Managing performance in digital health: a study of knowledge integration and value creation

This study investigates the divergent performance outcomes of two digital health business models in the clear aligner market. It contributes to the healthcare performance management literature by proposing the Business Model-Institutional Strategy (BM-IS) Fit framework, explaining how a firm's approach to knowledge integration and value creation determines its success.

This study employs a qualitative-dominant mixed-methods approach. The core analysis is a longitudinal comparative case study (2014-2023) of SmileDirectClub (SDC) and Align Technology, supplemented by an exploratory consumer survey (N = 277) and illustrative professional interviews (N = 5).

A firm's business model dictates its approach to knowledge integration. Align's platform model integrated professional knowledge, creating a cooperative strategy that built an "institutional moat" and generated ecosystem-wide value. In contrast, SDC's pipeline model disintegrated professional knowledge from the care process, creating a "trust vacuum" that destroyed value and led to performance failure, despite apparent cost advantages. Survey evidence from a naive market and professional interviews further show that models lacking direct clinical oversight face structural resistance and struggle to cross the legitimacy threshold in high-trust healthcare systems.

The paper's primary contribution is the BM-IS Fit framework, which reconceptualizes business model fit as a challenge of knowledge integration across institutional boundaries. It offers the "legitimacy threshold" as a critical, non-financial performance metric for digital health. It also provides a new lens for managing digital health ventures by linking the removal of trusted intermediaries to value destruction and performance failure.