In the face of the Covid-19 pandemic, the massive digital health investing trend is emerging. A variety of business models, including telehealth, tech-enabled primary care, digital pharmacies, and fitness benefits, are experiencing a surge in funding deals. This increasing financing of digital health companies represents the public demand to shape a new future for the industry. Besides, employment in healthcare occupations in the US is forecasted to grow 15 percent within the next 10 years. It all provides fertile ground for healthcare startups to augment the global healthcare landscape through digital transformation.
However, healthcare remains a challenging industry based on longtime practices and assumptions. Aiming to transform everything from patient care to organizational efficiencies, new-generation startups will need a roadmap explaining the steps to take on the way to success. In this article, we are going to discuss the general must-do’s & don’ts for entrepreneurs in a vastly changed healthcare landscape.
Best practices for healthcare startups
Many breakthrough clinical discoveries come from state hospitals, health systems, affiliated universities, and labs. However, this is not a cast-iron rule. Startup companies with little or no health care experience have the value to bring to health systems that already have remarkable research, clinical and operational assets.
The digital health startups’ biggest asset is their mindset. It is also sometimes referred to as a startup mentality. It makes them question everything, imagine nearly anything as if there were no constraints, and maintain an increased focus on delivering value to the customers. By bringing this to the table, medical startups put themselves in a position where they can make big changes. To facilitate this process, we offer to consider the following best practices aimed at making the most of the startup mentality:
Focus on creating the best patient experience on your app. Today, healthcare startups collectively create the culture catalyzing a new way of thinking. It demands certain major mindset shifts. From one-size-fits-all to personalized experiences, from organizational to customer-centered thinking – successful medical startups choose collaboration over competition. Not necessarily there is a sort of tech novelty that a company offers. The innovation that is delivered along with a great digital healthcare customer experience is also generally easier for a business to market. It includes the transition to a value-based care model and covers transformations of online and mobile interfaces, such as personalized features, intuitive navigation, and designs that are comfy and pleasant to look at and that can strongly support the content on the page.
One way or another, there is a consumer-driven demand for a better digital experience. As a result, against a backdrop of increasing competition, telehealth services and related resources providers cannot but keep searching for ways to support improved patient outcomes and more satisfactory digital health experiences.
Have a result-oriented mindset. A tech startup management style should revolve around the idea of getting customers the results they want. For some healthcare app users, these results mean that their well-being and everyday life are getting better. Yet, getting a person from where they are to where they want to be with their health is a big deal. Aiming to create a simple app for solving that big problem is a noble aspiration, but also it requires a lot of effort. Besides, the undertaking is more likely to turn out successful when fulfilled by the team with the following skillset:
Goal-setting skills. Business goal-setting is vital, especially for a startup. Not only is it about marketing and financial goals, but more importantly, it is about development goals – how you want to develop your business and your product so that it could eventually deliver value to users. A start-up always has to have a plan consisting of far-reaching and immediate specific and measurable goals. If this goal-setting process is efficient enough, it will serve as a basis for further plan development and execution.
Leadership and motivational skills. Leadership and motivation are all about managing people. Motivating employees in a startup environment can, at one point, become more challenging. For instance, being close to the founders and working alongside them tends to motivate and inspire young staff. But as the company grows, it gets more difficult to keep the enthusiasm up. Motivational programs can make a difference. The sense of employees’ autonomy, competency growth, and relatedness must be at the core of those programs.
Strategic-thinking skills. Although business goal-setting is critical for a start-up, strategic-thinking skills are the ones that will allow setting and achieving those goals wisely. Therefore, entrepreneurs should continuously work on sharpening and cultivating them. In essence, strategic thinking makes it possible to arrange currently or potentially available resources in such a way to be successful in the future. Sometimes entrepreneurs can get excited over something they think is a good business idea. Then, strategic thinking is what will prevent them from failing or even starting the “not-so-good” business.
Stay on-time and on-budget. It will be no exaggeration to say that most start-up companies will find it challenging. Even though healthcare startups are most often trying to introduce simple solutions to complex problems, sometimes they can end up delivering large-scale IT projects that would cost much more than planned. So, a startup must be capable of aligning IT and business value and calculating realistic project timelines from day one. Of course, things can go wrong (or should we say take an unexpected turn) anytime. However, the budget and schedule overruns must never threaten the existence of the company. Besides, the longer a project is scheduled to last, the more likely it is to run over time and budget. So, basically, it comes down to setting clear expectations for project implementation. Focus on managing strategy, hire talent qualified to do the job, align the team’s incentives with the overall business goals, and deliver in an agile way.
