Why Digital Health Companies Die With Pilots But No Revenue
Welcome to Episode 4 of the Ardexia Podcast where we speak to leaders, clinicians and advocates for better healthcare. This week, we talk to Dr. Raihan Faroqui, an internal medicine physician and repeat early-stage startup operator who has closed $30M+ in enterprise deals and helped build four startups from zero to one.
Health tech is filled with companies that died with impressive pilot numbers but zero revenue. Beautiful case studies. Glowing feedback from physicians. No actual contracts.
Dr. Raihan Faroqui has been in the first 2-10 hires at four early-stage startups and now advises companies through Connectify Health. If anyone knows why pilots fail to convert to revenue, it's him.
The conversation revealed something critical: the companies that succeed don't think about pilots. They think about partnerships with clear paths to revenue-generating contracts from day one.
The Three Letters That Matter: ROI
"ROI are my favorite three letters," Dr. Faroqui explained. "There's financial ROI and clinical ROI. And telling the story of both to buyers who have budget AND to frontline users—that alignment is oftentimes really tough to understand."
This is where most companies fail. They prove clinical value. Maybe patients love it. Maybe physicians find it useful. But they can't translate that into financial ROI that makes a CFO or hospital executive commit.
The companies that close enterprise deals understand both from the first conversation. Not the tenth call. Not after the pilot. The first call.
Why "Pilot" Sets You Up for Failure
"Health tech is filled with thousands of companies who've died because they had a ton of pilots that never converted to revenue-generating contracts. That's just a fact."
Dr. Faroqui prefers the word "partnership" with crawl-walk-run frameworks and clear year-one, year-two, year-three milestones.
"The first mistake vendors make is saying, 'We just want to get our foot in the door and that's why we're going to pilot.' There's this assumption of asymmetry—'I'm just this tiny startup and there's this massive enterprise'—and that sets up vendors for failure over and over."
Companies approach from weakness, grateful for any attention. They accept vague pilot agreements to "prove value." The pilot ends. Nothing happens.
The Questions Nobody's Asking
His advice for first conversations: "You gotta be like the CIA. Get intel on the first call. Don't talk, just ask questions. Ask a ton of really smart questions and the other side will tell you what they're looking for, how much they can spend, what they can implement today."
But that's not what happens. "Folks are not curious. They're coming at conversations with their own bias because there's pressure to sell, sell, sell. For me it's always about ask, ask, ask. Get in the other person's shoes."
The questions companies should ask:
What are your top three problems?
What are your partnership priorities this year?
What's your budget?
What can you implement this quarter?
"Don't pitch. Don't sell. Be really consultative and they'll tell you."
The AI Cycle: What's Actually Different
We discussed whether the current AI bubble differs from previous digital health cycles.
The fundamentals haven't changed. Hospitals still have the same problems. "If anything, they've gotten worse."
What changed: time to revenue and time to value.
"Five or eight years ago, the time to ROI was four months, nine months. Now it's really quick."
Example: AI-powered revenue cycle management. Implement it. See ROI in less than a month. You're convinced it works.
AI tools in administrative and financial areas skip clinical ROI debates and show immediate P&L impact.
Where AI Is Actually Getting Adopted
Dr. Faroqui gave specific examples:
Voice AI call centers - Companies like Assort, Elise AI, Hello Patient have raised $300-500M collectively solving front desk chaos. "You immediately see booking improve, NPS scores go up. A month or two."
AI-powered RCM - Fastest time to ROI. "Talk to any CFO, they're like, 'We get paid quicker. Claims are adjudicated faster.'"
Both solve operational problems with measurable financial impact.
What Investors Actually Want Now
The seed-to-Series A graduation rate hit 5-7% last year—lowest ever. (Compare to 30% in 2021.)
What investors want: "Being able to tell that story of how this will be a $100M, $500M ARR company. What distribution levers you're building out. The best products don't win. You'll build it and buyers will not come."
This generation understands distribution. "Eight years ago it was 'let's build something and see if somebody wants to buy it.' That's gone."
Now: Team, TAM, Timing, Traction, Distribution strategy.
Either greenfield white space or most customers early. Those are the two realities.
The End of Life Care Case Study
At Guaranteed Health, Dr. Faroqui's team identified three problems organizations have budget to solve now:
Clinical capture - Identify hospice-eligible patients earlier
Chart review efficiency - AI cuts review time by 25%
Revenue capture - Appropriate length of stay, reducing missed referrals
These aren't "nice to have" problems. They're P&L problems with budget allocation. "Marrying clinical and financial ROI—we've gotten great traction."
The Bottom Line for Digital Health Companies
Dr. Faroqui's advice for early-stage founders: Check your own bias.
"Every builder thinks they know what people want to buy. That's passion or experience, which is great. But become a scientist. Become objective."
His prescription:
Survey 20-50 buyers AND users
Gather actual data
Ask: Will somebody buy this?
How much will they pay?
What KPIs prove it works?
"That exercise oftentimes doesn't happen. Many passionate entrepreneurs have anecdotal data but are less scientific."
Three principles for converting pilots to revenue:
Stop Saying "Pilot" - Signals weakness. Start with partnership frameworks with clear revenue paths.
Lead With Questions - Understand buyer problems, budget, and timeline before demoing your product.
Time to ROI Is Everything - Tools winning show ROI in weeks, not months. They solve operational and financial problems with measurable impact.
The obvious things are the ones most companies skip. And that's why they die with impressive pilot numbers but zero revenue.
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Dr. Aditi Joshi is the CEO of Ardexia and host of the Ardexia podcast. She's an emergency physician who has built multiple digital health programs across three continents and specializes in turning failed digital health implementations into measurable clinical and financial success.