It’s a 4.5 trillion dollar sector of the US economy! Fraught with waste, desperately requiring innovation and change. How could it be difficult to bring value to US healthcare and profit by it?
When I think on the topic of digital health startups and their frequent struggles to generate adaquate revenue I go to Jules Verne’s, Journey to the Center of the Earth.
The intrepid startup adventurers travel deep into the heart of the healthcare economy.
where they discover unaddressed pain points or unmet market needs!
they decide to take the lead to solve the problem they’ve identified
Perhaps it’s a pharmaceutical or medical device innovation
They decend down their path, raising money and evangelizing their concept, embracing ever more personal risk.
They establish a company and begin building their solution and attempt to bring it to market.
When they get there they discover that healthcare is a big and dangerous world, filled with promise and oportunity.
And soon they also discover that the vast ocean they’ve entered is dominated by health systems and payers, themselves engaged in mortal combat with one another.
The commercial payers fear healthcare innovators will generate additional reimbursable events and will attempt to destroy or frustrate you.
Bloated government payer bureaucrats believe they are overworked and underpaid. Government payers are not well incentivized to take risk and try new solutions. CMS employees gain better advantage from cozy relations with the large incumbents. The end result is, don’t assume that Medicare or Medicaid will warmly embrace your startup - regardless how overwhelming your value proposition.
The hospitals and health systems may see you as messing around in their ocean and they too may attempt to take you out.
While these discoveries and battles are raging the bills keep coming, the money you raise often flows out faster than new investment dollars flow in. Expect unpleasant costs and surprises along the way.
You’ll also come across others who made this journey before you and did not survive it. You can’t let that lessen your resolve.
When you can’t generate revenue or investment income quickly enough you may find your new company starting to sink.
But, if you manage to defend yourself by raising enough cash, securing your IP, befriending a health system or payer or medical device or pharmaceutical company along the way (without being gobbled up)
you may be one the very fortunate few who survive this journey.
And that will be a beautiful new day indeed.