Sunday, July 12, 2015

Advice to Healthcare Startups

Like many in my role, I am constantly pounded by young entrepreneurs with the "next great innovative idea for healthcare".  I appreciate their energy and enthusiasm, and in some cases they really do have something cool and special.  However, I do find myself repeating many of the same thoughts and "rules" - so I thought that I would put some down on paper to prepare them ahead of time.

This is in part inspired by an GREAT blog by Todd Dunn (Director of Innovation, Intermountain Healthcare Transformation Lab):  The Seven Deadly Healthcare Startup Sins (and his follow up advice).  The summary:
Sin 1: Healthcare startups assume hospitals will let them host patient data in “their portal.”
Sin 2: Startups assume that clinicians will be willing to access yet another portal for their data.
Sin 3: That one doctor or hospital lends enough credibility for other organizations to simply accept a startup’s solution.
Sin 4: Believing that ONE key leader inside a hospital is the decision-maker, influencer, etc. all in one role….
Sin 5: Thinking that conducting a “proof of concept” and/or pilot is a simple endeavor.
Sin 6: There isn’t anyone else out there solving the problem.
Sin 7: Believing that startups need to have more answers than questions.

His Advice:

  • Use the Lean Startup tools! Regardless of where you start, it comes down to your value proposition as a starter or non-starter. 
  • This often tries the patience of entrepreneurs. I cannot overemphasize the need to use the learning loop in every single part of the Value Proposition and Business Model canvases. The only way to do that is to GET OUT OF THE OFFICE!
  • Be curious about workflow  - Be empathetic to your user.
  • Study the industry more deeply. While you may have a great value proposition for one or two hospitals, how does your solution fit into the regulatory landscape, workflow, etc. of multiple hospitals?
  • Listen! Assume you don’t have enough evidence to scale your business yet. Act like you don’t know enough. While an entepreneur’s “go get ’em” attitude is appreciated, it isn’t appreciated when the entrepreneur isn’t open to feedback, seems to have all the answers, and has a condescending attitude toward the way “jobs” get done today. Test your assumptions! Come loaded with questions that are related to your assumptions.
  • Last but not least, structure a learning plan. Embrace the Lean Startup tools and methods. Following this structure will cause you to write a learning plan. A foundational question to guide your learning plan in every part of your business model is “What do we need to learn before we invest more time and money?”

Some thoughts and Rules I would add to enhance the above

  • There are basically no new ideas... a successful startup understands it is about execution.  So please don't tell me that you have a brand new idea and want an NDA because the idea is so priceless and if anyone else finds out about it they will copy it.  If it's that easy to replicate, then you really don't have a business.  I remember years ago when I was being mentored by the great informaticist Dr. Bob Greenes.  He took me into his office and showed my his PhD thesis from around 1966.  This was the dawn of the age of computers, and in his thesis was basically every idea we are now hearing from "startup" companies daily - computer guided interviews and diagnosis, telemedicine, artificial intelligence to read notes, etc...   The key is rarely the idea, but how you combine the right people with the right technology and the right timing to make it all work.  Bill Gross had a nice Ted Talk on the topic of "The Single Biggest Reason Startups Succeed".  So convince me you really understand a problem and solution well and that you can be THE company that executes on it better, faster, cheaper than anyone else!
  • Truly understand and be able to explain your "Value Proposition" - specifically, clarify (1) Who Pays for your tool, (2) Who Uses your tool, and (3) Who Benefits from your tool.  In healthcare, the incentives are often not aligned - and the smart startup will fully understand and have a business plan that makes sense.  Nothing turns me off quicker than a company that expects a doctor to pay for and use a tool, when all the financial benefit then accrues to another party.  
  • Bring me a solution, not just a tool.  A lot of startups are talking about how they use "big data" to identify problems and opportunities for improvement.  That is nice, but the truth is we have a lot of low hanging fruit in healthcare- I don't need to find more problems as much as I need solutions.  So if all you are selling is a way to find more problems, that will not resonate as well as a packaged solution that also "fixes" them.   For example, the analytics vendor  HealthCatalyst is soaring because they realized that they need to use analytics to identify both the problem and the potential solutions to be successful.  Another interesting company, Transfuse Solutions, combines analytics and process improvement techniques to focus on the specific issue of identifying when a hospital is doing too many transfusions and then offering solutions on how to improve on those metrics. 
  • Be committed... healthcare is not for the faint of heart.  This is a big business, with long sales times, difficult implementations and hard change management.  When something works and can improve efficiency, quality and financials at the same time - and can scale well... then you will have a winner, but nothing happens overnight like in so many other industries.  So don't tell me how you have a part-time CEO, and you are out-sourcing all your IT work so some guys who have other jobs.  That is not going to build a company which has the DNA needed to succeed in this industry - show me executives and staff that wake up every day obsessed with fixing a specific problem, and an IT team that understands the nuances of healthcare and can react quickly to solve issues. 
  • Make it easy to do the right thing, especially if this is doctor facing.  I often say that the best healthcare IT can make life easier for doctors and better for patients at the same time.  Do not try and tell me how "this system only asks the doctor to spend one more minute for each patient" - we don't have one extra minute!   We want you to tell us how you save us time from mundane tasks so we can have more face to face time with patients - that is what will win our hearts and minds!   This post from last year explains this thinking further:
So yes, please keep innovating and trying to make things better.  Our current healthcare system is clearly not sustainable as it stands, making for a "target rich environment".  But when pitching to busy providers and healthcare organizations, remember that their plate if often very full - so have your value high, your proponents lined up, your story straight, and your team ready to truly make a difference in the lives of both providers and patients.

Addendum: List of Other Relevant Blogs and Advice for Startup Entrepreneurs