a category the Germans left out. It allows higher-risk devices (up to Class III medical devices) to qualify, whereas DiGA stuck to lower-risk Class I and II software (icthealth.org). And the French gave startups just 6–9 months to show clinical benefit for permanent listing, compared to up to 12–24 months in Germany (icthealth.org). The entire French approval process is supposed to take no more than 90 days from application to decision – très rapide. In theory, a health app can go from dossier submission to being publicly reimbursed in three months, then have a year of coverage to prove itself. That is almost breakneck speed in the annals of French bureaucracy (this is the country of Molière, not exactly known for administrative haste).

But before we imagine la vie en rose for French startups, PECAN comes with a sting. The requirements are formidable. An app must already have a CE mark (European safety certification), meet strict data security and interoperability standards set by France’s Digital Health Agency, and show credible “innovativeness” and potential clinical benefit (icthealth.org).

This is not a playground for every wellness app with a baguette emoji. PECAN is emphatically not intended to be a testbed for every app under the sun – only high-quality solutions that can genuinely impact patient care get invited to this partyicthealth.org. The French health tech community got a sobering reminder of that when one of the pioneers of digital therapy, Germany’s HelloBetter, tried to enter PECAN. HelloBetter submitted a dossier to get its insomnia treatment app reimbursed in France – and in August 2024, the French Haute Autorité de Santé (the health technology assessor) gave it a thumbs-down (icthealth.org).

Despite HelloBetter’s track record (6 DiGA-approved apps in Germany), France wasn’t convinced. Making matters worse, PECAN offers no appeals process or easy way to submit additional data if you’re rejected (icthealth.org). In Germany, if BfArM isn’t satisfied, they issue “deficiency letters” and give companies time to address concerns. France’s approach has been more guillotine-like: off with your app’s head, and au revoir.

This early hiccup with HelloBetter suggests PECAN’s bar is high indeed. The French argue that if they’re going to pay for digital therapies, they want the crème de la crème – robust data, seamless tech integration with health systems, strong privacy protection (France is, after all, home to strict GDPR enforcement). The result is that qualifying for PECAN might be as tough as getting a new drug on the formulary, just on a faster timeline. It’s early days – the scheme only launched in 2024 – so we’ve yet to see success stories or learn how many apps will clear the hurdles.

French startups are cautiously optimistic but also realistic. They know that even if they secure reimbursement, they’ll face some of the same challenges seen in Germany: persuading doctors to prescribe something other than pills, and making patients aware that “oui, there is an app for that” covered by l’Assurance Maladie. At least France has a more centralized system: convince the national payer once, and you’ve got the whole country. But convincing that payer is evidently no easy feat.

Beyond PECAN, several other countries have hopped on the bandwagon with their own digital health reimbursement pilots. Belgium launched its mHealth validation pyramid and now allows certain apps to be prescribed and reimbursed through a program not unlike DiGA (the first reimbursed app there was an insulin titration app for diabetics). Sweden and Italy have explored regional schemes and are watching the German and French experiences closely.

Austria is working on an “DiGA-like” pathway as well (sifted.eu). All recognise the same truth: their health systems must adapt to the software age, or risk missing out on tools that could improve care (or even save money in the long run). Notably, Scotland’s NHS took a different route – it directly evaluated Big Health’s cognitive-behavioral therapy apps (for insomnia and anxiety) and decided to provide them free to citizens as part of NHS services (politico.com). Essentially, Scotland treated the apps like new treatments, and being a single-payer system, just went ahead and paid for them for anyone who needs them. It’s a smaller scale than England’s NHS, but it demonstrates a certain canny pragmatism: why wait for complicated new reimbursement categories if you can just centrally procure a digital tool that has evidence behind it?

Meanwhile, across the pond, Singapore and Estonia present two fascinating outliers. They are tiny in population compared to giants like Germany or France, but punch above their weight in digital uptake.

Singapore: Sandbox in a Small Market

Singapore’s healthcare system is a unique hybrid, much like the city-state itself – combining public and private elements with a technocratic zeal. On one hand, the government heavily subsidises care (public hospitals, basic insurance) and maintains a nationwide electronic health record. On the other, individuals are expected to use personal health savings accounts (called Medisave) for routine expenses, and there’s a thriving private sector.

You might think such an environment would be fertile ground for digital health startups: a tech-savvy population, strong government support, and patients who do pay something out-of-pocket (unlike Europeans). Indeed, Singapore has been positioning itself as a healthtech hub in Asia, launching accelerators and sandboxes. Initiatives like the MOH’s Licensing Experimentation and Adaptation Programme (LEAP) allow novel digital health services to be piloted under a relaxed regulatory leash. The country’s Smart Nation strategy explicitly highlights digital health and even AI in medicine as growth areas (hitap.net).

But when it comes to reimbursement – who actually pays for digital health tools – Singapore faces a familiar snag. The public insurance schemes (Medishield for catastrophic coverage and Medisave for individual savings) do not have clear mechanisms to cover things like a therapeutic app or a health monitoring software.

