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7 Keys to Success to Ensure Digital Health Startups Don’t Fall Short of Expectations
It’s no secret that the explosion of digital health technologies in recent years has created a chaotic level of activity and excitement. Investment dollars have been flowing steadily, and the number of new ventures continues to increase with every passing quarter. But at the end of the day, only one-in-ten digital startups last. And it’s likely worse in the healthcare vertical.
As an industry, we need innovation to translate into outcomes. We need fresh thinking and solutions that can make a real difference. We need today’s sweetheart stories to be tomorrow’s industry standouts. Unfortunately, the cards are stacked against the startup.
There are countless challenges with successfully launching and sustaining a digital health company. But here are 7 keys to success that can help make or break the promise and potential of a digital health startup.
1. Choose a Business Model
A lot of digital health startups begin as a consumer-facing solution with hopes of migrating to a B2B solution. They build a following, and enjoy success, but then are drawn to the expansion opportunities available via supporting healthcare enterprises. The problem is that these solutions were initially built upon a revenue model that is highly dependent upon advertisers. At some point, they discover that they must choose between advertisers and healthcare enterprises. Or they try to serve two masters. It’s extremely difficult to pivot away from advertising revenue. It’s even harder to balance the competing agendas that arise between advertisers and healthcare providers. These two groups want completely different things. If you want long-term success, you have to choose.
2. Don’t Say No to the Status Quo
It may sound counterintuitive, but abandoning the status quo in healthcare is often not the best way to think creatively about new solutions. Too many startups disregard the way the current system operates, in favor of thinking completely outside the box. The smarter bet is to be thoughtful with innovation and integrate to work within the existing infrastructure while charting a path to transition over time. Startups who fail to do this are basically showing up to a Lego party with a bag of Jenga blocks.
3. Solve a Real Problem
It’s easy to get caught up in developing technology that is faster, or cooler or more cutting edge. But at the end of the day, it needs to help the system. If the solution doesn’t clearly solve a real problem, such as improving patient outcomes, increasing clinical efficiencies, enhancing the care experience or reducing costs, its lifecycle will be a short one. Yet, we see so many startups that chase tech trends while losing focus of the problem they set out to solve. The only things that sell in healthcare solve for something.
4. Speak the Language
Another common obstacle for digital health startups is a lack of traditional healthcare experience on the leadership team. It’s not enough to have a cool product or service, or to bring the latest technology from other sectors and drop it into healthcare. Without a team that understands healthcare value propositions, the history of the industry, and the best ways to navigate and drive change, a digital health startup will sooner or later trip itself up.
5. Don’t Be a Me Three
Even worse than intimating another solution is imitating an entire group of solutions. Instead of a Me Two, these companies become a Me Three or four. Or five. Yet the digital health market has been flooded by 31 flavors of everything. If a startup isn’t addressing a new need or doing it in a meaningfully different or better way, it won’t last long in the hyper-competitive healthcare industry.
6. Avoid Being Stuck on Auto Pilot
Many startups are grounded because they poorly handle pilot opportunities. It’s not uncommon for a new, unproven solution to be piloted before a prospect fully commits to it. But not properly managing pilot opportunities can lead to over-commitment and unsuccessful, or unsustainable, results. Countless startups have been overwhelmed in this way, or burned through their operating capital serving organizations that may or may not be long-term supporters. Healthcare sales cycles are notoriously long, so added pressure from over-piloting can negativey impact your long-term solvency.
7. Pivot, But Don’t Spin
Almost all startups pivot at some point in their early development. That’s especially true for digital health. Many times the pivot is necessary because the organization began solving one specific problem but learns that it’s technology actually can solve a broader set of problems. The danger of the pivot in digital health is that a startup can easily find itself in a spin cycle. It’s like Goldilocks. You can’t stay too small or specific or you’ll be left behind. You can’t go too big, or you won’t have an addressable market or won’t be able to sell your vision. Each pivot has to be just right. Too often, startups get this wrong. And in the era of COVID-19, this problem has been magnified.
Are you running a digital health startup, or evaluating one as a potential partner for your health system or health plan? Use these seven keys to success as a checklist to determine the staying power of the solution at hand. Have more insights to share about best practices for healthcare startups? Drop us a line and share your tips.