With healthcare being the largest employer in the U.S. and projected to reach 20% of national GDP in the coming years, the sector is ripe with startups looking to make a stake. However, digital health startups are struggling, even with an influx of investment cash, as a result of the current market, according to Justin Barad, MD, co-founder of surgical training platform Osso VR.

Barad penned an article for TechCrunch on the market struggles healthcare startups currently face.

Part of the problem may be that tech companies are dipping their toes into healthcare using the tradition tech model: producing a product then finding uses for it. The same formula doesn’t work out in the more complex world of healthcare. Instead, the healthcare sector is more rewarding of needs-based innovations, according to Barad.

Despite this approach, the current ecosystem has “stunted” innovation, Barad argued, who laid out two “crushing challenges” to healthcare startups:

Institutional policies and hierarchical systems that maximize ownership and returns over innovation

Early-stage tech companies are misunderstood by the healthcare industry

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