Why would you bother building a healthcare business?

It's a total pain in the ass!

I was asked this question recently and I’ve been reflecting on my answer, so I’m going to share why it can be painful, and how best to limit the pain as you build.

Managing the risk

So you're building in healthcare, if you get it wrong, you can damage people. Sometimes permanently or fatally. It’s high pressure and high risk depending on what you’re doing. That's why there’s so much regulation, red tape and a hesitance to embrace new concepts.

To reduce this pain, healthcare businesses MUST be built and validated with clinicians who have appropriate expertise and experience in the right area. Verity Barrington have a superstar team of clinical experts to help with this.

There also needs to be a relentless focus on quality and ethics. If you want to rush, build sloppy and fly by the seat of your pants until you sell out to private equity – you shouldn’t be in healthcare.

If you're doing things right, trying to maintain quality and ethics, how can we be absolutely sure that what you’ve built is safe and actually works? Well that’s where you need evidence. Appropriate, high quality, clinical data. Would I give my child a drug you invented in your garage and hadn’t tested? NO!!! So why would I do it with an app that claims to treat their mental health issue? Companies like Prova Health and Dr Jack Halligan are doing amazing work developing evidence for novel products.

You need to accept that you’ll likely need to comply with a plethora of regulations, and be familiar with them. There’s a lot... FDA, EUMDR, DTAC, DIGA, HIPAA, GDPR.

You’ll have acronyms coming out of your ears, so engage early with somebody who’s familiar with regulatory and compliance, you’ll cut out a whole load of pain by doing this. People like Rudolf Wagner are great on this front.

Ok, you’ve got a clinically validated product, clinical evidence and you’re compliant with ALL of the regulations. You're flying.

Well, not yet…

Who’s going to pay for it?

When you started building this company, you knew you wanted to solve a big healthcare challenge and you’ve done that. But your plan was to sell this to health systems, and maybe they don’t see enough ROI to pay for it.

Healthcare is a complex matrix of stakeholders and personas. Patients, families, clinicians, administrators, payors, shareholders and more. When you’re starting out, always think about each of these individually.

Who is your user? How will you help them solve their problems? Are there multiple user types – patients and clinicians, clinicians and administrators?

Who is your customer? This might not be your user. Many healthcare products are procured by somebody who isn’t the user and this is incredibly important.

Selling to individuals is an expensive foray, so companies often try to sell to health systems and payors. The value return that these organisations require for the investment, is often not considered as the business is initially developed.

Being conscious of these considerations from ideation phase is always helpful, as it allows you to build value into your product and generate health economic data as part of your evidence.

So now you’ve sorted the product and identified who we’re selling it to… You’re so close to revenue..

Let's sell it...

Go and pitch to a hospital system.

“We love your product, looks great and seems to solve a big problem we’ve had… Can it work alongside the systems we already use? And does it work easily within the clinician workflow?”

Did you remember to make this solution interoperable with key systems, and does it have a fantastic & efficient user experience?

YES… Amazing, well done team!

“Ok we’ll try it, we’d like to do a small pilot… Maybe 100 patients for 6-12 months… depending on how that goes, we might look to bring a business case to our executive and stand up a project to get this implemented within 3 years…”

Hmmm… how much cash do you have left at this point? Enough to last the 3 years?

Don’t forget that healthcare systems and payors are large enterprises, with multiple layers of approval and long procurement cycles. If you’re selling to these customers, you will need enough cash to stay the course. They also won’t want to start using your solution with real patients or clinicians, only to find out that your startup has fallen over as you waited for payment.

If you’re selling to these customers, you will need enough cash to stay the course. When you're raising cash, understand your time to revenue and how much runway you'll need. Keep your operation lean, minimise your burn rate and work with investors who are familiar with healthcare and understand the timelines.

Then, if you get this all right… Eventually, you’ve made it to revenue. You’re there, congratulations. Now you just have to scale it up, keep it high quality and ensure you hit all the growth targets you promised the investors along the way!!!

So is it worth it?

Yes, well I think so anyway!!

You started the journey to improve things, and by taking all of the steps we mentioned above, you should be solving a real meaningful problem for patients and clinicians.

What could be more purposeful than improving health outcomes, health equity and positively impacting on peoples lives?

If you’re successful, you’ll also be earning a slice of a $10trillion global spend. If you manage and scale properly, your business could make you very comfortable, repay your efforts and give your investors their expected return.

And of course you’ll be part of a phenomenal community of healthcare innovators who are trying to improve the world, one problem at a time.

In summary, if you know a problem that you can solve in healthcare and you’re interested in building a business, then go for it. However, make sure you’re aware of the challenges, build the best team around you, learn from others experience and engage early with experts who can help you limit the pain!

Also, don't forget this. It might not work out the first time around. Lots of businesses don't. Sometimes healthcare isn't ready, your problem isn't hurting them enough or you find it difficult to get the capital or team to make it fly. Don't give up, take lessons from every adventure.

Two important lessons to remember

• It's only a failure if you didn't learn anything from the experience.

• Only those who risk going too far, can possibly find out how far they can go.

Have fun on this journey and I’ll see you along the way. Connect with me on LinkedIn and DM me if you think I can help you, I’m always happy to connect with others on the same mission.

Now go change the world, you got this!

‍