It is one of those great ironies in life: For all the need of innovation within healthcare in order to be able to pay for everything and ultimately provide better outcomes for patients, it is super, super hard for a startup to get in a position to actually sell anything for the public healthcare sector.
I will venture so far as to say that for startups to rely on being able to sell to fx hospitals is a big flag for me, when I look at a new case. I have seen what the inverse relationship can be between the perfect solution and the ability to cut through all the red tape and bureaucracy, you need to master in order to get anywhere commercially. Countless great ideas with potential for real impact has suffered and ultimately died because of this.
Thus, what you need to be very aware of as a founder venturing into building a company in the healthtech space is the answer to this seemingly innocent and straightforward question:
Who is going to pay?
Of course it is easy to answer “Public sector”, but if you can’t say that, what are the alternatives?
Frankly, I think there are quite a lot.
First and foremost I think there is a growing willingness among patients for reasonable out-of-pocket expenses, if – IF – it turns out that fx a digital product might be able to help them get better through the day with whatever condition, they have.
Second, I think there is an immense appetite from health insurance companies for new solutions that can help them reduce payouts to people, who get helped too late or might not be able to get the adequate help, they need. In many instances I sense there is literally money lying on the table ready to be spent for anyone, who can show a credible product backed by some realworld data on its efficiency.
Because it needs to be that: Credible and somewhat documented at the very least. Documented through studies in the best of cases. And it makes sense for two reasons: Of course payers will want some sort of reassurance that they’re paying for value. Otherwise neither they nor their customers – the insured – will have achieved anything. Second, they have been burned in the past by solutions that promised the world but failed to deliver.
However, they still have the pain and the need. And it is up to you as a founder to realize that, engage in a dialogue and explain to them just why it is your solution fits the bill and should make them feel comfortable about engaging commercially with you. Show them the numbers. The same thing goes with the end customer: It is up to you as a founder to build a product that delivers such a great service that the value, you bring, is being question, and the customer will gladly pay for it (within reason of course).
Realizing these dynamics should be at the forefront of what every founder in the healthtech space thinks about: Not only the product and its features but also addressing clearly the needs and pains of those, who are in the most perfect position to eventually pay for it.
The life and success of your healthtech startup may very well depend on it.