Digital Health’s Great(er) Responsibility: Failing Without Failing Patients
When Healthcare Innovation Fails, Patients Shouldn’t Pay the Price
TL;DR: When digital health companies shut down, they must prioritize patients' clinical care and data security. The recent closure of Forward Health underscores the need for better protocols, shared responsibility among stakeholders, and adherence to healthcare’s ethical standards. Anything less than this is malpractice in the name of innovation.
The Rise and Fall of Digital Health Giants 🚀 ⏬
Over the past decade, digital health has been the darling of Silicon Valley, with investors throwing billions at startups promising to “disrupt” healthcare. Bold mission statements, flashy ads, and sleek user interfaces painted a picture of a healthcare utopia—better access, lower costs, improved outcomes, happier patients. But as the dust settles, it’s becoming clear that healthcare doesn’t follow tech’s usual rules. Turns out you can’t just A/B test your way out of a malpractice lawsuit. This isn’t e-commerce or social media; lives—not clicks—are on the line.
Forward Health, a high-profile company that sought to replace traditional primary care with a slick, tech-first model, recently shuttered its doors, leaving patients and providers in the lurch. While failure is often celebrated as a badge of honor in the startup world, there’s no “fail fast, fail often” in healthcare. Patients can’t pivot to another app overnight when the one they depend on for medication management or mental health support suddenly vanishes. Forward’s closure highlights a harsh truth: healthcare’s high ethical stakes make the sector uniquely unforgiving to sloppy closures.
And here’s the kicker: there are millions of tweets, thousands of books, and hundreds of courses focused on how to build, launch, and grow a healthcare delivery company. But there’s almost nothing to help founders, operators, and investors think through how to wind down a care delivery business responsibly. 🛑 It’s a blind spot that puts patients at risk, and we’re here to present a framework to fill that gap.
Why Healthcare Closures Are Different 🏥
When a healthcare startup fails, the ripple effects are seismic. A shuttered ride-share app might leave you stranded for a night; a collapsed digital health company might leave you stranded without care for months. That’s because healthcare operates at the intersection of regulation, ethics, and trust—three areas many founders are unprepared to navigate when the walls start closing in.
Here are the three most significant ways healthcare closures differ from other industries:
Patient Data Security: 🔒
Digital health companies don’t just hold purchase histories or user preferences—they hold medical records. The stakes of mishandling these records are sky-high, with risks ranging from HIPAA violations to irreversible loss of continuity in patient care. Data isn’t just a “nice-to-have” in healthcare—it’s a lifeline.
Continuity of Care: 🩺
Unlike other industries, healthcare doesn’t have the luxury of disruption. Patients can’t wait for new funding rounds to see their psychiatrist or refill their lifesaving prescriptions. Abrupt shutdowns risk creating serious gaps in care, particularly for vulnerable populations with chronic conditions or acute mental health needs. And no, an FAQ page doesn’t count as ‘continuity.’
Clinician Responsibility: 🤝
Clinicians working for these companies are often caught in the crossfire, left scrambling to inform patients of the next steps while wondering how to meet their own professional obligations. The fallout can damage their reputation and even their license if not appropriately handled.
Forward Health: A Cautionary Tale ⚠️
Forward Health’s recent implosion wasn’t the first digital health closure to leave patients and providers feeling burned, and sadly, it won’t be the last. But it serves as a stark reminder that when healthcare companies fail, their shortcomings don’t just show up on a balance sheet. They show up in missed appointments, unfilled prescriptions, and delayed treatments.
We’re not here to dunk on Forward specifically—building in healthcare is hard (as anyone who’s tried to navigate state-by-state medical regulations can tell you). But there’s a difference between “hard” and “negligent.” When companies like Forward collapse without clear plans for offboarding patients or transitioning care, it’s clear that the incentives in healthcare startups need recalibration. Patients are not just “users,” and care delivery is not just another SaaS model. 💔
The Way Forward: Best Practices for Ethical Closures
Healthcare startups need to bake responsibility into their DNA from day one to avoid the chaos of closures like Forward's. The time to think about exit strategies isn’t when you’ve got 30 days of runway left—it’s when you’re still hammering out your Series A pitch deck.
Here’s what ethical shutdowns should look like:
Data Safeguards: 📂
Patient records need to be treated like the sacred artifacts they are. Companies must establish partnerships with third-party custodians or repositories to ensure patients can access their data long after the company ceases operations. Bonus points if those partners are vetted for HIPAA compliance. Remember, there are also federal, state, and payor requirements related to safeguarding, storing, and making available patient records, even after the doors have closed on a shuttered practice.
Continuity of Care Plans: 📑
Every healthcare startup should have a “what if we fail?” playbook. This includes referral networks, clinician handoff protocols, and an established communication plan for notifying patients well before the lights go out. Anything less is a recipe for disaster. And no, emailing your patients, ‘Good luck out there!’ isn’t an appropriate plan.
Stakeholder Accountability: 🏦
Investors who loudly trumpet their healthcare wins at portfolio day must be just as visible when their companies falter. When things go south, a silent retreat isn’t just cowardly—it’s complicit. If you’re backing healthcare companies, the responsibility doesn’t end at the exit (or lack thereof). Particularly if those same investors were onstage six months ago talking about how they were ‘revolutionizing’ healthcare with their investment in and support for the supposedly revolutionary care delivery business.
Transparency and Communication: 📣
Abrupt closures make for splashy headlines but abysmal patient outcomes. Companies need to communicate openly with all stakeholders—patients, clinicians, and regulators—well in advance of shutting down. And again, a cryptic email the day before doesn’t count.
The Harsh Reality of Healthcare’s Unique Stakes
Founders often romanticize healthcare as “the last frontier” for tech disruption. But the truth is, healthcare has been around since long before the first pitch deck included the phrase “TAM of $4T.” It’s an industry built on trust, and that trust is hard-earned. When companies like Forward fail without proper planning, it erodes public faith in digital health and the entire ecosystem of healthcare innovation.
Here’s the unvarnished truth: if you can’t handle the responsibility that comes with delivering care, you have no business building in this space. Innovation doesn’t excuse irresponsibility. Healthcare isn’t just another sandbox to play in—it’s a field where missteps have real, sometimes life-threatening consequences.
A Call to Action for Founders, Investors, and Regulators 📢
Founders, if you’re in this space, ask yourself the hard questions now:
What happens to your patients if your funding dries up?
What’s your plan to ensure care continuity if things go south?
Investors, it’s time to do better diligence—not just on the potential upside but on the downside, too. Do the companies you back have plans to offboard patients ethically? And regulators, maybe it’s time to consider mandating “closure protocols” for digital health companies, just like hospitals and traditional providers already have.
The closure of Forward Health was a wake-up call, and we can only hope the industry is paying attention. In healthcare, failure is inevitable, but failure to protect patients isn’t just bad business; it’s unforgivable. 🚨
Two Questions:
Should founders in healthcare be required to submit a “patient protection plan” when raising capital?
How do we (society) hold investors more accountable when their companies fail to manage care continuity responsibly? And how do we uplift those founders and investors who did right by patients when winding down a business? Do you have examples you can share of folks who got this very right?
✌🏽 A + A
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Great post! I always read about data, and data governance is a common topic. However, I’ve never seen a discussion like this. Here in Brazil, there is a law about data protection, but it doesn’t have a section about what to do with customers’ data when a company closes. In healthcare, where historical data is important, special care is required. Well, maybe saving everything on the blockchain is the answer.