Over a decade ago, consumers were introduced to the idea that there’s an app for that. Today, the tech startup industry is worth hundreds of billions of dollars, and Silicon Valley’s influence is ubiquitous. Why then, in this era of widespread (and well-funded) innovation do the majority of startups in the healthcare or healthcare data company space seem to fail?
In short, it’s because healthcare is a complex industry rife with rules and regulations, multiple stakeholders, and a high bar to clear when it comes to gaining industry trust. Overall, healthcare functions much differently than the tech sector – creating new considerations for those looking to gain market share. So, what are the specific headaches health IT brings? We’re taking a look at some below.
1. The role of regulations
Healthcare is a highly regulated industry, which means that companies looking to go to market within the health IT sector have different considerations than those in the traditional tech world. For starters, successful HIT businesses must understand the field’s intricate interoperability requirements as well as its complex web of code sets and data standards – both of which are frequently adjusted and updated. But dedicating significant time and resources toward tasks like code management isn’t necessarily the answer. First, these efforts can quickly take staff focus away from the company’s core business goals. And even when done well, they’re likely to contribute to delayed product releases – slowing down overall revenue acquisition.
2. The interconnectedness of the industry
Oftentimes, becoming laser-focused on solving a specific problem can be a good thing. But in healthcare – specifically health IT – this can mean companies forget how complicated the healthcare industry is. To get buy-in from potential investors, health IT startups need to adopt a more holistic mindset. When setting out to address a problem – say, one that plagues clinicians – HIT companies must also consider how their solution will impact other stakeholders – like those in revenue cycle operations. When proposed products don’t positively affect multiple users across the healthcare ecosystem, growth potential is limited and investor buy-in is more difficult to secure.
3. Not understanding clinical workflows
Although clinicians aren’t the only end users, they’re certainly high-stakes players when it comes to successfully integrating a health IT startup’s tech. In short, clinical adoption is key to the success of a healthcare data company. Indeed, EHR workflows and interoperability issues are already convoluted enough. Clinicians are often wary of new offerings promising to magically streamline their administrative tasks, since many startups pitch ideas without having considered important challenges their solution must address. Successful HIT startups are ones that consider the clinician throughout the process of bringing a product to market.
4. Choosing to go it alone
For any business, it’s crucial to keep costs in check – and for startups still in the development stage, that might make outsourcing tasks seem like a financial drain. But that’s not always the case. Organizations spend copious amounts of both time and money to build or develop complex processes in an attempt manage the regulatory complexity in the healthcare field. On top of that, without deep industry knowledge developed over time these in-house solutions don’t always get it right, which can create bigger headaches down the line. In situations like these, outsourcing code management or regulatory requirement compliance can actually have a positive effect on cash flow and free up employee time to focus on the company’s goals.
While this list is by no means exhaustive, it touches on four significant ways in which healthcare startups can fail with clinicians and other health IT players. At the heart of the issue? Not taking enough time to truly understand how the healthcare industry works – from revenue cycle functions, to clinical workflows, to overarching regulatory rules – healthcare is an industry that takes time and effort to comprehend. But by leveraging partnerships with organizations that have deep clinical expertise and the right subject matter experts, health tech startups can make sure they begin on the right foot.