“There are limited reimbursement pathways for digital health interventions in Singapore,” notes a recent analysis by the country’s Agency for Care Effectiveness (hitap.net). Singapore’s health technology assessment system can evaluate new technologies for cost-effectiveness, but if an app doesn’t slot into an existing benefit, it lives in a grey zone. The default is often that hospitals or patients must absorb the cost. For example, a government hospital might deploy a telehealth program and fund it internally, or a patient might choose to spend from their Medisave for a device, but there isn’t yet an equivalent of DiGA where the national insurance universally pays for an app.

The upshot for startups in Singapore is that many adopt a B2B model or target private insurers and employers. The country’s largest healthtech successes – like Doctor Anywhere or Holmusk – built revenue by selling services (telemedicine, analytics) to corporate clients or insurers regionally, rather than expecting the government to write a check for each app user. Singapore’s market is small (5.6 million people) but it serves as a springboard into Southeast Asia. Startups leverage the supportive ecosystem at home (where regulators are accessible and hospitals willing to trial new tech) to develop proofs-of-concept, then export to bigger markets like Indonesia or Australia for scaling.

The government, for its part, is gradually evolving financing models. There’s talk of integrating digital therapeutics into preventative care programs and allowing certain app subscriptions to be claimable under insurance riders. But as of 2025, a Singaporean health startup still can’t count on a “prescribe-and-reimburse” model in its home turf (hitap.net). The irony is that Singapore’s public system is advanced enough to implement digital health swiftly (99% of its citizens’ health records are electronic, after all), yet the question “who pays?” remains tricky (hitap.net).

The bureaucracy, though far nimbler than in the West, hasn’t fully caught up with creating categories and budgets for digital services. In true Singapore fashion, one expects they will solve it pragmatically – perhaps by declaring certain vetted apps as claimable benefits – but they will want to see strong proof of value first. In the meantime, for a startup, Singapore is an excellent lab and launchpad, but not a place to rely solely on government reimbursement.

Estonia: Digital Utopia, Commercial Challenge

On the Baltic Sea lies Estonia, a country often cited as the exemplar of digital government. With only 1.3 million people, Estonia transformed itself over the past two decades into a high-tech society where virtually all public services are online. In healthcare, Estonia is le roi: 99% of health data is digitized, all doctors and hospitals share data via a seamless X-Road infrastructure, almost every citizen has an e-health record and almost all prescriptions are electronic (gnius.esante.gouv.fr(.

During the pandemic, many countries scrambled to enable remote prescriptions and tele-consultations; Estonians barely noticed a change, since they’d been doing that for years (sifted.eu). Need a refill? Click. Need to check your vaccination history? Click. The system even automatically handles things like notifying relevant agencies when a death is registered. In short, Estonia built the kind of integrated digital health platform that bigger nations can only dream of.

Surely, then, it must be paradise for digital health startups? It is – up to a point. On the plus side, any new health app or device can integrate into the system relatively easily. There’s a government-backed Connected Health incubator and testbed where startups can pilot their solutions with local clinics (gnius.esante.gouv.fr).

If a tool proves effective, the single national health fund (Tervisekassa) could in theory scale it countrywide. But here’s the catch: as of now, “digital therapies are not yet reimbursed in Estonia.” The country has been so busy digitizing core services that it hasn’t created specific reimbursement categories for, say, a mental health app or a diabetes coaching software. The Health Insurance Fund covers traditional treatments; anything novel in the digital realm likely needs a special program or must demonstrate cost savings that justify its inclusion. Given the small budget (health spending is only ~6-7% of GDP, and that GDP is small), Estonia must prioritize. A digital tool that can replace expensive treatments or medicines stands a good chance of funding; one that is nice-to-have may have to wait.

For startups, this means Estonia is a fantastic proving ground but a limited revenue source. Many Estonian healthtech startups use the home system to refine their product (with the help of tech-friendly hospitals and even patient participation in design – the community is very engaged (sifted.eu). But once ready, they often aim for larger markets – Germany, UK, USA – to actually make money.

The government occasionally directly sponsors pilots of digital health solutions (for example, covering a trial of a remote monitoring app for heart patients to see if it reduces hospitalizations), and if the pilot shows clear benefits, they might incorporate it into standard care. In essence, reimbursement in Estonia for digital health tends to be ad hoc and evidence-driven: prove to the Health Fund that your app saves money or improves outcomes significantly, and they may pay for it. Otherwise, even in this tech utopia, the startup may have to resort to out-of-pocket models or external grants.

Estonia’s unique feature is that integration and adoption by users is almost a non-issue – people trust digital services (only a few hundred citizens opt out of data sharing each year), and doctors are used to digital workflows. The roadblock is purely financial: making the business case to the payer. The upside is that decisions can be made relatively quickly by the central authorities if convinced. The downside, again, is scale – even total saturation of the Estonian market may not satisfy a venture capitalist’s growth expectations.

