The U.S. health care industry is at a major inflection point. Faced with a growing population of senior citizens, new regulations under the Affordable Care Act and a reliance on outdated processes and systems, the industry is under a unique combination of market pressures unlike anything else in its history.
This marks a tremendous opportunity for entrepreneurs who can disrupt the market with innovative technology, as I learned during a recent interview with two experienced health tech founders.
"It's a rapidly evolving industry, and with the tech-enabled dawning that's recently occurred, I think it will only accelerate," said Stryker Warren, an angel investor, healthcare consultant and mentor at Vanderbilt University.
Here's where tech fits in.
Although the major market pressures on the industry are varied in type and origin, they can all be addressed with innovative, modern approaches to medical technology.
Changing policies for healthcare reimbursement and rising costs of care are prompting providers to seriously explore options for value-based care, a departure from the long-standing fee-for-service model. But the value-based approach requires fluid interaction between many different parties that's difficult to achieve with the systems currently in place.
Information systems and management processes are stuck in the past, dependent in most cases on paper forms and ancient computer software. Purpose-built, streamlined, and cloud-based software has the potential to make processes from medical device procurement to remote patient treatment faster, easier, and more cost effective.
The benefits of better technology can even alleviate problems stemming from the increased number of senior citizens in the healthcare system. Health tech facilitate faster care of better quality, and it can help Baby Boomers manage their health from home, reducing strain on the entire industry.
You can minimize risk for your health tech startup.
Disruptive healthcare technology is sorely needed to move the industry forward, and innovative startups have the best opportunity to benefit from this need. However, the amount of risk in any health tech venture cannot be downplayed. The industry is resistant to change and highly regulated, which means founders must take a number of unique considerations into account.
If you're thinking about launching a health tech startup, take a look at the high-level tips from experienced founders below. I've specifically curated these six pieces of advice that can provide you some direction as you launch into your own health tech startup journey:
1. Know all of the regulations pertinent to your business.
"Understanding your regulations, embracing quality and managing risk are not checklist activities. I've seen many companies believe they are compliant when they are not."--David DeRam, CEO of greenlight.guru
2. Learn how the pieces of the healthcare system work together.
"Understand a few key realities: doctors run health care, compliance/regulation is king, the person who makes the decision to buy and the person who will use it are often not the same, and the industry can be stagnant. It needs an infusion of fresh blood, so be as creative as possible."--Ryan Macy, Founder & CPO of Satchel Health
3. Adapt to working with established healthcare companies.
"The way [big companies] do business is fairly structured because they have to adhere to what the FDA tells them. When we first started doing work with pharma companies, we very quickly learned that we needed to fit in with their process."--Susan Bratton, CEO of Savor Health
4. Use tech to improve existing processes, not change them.
"In my experience, it's best to map your technology to augment, not change, current workflows in order to accelerate adoption. If you are asking users to do something different than before, you are asking for 'more work,' in their eyes, to learn a new system."--Austin Dirks, CEO of GreenLight Medical
5. Create a revenue model that accounts for reimbursement policies.
"Getting a code for reimbursement purposes can be very time-consuming, very expensive, and there's never any guarantee that you get one. Many companies do not have a clear explanation as to their revenue model and why it's defensible, how it's sustainable, and how they're going to play on a field with limited dollars."--Stryker Warren, investor and former CEO
6. Find a personal mission.
"Especially in healthcare, a new business venture has to be personal. You have so much more drive and motivation to develop a solution that really makes a difference when you've seen one of your own loved ones struggle with the health condition."--John Valiton, CEO of Reemo
To learn more about the state of the healthcare industry and how tech-oriented founders can break into it, listen to my interview with Susan Bratton and Stryker Warren.