All you need to know before launching a Health-tech venture: Part 2

The United States, compared to other affluent nations, spends a disproportionate amount of resources on healthcare with disappointing results. Distorted market signals and complex insurance rules lead to providers burdened by excessive paperwork, frustrated patients and massive inefficiencies. To combat these issues, entrepreneurs are increasingly applying information technology to healthcare treatment, monitoring, equipment, and service delivery, resulting in a sector called digital health or health-tech. These technologies house the potential to substantially alter the efficiency and quality of healthcare. However, when faced with an aging and unhealthy population, complicated paperwork, and a highly inefficient health care delivery system, how do you steer the change by embedding and distributing this technology across the country and perhaps, globally?

So how do you tackle these issues?

  1. Acknowledge this is a financial, as well as a political problem. The truth is, a system like this can only be ripe for disruption when the hospital system comes together to put their patients first. The traditional primary care is setting itself up to lose unless it reinvents itself by making itself markedly more patient-centric and convenient. And, online scheduling isn’t an innovation. Enough companies have been doing this for over a decade. Change is inevitable. Primary care can lead the change if its open to innovation. This way their leadership gets to define the future they believe is best.
  2. Deliver a service that people actually want. Ordinary people don’t use video to talk to strangers. Most of us don’t even make use of real-time conversations. Pay attention to what usual tech adopters are comfortable embracing. By making people engage in a manner they’ve repeatedly refused to do, you're fighting a losing battle.
  3. Reframe the problem. When you stop treating digital health as a technology problem and start looking at it as a service problem, everyone wins. Merely owning an espresso machine doesn’t mean you're a step away from running a Starbucks. Spend a few of those millions you've put aside for technology on marketing that could transform consumer behavior. The behavior you might be aiming for could be programming consumers to be comfortable with getting care online before opting for in-person care. Other industries have led the way on how to approach this reprogramming. Take a good look at the food delivery or cab booking services. You don’t have to staff and train reluctant doctors. Instead, broach a new conversation with untethered customers. The only people who win, when you treat digital health as a technology, are the CEOs of fancy gadget companies that make no real change on the ground level.
  4. Build a different relationship with customers. Most of us think of hospitals as an unfriendly building with that disinfectant odor and memories of grandpa’s last days. Take Microsoft Office, for instance. How do you look at it? An outdated but still reliable tool. What about an XBox? Now an Xbox is a fun, cool gadget that offers us an experience that we enjoy. Both are part of the Microsoft brand. Too many hospitals have launched services like video visits and such. How much success has that gotten them? Not much. You’re trying to appeal to the early adopters who are looking for a hip, new experience. The repackaged, polished old ways, sold as innovative won't cut it anymore. Look at this as an opportunity to build a new promise, a new brand, and connect with the younger generation who are going to be the primary source of your future revenue. This building of a fancy new brand is for sure not coming from the IT department. So invest those dollars in marketing, not IT.
  5. Begin working on your data strategy early on. Your strongest competitive advantage in the future is likely going to be unique data sets. Put some thought into how you can “digest” the data into meaningful insights that'll help drive the value of the data, be it proprietary biological associations, stratified patient cohorts for clinical trials, or something else. Consider who the “users” of that data (perhaps pharma) will be and start a conversation with them now so that they can start guiding you on what data they need. Such early insights will make you think about the data collection options available today.
  6. You’ll find yourself joining hands with the corporate and government big guys, hospitals, pharmaceutical companies, insurers, and regulators if you want to see success in the healthcare industry. No startup can function as an island in this industry.
  7. Merely servicing the existing industry structure, a little better, has not been the path to success. In reality, it has given birth to a bunch of startups and products designed to serve an outdated, inflexible market that continues to grow in power and size, ultimately, only changing the system incrementally. The most exciting health tech companies, rather than trying to improve them, will actively discard convention by ignoring the parts of healthcare that have become anachronistic. The seeds of this difference have been sown in a handful of new companies in the last couple of years. They are making healthcare markets more efficient by painstakingly taking relationships from incumbents and winning with deflation.

What is the future of Health Tech?

Health Tech is in an enviable position as its consumer and financial backing promises a continued and steady growth over the coming years. The promise of technology to update and innovate has come at a time when healthcare is having to respond to the rising demand. The health-tech revolution is in a strong position to not only build solutions but also deliver them. Health-tech companies are no longer in their infancy. Most are already generating significant returns to both broader venture capital firms and specialist investors, signaling that the sector is moving from proof-of-concept to higher rates of implementation and expansion. This change will demand far more than individual genius. The ability of the market to find innovative solutions, along with the empathy of the policymakers will define our future.

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