Three Ways Digital Health Startups Can Leverage Partnerships for Growth
PerspectivesVab Goel + Fay Hazaveh Costa
April 27, 2021
In the past decade, three technological advancements have collided to create an unprecedented impact on the potential for innovation in healthcare: the rise of artificial intelligence, a dramatic reduction in the cost of compute, and the digitization of medical data. As healthcare providers look to harness the new benefits made possible by these changes, startups are facing a unique opportunity to leverage the power of partnership at all stages of growth to meet the highly nuanced needs of this industry and deliver on the promise of innovation.
At NTTVC, we recently hosted a roundtable with executives from leading healthcare systems around the country, including Mayo Clinic, to discuss how technology is unlocking transformational opportunities and improving patient outcomes. Collectively, the set of healthcare providers in attendance serve over 50 million patients in North America. In hearing directly from these leaders, several common challenges emerged that shed light on important considerations for entrepreneurs in the healthcare space.
Healthcare brings unique challenges to Digital Transformation.
The COVID-19 crisis dramatically accelerated the importance of digital transformation in healthcare, but the reality is that many health systems are still in the initial stages of moving legacy systems to the cloud (and some workloads need to stay on-premise indefinitely). Due to this complexity, the real difficulties lie in integration and implementation.
Workflow continues to be a huge burden.
Hospitals are facing shortages of clinical and operational staff, skyrocketing costs, limited patient access to care, and declining quality of care and patient outcomes. Many technology offerings may provide plenty of business value, but they frequently ask overloaded doctors and nurses to do more instead of less. The most acute need for many of these organizations is technology that can help providers automate tasks and processes while also improving the patient experience.
Inbound is overwhelming.
Healthcare decision makers are being inundated with outreach about the latest and greatest technologies, and it’s often tough to process with all they have on their plate. As Mayo Clinic’s Dr. John Halamka has said previously about the impact of AI on Health Care today, “there are also questionable vendors that have rushed to market with little evidence to support their claims. Separating the wheat from the chaff can be a full-time occupation.”
Now more than ever, provider-focused Digital Health startups can benefit from harnessing the power of partnership from inception to scale to maximize their growth, scale their impact, and better serve the needs of their customers. Here are three approaches to consider:
1. Work with early design partners to go deep before you go broad.
By thoughtfully choosing a few key engaged prospects and customers to go deep with early in the development of your business, you will have design partners who can help you better understand use cases, roadblocks and opportunities. This early, real-world feedback can be critical in accelerating product/market fit as you iterate on features, design and roadmap – especially in healthcare, where sales cycles are long and product offerings need to be truly market-ready before they are released. Depending on your business model, a larger number of high-level proofs of concept can sometimes be less helpful by pulling your focus in too many different directions. However, an important consideration is making sure that your design partners are representative of your longer-term target customer set.
We’ve seen this design partner strategy play out successfully for many healthcare startups, including our portfolio company nference who focused on working deeply with Mayo Clinic in the early days of their business. This led to a level of customer empathy that catapulted their credibility and traction.
2. Think carefully about your sales partnerships and the strategy behind them.
Healthcare systems are struggling to vet the hundreds of startups knocking on their door. By working with partners who are already trusted by your target customers, you can rise above the noise, accelerate the sales cycle, and enter initial conversations with credibility tailwinds. The ability for new technologies to work seamlessly with existing tools and systems remains a top priority for healthcare providers and is one of the biggest factors driving purchasing decisions. Partners who know your customers well will be able to guide you to focus on the integrations that truly matter.
Our portfolio company Eko recently partnered with 3M, the world’s largest and most established brand of stethoscopes that has been trusted by healthcare practitioners for decades, to integrate Eko’s AI software and digital stethoscope platform with 3M’s best-in-class Littman stethoscope to reach millions of clinicians globally.
3. Seek and demand patience.
Anyone who works at the intersection of healthcare and technology knows that the space is extremely complex and requires incredible patience. It is critical to seek investors and advisors who not only have experience in healthcare, but have a long-term view on what’s required to build an enduring business in the industry. When hiring for your team, it’s important to have a good mix of folks who have worked in both healthcare and technology, since both can be important influences on your approach and trajectory. Health tech is a long game and incredibly mission driven, so at the end of the day, everyone involved should know what to expect and see themselves as partners in building your business.
Healthcare is undergoing significant change and is on the cusp of another massive wave of digital transformation. By harnessing the power of partnership at all stages of growth, startups can better understand the needs of their customers, accelerate their go-to-market efforts, and build an effective team to deliver meaningful innovation that drives the entire industry forward. If you’re building a startup company in the digital health space, reach out – we’d love to meet you.