Ideating in Healthcare- breaking it down to build back up

Ideating in Healthcare- breaking it down to build back up

Healthcare has the reputation of being the space with the most potential for disruption from software, yet it is a system resistant to change. The possibilities for applications of both pure play software and AI can be dizzying, but the bottleneck of tech adoption healthcare lies not in tech itself but the structural resistance to adoption and complex relationships of the system. Specifically, In healthcare, past the surface level, intricacies of relationships in the system make it hard to understand and know where to start.

Additionally, whereas traditional tech startups have the attitude of knowing what your customers want before they do but healthcare favors more intentional ideating. The adage of “ move fast and break things” don’t necessarily map well onto a system that is culturally and structurally sclerotic.?

So, how would a founder looking to build in healthcare and AI even begin to search through spaces available and tease out “great” ideas that are potentially venture backable? Lateral thinking from other fields’ frameworks can help build unique approaches –? One way to look through the healthcare landscape is the explore-exploit algorithm. The framework is borrowed from an algorithmic framework in computer science used to parse through large information sets and decide next recommendations (your Facebook and Youtube feed uses it!).?

The iterative process of exploring new ideas and exploiting tried and tested spaces with known healthcare constraints can be used to look for ideas. Below we walk through a brief example of what one iteration may look like lightly applied to the healthcare system:

Broad, surface-level overview of pain points for each players as a way to look for AI and software opportunities in healthcare. This is a high level view of healthcare player relationships as a starting point.


Exploring top of the funnel – finding white spaces.?

We commonly hear that in building and ideating in healthcare, the four stakeholders to be considered are the 4P’s – the patient, provider, payor, and pharma. Each of these relationships have different dynamics and very different gaps, making it untenable to generalize across them. In addition, examining pairwise relationships doesn't fully capture the complex nature of how other players are involved. The following are three potential ways of digging deeper into healthcare:

  1. Follow the patient journey - this will most likely land you in spaces between provider/patient relationships. We’ve all been patients at some point in our lives, and experiencing or watching a loved one go through gaps in care often is a strong impotence in starting to look into a particular space. Mapping these journeys out can reveal other gaps along the way, and other players that are financially involved in different parts of the journey.?As an example, below is an example of examining a cardiac patient’s health journey and technology white spaces in that space. Other specific examples of spaces are tech enabled care, mental health, diagnostic decision making, coordination of care, last mile Rx, consumer healthcare.

Deeper dive into software white spaces in parts of a patient journey of a cardiac patient.


  1. Follow the areas of contractual relationships: this will likely lead you to discover backend (non-patient facing) relationships of healthcare; The complexities of healthcare can become overwhelming here, as there are many hidden middlemen in between the four large players in healthcare. To start, here are some consolidated, short primers about insurance (payers), health systems (providers), and pharmacies . Very often, these spaces resist disruption because of opacity, oligopolistic markets, and fragmentation of potential end users.? As you dig into these areas, you may uncover spaces investors have funded, such as revenue cycle management (RCM), medical billing software, specialty pharmacies, and discover emerging areas not as well trodden.

Breakdown of examples where there is AI white spaces for hospitals , pharmaceuticals, insurers as end users. Repetitive, cyclical nature of managing paperwork can lend itself to opportunities for startups to build. Incentive structures are not noted.


  1. Find highest surface area of skillset and market (aka founder market fit): Some founders may have previous experiences in healthcare or tech that lends an insight into very specific areas of expertise, say building software for medical billing space or nursing staffing in nursing homes, that they are drawn to. In this case, a bottoms up approach from understanding the end user up to clarifying which of the four players upstream is incentivized to pay for such a product is a good way to explore.

Exploiting existing incentive structures to narrow the idea universe.?

  1. Sales cycle / size of contract considerations:? as an example, larger organizations such as large pharmaceutical companies and health systems will require a longer sales cycle than smaller biotech companies and group practices. Conversely, contract sizes are usually available to companies with larger cash flow and spend (large pharma companies & health systems), so weighing sales cycles to your companies’ business model and ability to charge is an important consideration for cash flow down the line. It is also possible to start with smaller customers and move upmarket to an enterprise like sales motion later, for which additional thoughts should be put in around overcoming barriers to moving upmarket.
  2. Incentives structures and players: it’s important to understand how the players are financially incentivized to act. This can be done by exploring contractual relationships between different actors in the space you’re interested in. For example, understanding that pharma companies may be more incentivized to spend on software driving increased utilization of their top therapeutics over providers spending on tools may be a guiding principle in creating your business model for clinical decision support tools.??
  3. Competition: Incumbents captured spaces and potential for fast followers are a good way to narrow out specific areas. Building in blue ocean spaces may prove to be easier for initial go to market when you’re not competing with larger companies with more resources, brand, pricing power, and platforms entrenched already into the customer base. However, don’t be discouraged if there’s already a company in a space you’re interested in; it is often the case that it is not a winner-take-all space, and you may have insights to build a better software aligned with current structural incentives.
  4. Trends & DisruptionsWe tend to look at past history as indicators of potential future behavior. Often, it can be useful to examine patterns of behavior of different healthcare players and subsequent reactive consequences to understand trends. As a broad example, looking at the spread of healthcare spending can help us conclude that across all payers, spending on healthcare long-term care have increased over the past few decades, which can be an incentive for payers to spend/cover in preventative personalized care.?Additionally, while healthcare is slow to change, paradigm shifts can create new opportunities in well-known problems. The “why now” can be galvanized, in order of magnitude of consequence , by 1) change in legislation landscape (e.g. expanded Medicare coverage) 2) increased spending/willingness to partner with startups from pharma/payers/health systems 3) drastic step change in technology (e.g. LLMs).?

Digging deep introspectively??

The overlap between the systematic analysis of healthcare and personal skills and mission can yield a higher hit rate of personal fulfillment in great problems to work on. The following questions may be interesting to ask once you’ve arrived at the filtered subset of whitespaces to work on:

  1. Can I see myself working on it for a decade/ am I passionate enough about it?
  2. What insights do incumbents fail to realize?
  3. What relationships do I and(or) my cofounder have that can engage/gain additional insights from key players with expertise?

Examples provided above are not exhaustive, and the framework is not the only way to look at healthcare. However, it can provide a starting point and walking through the steps iteratively can create better intuition for founders looking to build software/AI in healthcare. If you’re a founder looking to bounce ideas around, feel free to reach out!

Primary author of this article is Sharon Huang . Originally published on “Data Driven Investor .” ? These are purposely short articles focused on practical insights (we call it gl;dr — good length; did read). See here for other such articles. If this article had useful insights for you, comment away and/or give a like on the article and on the Tau Ventures’ LinkedIn page , with due thanks for supporting our work. All opinions expressed here are from the author(s).

Tim Fitzpatrick

CEO at IKONA - Advancing Kidney Innovation

1 年

Great frameworks, Sharon S. Huang! Loved the patient journey example. Any thoughts/ further reading on how founders should think about capital needs/partners while de-risking regulatory pathways?

回复

要查看或添加评论,请登录