5 common mistakes healthtech startups make, and how to avoid them
Whilst healthtech startups span many areas of science and technology, businesses in the industry have a limited number of pathways to success. This is because businesses in health are highly regulated, have a limited range of funding pathways, and have a small cohort of end customers.
Having a clinical background and working with several healthtech startups through our business, Medical Consulting Group, I have observed a recurring pattern of common mistakes within the industry. These mistakes often stem from inadequate planning and a lack of understanding of the market rather than technical or scientific issues.
While we often hear about wasteful spending in public health services, having worked in both sectors, I have observed that there is also comparable wastage in the private sector. As budgets become tighter and the burden on population health increases, it is the responsibility of both healthtech entrepreneurs and hospital managers to ensure that every pound invested is utilised efficiently.
Luckily, here starts the positive message! These common mistakes have already been made by many businesses, so learning from their mistakes can help you and your business today.
Businesses don’t know who their end customer will be
In the UK, simply stating that you will sell a product or service to the "NHS" is insufficient. Determining who pays for healthcare services can be exceedingly complicated and is often a moving target. Many companies have excellent ideas and even demonstrate positive health impacts, but lack a comprehensive understanding of who will pay for their product upon entering the market. In today's world of strained budgets, it is crucial to understand your route to market, and consulting with people involved in NHS procurement or businesses with a similar product on the market is paramount. Waiting until after you have built something is too late because you may discover that while people like it, no one is willing to pay for it.
How to avoid it: To avoid this issue, you must create something that is significant enough to persuade a particular part of the NHS to pay for it. Some key considerations include
If you are replacing a service, find out how long the procurement cycles are and whether other services are tied to the ones you seek to replace.
If you are selling a product, determine how high up the leadership chain, away from the end-user, you need to go to reach the decision-makers who have access to funds.
Finally, you must consider whether you can assist departments in accessing grants or third-sector money to pay for your product in the early stages of implementation. Proven use cases in the NHS are crucial and can be worth paying to obtain.
Businesses often don’t know their end-users well enough.
Understanding who the users of your product are may sound obvious, but people often get caught up in the science of a project and forget how vital it is to be crystal clear on who will be using it.
Will your product be used by patients, healthcare workers, or a combination of both? Does it require sign-off or interpretation of results? Have you factored in the time of those using the product into economic and usability assessments? If healthcare workers are involved, don't take their time for granted. Many products require clinician sign-off or interpretation of results but fail to consider this impact on the system.
How to avoid it: It is essential to have a clear understanding of who will use or interpret your product. This should include
their role
how they will use the product
how long it will take
whether they need training
whether they will experience immediate benefit or the benefit is experienced by someone else in the system
These factors can significantly impact the uptake and salability of a new product, making planning, building, and selling the product much more manageable.
Businesses need to know the intended use of their products
It's crucial for businesses to determine their intended use, especially for products that may be interpreted as medical devices, as is the case for the products and ideas of many healthtech startups. Early clarity on intended use can significantly affect how you'll be regulated and could mean the difference between self-regulation and a lengthy regulatory submission process lasting 2-3 years.
How to avoid it: To avoid potential complications, it's wise to consult with a regulatory specialist as soon as possible. This could save you considerable time and money, from tens of thousands up to hundreds of thousands of pounds. Moreover, if you're operating in a new or specialised area, don't hesitate to seek multiple opinions from specialists. They may provide differing insights that could significantly impact your business model and development timelines.
Businesses loose sight of who else is in the market
To avoid getting too focused on their own research and development, businesses should stay informed about the market they are in. This includes keeping track of competitors, their products, any new up-to-date evidence or studies, and regulatory approval achievements. This knowledge can have a significant impact on a business's decision-making process.
How to avoid it: Businesses should maintain a document listing current and potential competitors, and assign someone on the team to regularly update it, preferably on a monthly basis, but at least quarterly. It's important to not only monitor domestic competitors, but also keep an eye on foreign markets, as different health and regulatory systems can facilitate faster product development, providing valuable lessons for businesses.
People are worried to talk to others, particularly about mistakes
Many people are hesitant to discuss their mistakes, which can hinder their ability to learn and improve. While it's easy to celebrate success stories in the healthtech industry, failed businesses can offer even more valuable insights. Unfortunately, many companies facing similar challenges fail to share their learnings (or choose not to), resulting in a waste of resources. Whether it's navigating regulatory environments, procurement processes, international expansion, or clinician adoption, the healthtech market follows a pattern of repeatable events. Even seemingly different products can encounter the same obstacles, such as difficulties with data sharing or finding academic support in foreign countries.
How to avoid it: Consider reaching out to other businesses that have faced similar challenges. These companies don't need to be direct competitors, but rather, they can be in a different specialty and use similar technology or sell to similar procurement teams. When networking at events, don't just focus on success stories. Ask other professionals about their failures and be willing to share your own experiences. By collaborating and sharing information, businesses can support each other in a constructive and collegiate way. This can happen whilst still navigating a complex industry and maintaining their bottom line.
In Summary
As mentioned earlier, I have had first-hand experience of the many inefficiencies in the private healthtech market. Such shortcomings are not unusual, given that our sector is still in its relative infancy compared to other fields such as greentech or fintech. Nonetheless, we must recognise that every misused pound of investment could have been allocated to another promising and more feasible project. Therefore, as members of the private healthtech industry, it is our duty to strive for maximum efficiency and ensure that every pound invested leads to the success of businesses and, most importantly, improved outcomes for our patients and users.
If you are interested in a free introductory consultation with the Medical Consulting Group team contact us at thomasmaggs@medicalconsultinggroup.co.uk and we will be happy to help.