The healthcare startup sector should be one of the most dynamic and innovative in the world. After all, what is more important than people’s health and wellbeing? startups
Unfortunately, though, that’s not how the sector operates. Without digital technology, it would be stuck in a time warp, unable to move forward.
For companies entering the sector, this is a problem. Usually, if you have a good idea, you can go in and fundamentally disrupt an industry and change it for the better. But in medicine, that’s not always the case. In fact, getting an idea off the ground is challenging.
In light of this, healthcare startups often fail. They’re unable to make real in-roads in their target markets. Mostly, they wind up having to shut down before patients can benefit from their ideas. But why? What’s causing this general failure? And how can you avoid it? Here’s a look at common reasons why healthcare startups fail.
Remaining in Stealth Mode for too Long
Many health startup companies operate in stealth mode, developing their technologies in silence so as not to alert others to what they’re doing. After all, once they finally complete the technology, they want to make sure they get the rewards.
Remaining in stealth mode for too long, however, isn’t a good idea. While it helps protect your ideas, it reduces the public’s exposure to your brand, making you less well known.
Stealth mode is all about striking a balance. On the one hand, you want to protect your intellectual property. And on the other, you need to promote your brand.
The best approach is to lock down your IP as quickly as you can and then start marketing. Often, you’ll be able to do this immediately, provided you have patents or specialists in-house. If not, you should work to keep your knowledge secret as quickly as you can. Once you do that, you’re free to talk more openly about what you’re doing.
Assuming Direct-To-Consumer Model is Best
Selling healthcare products directly to consumers seems simple enough. However, once you start doing it, you soon realize that it is more complicated than you imagined. Often, you have to gain regulatory approval. And even if you get it, there will still be gatekeepers, preventing you from disseminating your products on the market as you’d like.
Often going directly to medical establishments provides you with a better channel to get your goods to market. Unlike consumers, they’re usually willing to become early adopters, trialing products, and seeing whether they work in the clinic. A lot of healthcare companies, therefore, market to doctors for device placement in the office. Then, once they have general acceptance, they move onto the consumer market.
Building a Product That Doesn’t Fit into Existing Workflows
Medical establishments have a strict set of protocols they follow while working. And, as an outside company, there’s often relatively little you can do about them. You can try to educate them on using better methods, but that’s not always possible. If they don’t see a need to change, they won’t.
The trick is to build a product that fits into existing workflows. You want something that improves medics’ lives without asking them to do anything radically different.
Failing to Go Digital Quickly
Not all health companies are in the business of building new products and services from scratch. Some are about serving patients directly.
In the past, providers used pen and paper to manage all their admin. Later they moved over to word processing applications and spreadsheets. Even so, their methods were fragile and prone to error.
Today, many healthcare companies are toying with the idea of digital transformation. The idea is to use digital technologies to build a fundamentally new approach to serving patients. It’s not just about making things digital. The goal is to build a new framework from the ground up.
For instance, there are now many types of electronic medical records software that makes it easier to control patient data. These systems don’t just digitize existing files. Instead, they enhance security, make them easier to share, and allow organizations to better comply with the law.
Digitizing your efforts can yield massive efficiencies. And if you can keep your expenses down, you’re much more likely to be profitable in the future.
Dedicating all your Resources to Pilot Programs
Pilot programs seem like a good idea. You find a partner willing to host your product and service and then see whether they like it. Ultimately, you hope that they’ll wind up buying your services full-time.
Pilots, though, are notoriously flaky. You can put an enormous amount of effort into them, only to discover that you can’t really add value in the way you hoped.
Hammering out post-pilot contract details with potential customers is a much better approach. Instead of going in with nothing but hoping that you’ll get more business, these agreements make things more certain for you. Ask testers for specific performance characteristics that would give them sufficient reason to purchase your products and services. Make it concrete. Then, when the pilot finishes, you have compelling reasons to suggest that your partner pays full price.
Living in an Echo Chamber of Ideas
Many companies work well because they’re full of like-minded people all on a mission to achieve the same thing. Sometimes, though, this “sameness” can work against you.
No matter how brilliantly intelligent you are, you inevitably internalize aspects of the culture around you. Eventually, you start thinking like your peers, without even realizing that that’s what you’re doing. You take on their assumptions automatically, limiting the scope of your thinking.
It’s essential not to fall into this trap – it’s a road to the dark side. Never stepping out and exploring new ideas is a recipe for disaster. You’ll merrily go about your business and eventually get blindsided in a way you never expected.
So what’s the solution to this problem?
Most companies get around it by changing their hiring practices. Instead of just choosing people like you, put strategies in place to make sure that you get a diversity of opinions and personalities. Ideally, you want people who are going to critique your assumptions and methods, letting you know if you’re on the right track or not. Living in an echo chamber will weaken you and allow your competitors to gain the upper hand.
Failing to Collect the Right Evidence
When you run a healthcare startup, you need to track its progress like a hawk. Often founders will talk about having an “evidence generation strategy” in place that lets them see where they are relative to various milestones. The goal is to ensure that the company is still making progress as the months pass.
The difficulty here, though, is choosing metrics that matter. Companies early in the cycle don’t care about profits or revenue – what matters most to them is raising capital and regulatory clearance. Firms in the latter stages are typically more focused on making sufficient money for their next expansion move.
Remember, you need to measure the success of your company on a variety of metrics. Achieving regulatory milestones is only part of the story. Many firms then go on to run out of money before they hit the market. And that’s a problem.
Health startups fail all the time, but you don’t have to. By avoiding the mistakes outlined here, you can make your business a success.