Thus, Estonia often partners with its neighbors or EU initiatives to give startups broader exposure. It’s telling that many ideas attempted in larger countries have been quietly successful in Estonia for years, yet the startups behind them remained obscure due to the market’s size. The country sometimes serves as a glimpse of the future: showing what a fully digital health system looks like in practice, and exposing the pitfalls ahead for others (like how doctors might resist an e-booking system, as happened in Estonia when some physicians balked at patients booking appointments online, fearing loss of control over their schedules).

In summary, Estonia proves that technology is not the limiting factor in digital health adoption – culture and financing are. If every country were as digitally wired as Estonia, many technical barriers would vanish overnight. But even Estonia can’t escape the question of sustainability: someone must decide which digital services are worth paying for out of the public purse. That decision is as difficult in Tallinn as it is in London or Paris. The difference is that in Estonia the discussion happens in a highly informed, tech-literate context, which hopefully leads to sensible outcomes (and fewer fax machines).

Prescriptions, Payers and Patience

The global tour of digital health reimbursement – from Germany’s grand experiment to France’s cautious entrée, Singapore’s agile improvisation to Estonia’s high-tech shoebox – yields a clear diagnosis. The challenge for digital health startups isn’t building the technology; it’s navigating the economics and politics of healthcare. Time and again, promising companies have learned that without reimbursement, even the snazziest app is like a drug that can’t get a prescription – clinically interesting but commercially DOA.

Some, like Aidhere or Pear Therapeutics, ran out of cash waiting for the system to catch up (sifted.eu). Others pivoted and survived: Big Health, for instance, realized early that FDA approval alone wouldn’t guarantee revenue and instead invested in years of clinical trials to convince health systems and insurers. That bet paid off when the NHS in Scotland and giant insurers in the U.S. agreed to deploy its apps for insomnia and anxiety (politico.com). The digital mental health company was skeptical of “build it and they will pay” thinking, its chief medical officer noted, and focused on evidence – consequently, it became one of the first to crack national reimbursement deals (politico.com).

There are also those who sidestepped the quagmire entirely by changing the business model. Doctolib, a French unicorn, chose to sell scheduling software to doctors and clinics (who gladly pay a subscription for a service that makes their lives easier) rather than chase insurer reimbursement. Alan, another French startup, went even further – it became an insurer itself.

By offering a modern health insurance plan directly to companies and individuals, Alan controls the reimbursement question internally: it decides which digital services to cover as part of its packages, bypassing France’s slow public system. In Germany, some entrepreneurs are now bundling multiple DiGA-approved apps into one platform to offer insurers a one-stop solution, hoping this “roll-up” strategy can overcome the customer acquisition cost issue and entice VC funding (sifted.eus). The moral is that creativity in business model is as important as creativity in code. Healthtech founders must be as adept in regulatory strategy and health economics as they are in agile development.

For investors eyeing the space, the takeaway is a mix of caution and optimism. Digital health is not a quick flip; it’s a long game of aligning with entrenched systems or gradually reforming them. The graveyard of failed startups is littered with those who thought an app alone could “disrupt” healthcare, only to find themselves disrupted by the lack of reimbursement.

Yet, the overall trend is forward. Germany may revise DiGA to be more startup-friendly (e-prescriptions and usage-based pricing tweaks are on the table . France’s PECAN, while tough, at least signals that le gouvernement is willing to put money on the line for digital health, a huge shift from just a few years ago. The US, often a laggard in public healthcare innovation, ironically has a more mature private insurance market for digital health – employers and insurers have begun paying for things like remote diabetes coaching, because it saves them money on claims. If Congress eventually updates Medicare rules, the largest health program in the world could open its coffers to digital therapeutics, and that would be transformative.

In the interim, startups must survive by finding pockets of demand and payment – whether it’s a forward-thinking regional insurer, a self-insured employer, or a pharma company that sponsors the digital tool to support its drug. Those that manage to endure the lean years can be ready when the floodgates finally open. And they will, in time.

Healthcare’s cost pressures are not going away, and digital solutions, once proven, are too enticing for payers to ignore forever. The potential to prevent hospitalizations, manage chronic diseases better, and personalise care at scale will push systems to integrate digital tools, grudgingly or not. As one veteran noted, it’s a marathon, not a sprint (sifted.eu). For now, it requires stomach for bureaucracy, patience for clinical validation, and maybe a dash of humor to get through it all.

In healthcare, the only thing that moves fast is the virus. Startups aiming to “Uber-ize” healthcare often discover that the system treats them less like a nimble taxi and more like an uninvited guest without the proper documents. Reimbursement, dull as it sounds, is the gatekeeper of innovation. Those who court its favor – by learning the codes, gathering the evidence, and engaging the gatekeepers – have a shot at changing the world and making a profit. Those who don’t… well, they may end up as another cautionary tale cited in articles like this.

In the end, digital health innovators must embrace a paradox: to be revolutionary, you must first master the rules of the old regime. Navigate the labyrinth of payers and policies, and you might just prescribe the future. Fail to do so, and your disruptive app could join the graveyard of lost software on our phones – uninstalled, unremembered, and uncompensated. In other words, when it comes to healthcare, no matter how brilliant the cure, someone still has to cover the bill. And that, as ever, is where the real battle lies.