Common mistakes healthcare start-ups make
Best practices are great. They are like sincere recommendations aimed at giving the recipients clear instructions on what to do to get what they want. However, oftentimes, it makes more sense to look at the matter the other way around and consider the most common mistakes that people are likely to make under certain circumstances. We will give you five indirect proofs that will better illustrate how a medical startup can increase its chances for success.
1. Lack of competence and industry expertise
Startup clusters and innovation promotion is impossible in the healthcare industry when the stakeholders and other project team members have a poor understanding of the healthcare ecosystem.
All the key members of a medical project team must understand everything about the product and market where this product is going to be used. Technology-driven innovation in healthcare will be in a position to enable the delivery of more convenient and individualized care for patients only if the team standing behind this innovation has the industry expertise. Skills, competencies, and expertise possessed by the team cannot be only those related to tech.
Instead, it is a good idea to consolidate the effort taking the best of the two worlds. Involve both experts in a medical field your product belongs in and tech-savvy people who will find clues for the perfect embodiment of your idea. Without in-depth industry knowledge, no technical proficiency is valuable for a medical startup aiming to succeed. If you want to enable today’s healthcare providers to benefit from technological innovations and allow them to take a more thoughtful approach to connecting with their patients, make sure you have healthcare professionals enjoying a high level of clinical expertise on board.
2. Lack of business analysis
Focusing on the product’s operational excellence is a good aspiration. However, in a medical startup, you cannot underestimate the power of research. There is hardly an app that can be considered great both in and outside the context of its usage.
In healthcare, creating products and services that try to be everything to everyone sounds tempting. But it is barely possible, and in some cases, such undertakings end up being nothing to no one. One has to understand the actual market needs and what competitors have come up with to meet them.
Such research data will eventually turn out to be too costly to disregard. Healthcare startups are required to amass real-life evidence and data as it is the direct pathway to setting and achieving the right milestones for your digital health startup.
Competitor research. Digital healthcare is day by day, becoming a more competitive field for startups to conquer. Of course, competition in the healthcare industry, just like in any other industry, is a good thing for end-users. It makes the prices for the services delivered on a healthcare app go down and encourages companies to improve their product quality, enhance innovation, and work harder on improving clinical outcomes for patients.
When conducting competitor research, the first thing to consider is what category you fall into. Thus, CB Insights suggested the following classification:
- Clinical trials
- Clinical intelligence
- Screening and diagnostics
- Virtual care delivery
- Therapeutics and disease management
- Online-offline primary and urgent care
- Online-offline specialty care
- Health plans and benefits management
- Drug discoveries
- Pharma supply chain
- Administrative automation
- Real-world evidence
Once you decide what particular field your business belongs to, it gets easier to assess tech novelty, corresponding market strength, and competitive landscape. Identifying competitors is not simple, but it is even more challenging to get insights deep enough for you to act upon. The information on your competitive analysis report should relate to competitors’ value proposition, pricing models, the features of their products compared to yours, their branding, and customer perception of their product. Also, do not forget about the SWOT analysis (strengths, weaknesses, opportunities, and threats.) Then, you will be better prepared to conclude where your fit in the competitive landscape is.
User research. The company's goals and users' goals have to be aligned. User research is your certain path to having a better understanding of your target audience. For a health tech startup company, the user is king. So, don’t be afraid to involve not only your colleagues but also real potential users outside of your direct team during the research process. Otherwise, you risk missing out on important information resulting from a broader buy-in. Investing in digital health means investing in users’ well-being. Make sure you know what groups of people are your target audience and that your medical app addresses their aches and pains.
3. Staying in stealth for too long
What do we mean by stealth in this particular case? In short, we refer to postponing the release for too long. Although, as we earlier said, thorough research is vital for project success, one should not wait until the product is “perfect.” The consequences of project drift can be too disruptive to overcome. So, a startup, and especially a health tech startup, should, by all means, avoid it.
