Healthcare is Hard — Part 1

I’ve learned a lot of lessons in the last 5 years, some lessons harder than others. But my hope is that for those looking to build something in health care, you will find some value in my stories and more importantly in the hardest lessons I’ve learned (for there are many).

While sourcing material for this post, I found a great article by Thomas Goetz from 2017 titled “I Tried to Revolutionize Health Care. Here’s Why It’s So Hard to Crack”. This article really resonated with me because like Thomas, I had launched my first startup in 2013/2014 and little did I know that I would be part of an epidemic of startups seeking to change healthcare. Investors and entrepreneurs to date still share a great enthusiasm for bringing technology to health care, to unleash a wave of transformation that can improve hospitals, health insurers, and drug companies. And I agree with Goetz, the hope was that “digital health” would upend health care the way tech had so many industries. But the reality is that healthcare is just different and healthcare is really hard.

Below are a few tips that I find particularly helpful. These are common themes that I find myself bringing up especially when talking to people who are looking to start up a new company in healthcare.

The consumer is NOT the customer

The most common misconception is that the customer will pay for your innovation. Let me be clear, I have helped build pretty successful direct-to-consumer brands, however a large percentage of digital health startups don’t realize that healthcare consumers (patients) rarely pay for things in healthcare. It’s usually health insurances or employers that carry that burden. This is why it is super important for you to clearly understand that consumers will NOT pay for anything they think their insurance should cover. If after reading this tip you aren’t sure who will pay, figure it out quickly or you are doomed.

Experience matters

One of the things I hear a lot is that disruption in healthcare is only going to come from the outside. I could not disagree more. Big venture-backed startups like this one, have come to realize that healthcare experience matters.

“To add increasing value to our members’ lives and continue building a sustainable business, we need to ensure that our focus, the skills of our teams and our costs structure match our mission.”

Often, the best talent in healthcare is frustrated working for big healthcare corporations in which they play a small role and are slowed by bureaucracy. Targeting these industry veterans allows startups to rapidly level up the expertise of the team. It’s these team members that are super passionate about changing the system and fixing the problems they’ve experienced and encountered firsthand. Find them and pair them up with a team of individuals that have fresh perspectives and vision.

Minimum viable products…yeah right

MVPs in health care just do not exist. Yeah, I’m sure there are a few exceptions but in the end healthcare is a high barrier, high stakes industry. There is a higher degree of sensitivity for things that get in the way of the patient/provider relationship and experience. Healthcare is risk adverse when it comes to adopting new technology therefore utility trumps usability and what you introduce has to work. You have to be very mindful about your product. Getting it wrong impacts not only your customer but their patients as well.

True innovation takes time

Let your idea cook. Your idea needs to be tied together with many other ideas that you may already have or may soon have. While your idea by itself might be good, it will be ten times better when integrated with other important concepts that may come from dramatically different experiences, industries, and domains. In healthcare you have to see how existing or new regulatory and compliance (I’ll cover this in my next post) requirements impact your idea. And don’t build your product in a vacuum. Be a student of healthcare and don’t create a solution for a problem you are yet to identify.

Some final thoughts

These lessons don’t apply to everything and they sure aren’t intended to discourage anyone from pursuing their ideas. I’ve worked in healthcare for almost 17 years and I’ve spent the last 5 helping startups get off the ground. My experiences have taught me a lot but I also still have a lot to learn. If you have any feedback or questions find me on Twitter.