As the Director of Rehabilitation Innovation for the Department of Rehabilitation Medicine at the Mount Sinai Health System, I hear these words in a pitch probably 3 times a week. Young entrepreneurs are flocking to what is often perceived as a massive emerging market, because they see an opportunity to make a lot of money in tech, while doing something that has a positive impact on the world. With its dated technology and inefficient practices, it is easy to see how the Health Technology (HealthTech) world is often viewed as low hanging fruit for aspiring tech entrepreneurs. However, in 2016 Forbes Magazine warned us that 98 percent of healthcare startups are “walking dead”: companies that will fail before they ever even touch a patient. How is there such a disconnect? How can an entire industry seem so ripe for innovation and yet in the same moment so entirely resistant to it? Let’s dive into these issues by exploring what I think may be the three biggest myths surrounding the HealthTech industry.
No it isn’t. Healthcare (in most countries) is a highly regulated, complex beast that is resistant to change on every level. Just because something can benefit from change, does not mean that it is ready to change. All US hospitals, Mount Sinai included, have strict limitations on how crazy they can be when it comes to drastically changing what they consider to be “standard of care” with their patients. These are not self-imposed limitations, these are federally- and state-mandated. Sometimes these limitations make sense, and sometimes they don’t, so make sure you understand the politics surrounding the aspect of medicine that you’re trying to change. So, just because HealthTech isn’t ready for innovation, does that mean that we shouldn’t try? No, if you’re passionate about the project, of course you should try–we need you! But it certainly helps to have some advanced warning before wading into this mess. If your plan is to sell to a hospital system or an insurer, you need to be prepared for multiple years of clinical trials. You need to have a plan for how your company is going to sustain itself as it makes it through this HealthTech “valley of death”. I am constantly approached by HealthTech companies that think that we will elevate them to standard of care in the hospital after positive pilot trial involving 50 or 100 (or even 500) patients. Please understand that this will never happen. If you’re banking on this being the case for your HealthTech product, you may be one of Forbes Magazine’s “walking dead”.
"…and using our innovative technology, we will disrupt business as usual in the healthcare industry…"
Oh boy. Once upon a time, Henry Ford was (probably falsely) attributed with the quote, “If I had asked people what they wanted, they would have said faster horses”.This is truly the quote that launched a thousand bad ideas and I wish it would stop. I hear this sort of logic also applied to the iPhone: apparently no one asked for an iPhone before Apple invented it. Sorry, but this is dead wrong – people absolutely wanted their mp3 player, PDA and phone merged into one device, it was a critical consumer need and Apple took a risk and innovated. In fact, Steve Jobs was (accurately) attributed with the quote, “You have to start with the customer experience and work backwards to the technology”. The point here is that you need to spend a lot of time with your end-user. I see so many HealthTech “solutions” produced without a specific clinical problem in mind: just a team of tech entrepreneurs developing a solution looking for a problem in the healthcare industry. This is a risky way to develop at the best of times, but in an industry as highly regulated as healthcare it makes success almost impossible.
This is the hardest and most painful myth to address. Let’s say you’ve been a wonderfully responsible HealthTech entrepreneur and identified a specific healthcare problem to solve. Then, you’ve come up with a clever tech solution to the problem and scientifically proven that your product works. Working well is not enough–you need to find a champion for your HealthTech product. If you want to win over the clinicians, you need to make sure that you save them time and they can bill for using your product. If you’re targeting a patient population, make sure that your product is easy to use and that they get some sort of intrinsic reward (beyond improved health!) for using your product regularly. Achieving mainstream adoption by your target population after going to the considerable trouble of proving your clinical effect is by far and away one of the toughest challenges you will face. Unlike a typical tech product, HealthTech is often sold to populations that aren’t necessarily massive fans of technology, so strategically identifying the right way to make your product take off will be crucial.
Hopefully, we’ve managed to cover a lot of the pain points that commonly arise in the life cycle of a HealthTech startup in this short article. This is a very tough field to engage in–unlike most tech products, you can’t just develop a product and release it onto a free market for consumers to use at their own peril. You’re dealing with people’s wellness and lives. It needs to be approached with care, compassion and patience. You need to be prepared to rigorously prove every single claim that you make about your product. The trade-off, though, is that if you successfully pull off this incredibly difficult task, you genuinely have the potential to change the world for the better.