In order to not let your investors and other stakeholders down, we suggest you should build an MVP for your healthcare project first. If a medical application is expected to be too complex, it can significantly affect the project timeline and have even more far-reaching negative consequences. Alternatively, designing a minimum viable product that validates the idea is a great place to start.
If the project seems impossible to complete fully before releasing it to the public, it might be helpful to consider delivering it in stages. Find your definition of done for each step. Establish what has to be completed for one stage to be considered finished and what needs to remain in place to allow the next ones to progress. Taking an agile approach to software development might support these efforts. Successful delivery at scale is easier to achieve when agile processes replace traditional ones.
In such a way, you will be much less likely to end up moving too far, having taken the wrong turn once in your project development. This approach helps stakeholders to revisit fundamental questions about the purpose and goals of the project regularly. Then, the team will be able to redefine the anticipated outcomes or quality requirements and set a new timeline or budget when this change is still harmless for the business.
See also: What is an MVP in software development?
4. Lack of a market strategy
How you enter the market is as important as when you do it. You should plan for product launch and have a detailed marketing and advertising strategy in place. Digital health is supposed to be the savior of the health care system, so medical startuppers should persuade not only investors but also users that it is really so.
Marketing mistakes are the biggest killers. They can vary from the lack of product-market fit we discussed earlier to the lack of strategy for elevating the brand in the marketplace. Let’s now focus on the latter part and define what can disrupt your go-to-market approach.
Failure to properly articulate your unique value proposition
An unclear business model and a poorly defined value proposition can be a problem for a startup healthcare company. How is your solution better than others in the same niche? Is it more reliable and secure? How much is it cheaper than the standard of care people are used to? If it is not, then explain why. You must have answers to all possible questions concerning your product. And you’d better be sure they showcase your digital health solution in the best light possible. Be ready to communicate your unique value proposition so that your audience would be convinced that your solution could improve healthcare economics for each of them.
Once you support your product with a decent value proposition, you inevitably face another obstacle. The market is competitive. Lesson learned. Moreover, the burden of proof that you’re going to deliver that value has quite obviously become high, too.
Not having an end-to-end marketing strategy
A common mistake that many startups tend to make is thinking about marketing efforts in a linear manner and perceiving them as a consequence of milestones that must be achieved one by one. A marketing strategy, however, is not a racing line. It is a comprehensive campaign covering a broad range of activities, from medical startup positioning to a detailed communications plan and a diversified digital marketing program. A startup company needs to administer its budget in such a way so that it would have enough funding left on generating sufficient evidence to convince customers to buy their product or service. Therefore, the project team has to take care of that in the early stages – plan the efforts and allocate funds.
5. Staying inside your bubble
A health tech startup should aim to help as many people in need of quality healthcare services as possible. It has to be a product that would please the internal circle of stakeholders and – even more importantly – become a lifesaver for real users. A medical startup must focus on making a product bring both clinical and commercial value.
First of all, one should take a well-planned, organized approach to stakeholder outreach:
Seek out individuals or organizations that presumably can be affected by company operations and embark on an open and honest dialogue with these prospect users.
Build and nurture relationships with local and state authorities, community organizations, and other professional groups.
Provide the mentioned stakeholders with accurate information about the company’s products, processes, plans, and risks.
Then, when the stakeholders are there, find out what needs are overlooked and require addressing. An unmet need is an opportunity for a business to approach an underserved market and obtain market exclusivity. However, if you stay inside your bubble, you will never learn about those insights. Always align your focus with what the market truly needs and consistently make sure your product keeps achieving the intended results. It will help avoid making wrong assumptions about the demand and potential use cases for the technology being implemented. Otherwise, you should move on to not let unexpected delays affect your business.
It takes a lot of effort for health care startups to succeed. Although they have been booming recently, the population grows used to new-generation technologies and keeps demanding more and better care. A medical startup is expected to grow exponentially, bringing innovative technologies, products & services to competitive markets. That is too much to handle. However, when you are informed about the best practices to follow and common mistakes to avoid, this landscape becomes much easier to navigate.
At Vilmate, we face startup pitfalls and hidden struggles every day. With that, we are proud to admit that our experience has made us prepared to address all the above challenges successfully, and our expertise has equipped us well to handle projects of varying complexity. If your health tech startup needs a strong team of seasoned software engineers, give us a call, and let’s get talking!
© 2020, Vilmate LLC
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