Show your workings: how entrepreneurs can sell innovations into the healthcare industry

by Startacus Admin

Considering selling your startup's tech innovation to the healthcare industry? These tips from Evelyne Priestman, Health Economist, Health Enterprise East should help...

Entrepreneurs in the healthcare industry often have a brilliant innovation idea, which they firmly believe will better support clinicians and help improve patient outcomes. It is this resolute belief that gives them the drive and energy to see their innovations come to fruition. However, unfortunately, entrepreneurs are often met with great difficulties as they try and bring a new technology to a highly regulated and complex marketplace. To better position innovations for both investment and industry adoption, there are some key questions innovators should be asking themselves as they pursue their innovation journeys.

What are the market conditions?

The UK healthcare market is a complex web of procurement pathways, underpinned by reliance on tried and tested methods, which startups unfortunately often have difficulty trying to penetrate. Whilst their idea might have great potential, the market might simply not be ready for it. Neglecting to thoroughly understand the market and competitive forces surrounding it may eventually lead to failure of uptake.

What needs do the customers have?

Understanding customers is also key. In the healthcare industry, there are various stakeholders involved in decision-making processes, each of which has different requirements and needs. The most important stakeholders to consider in any healthcare innovation are the patients themselves, the prescribing physicians, and the care budget holders. Understanding what could uniquely motivate each group to use a product will be key to developing a technology that satisfies market needs.

Where does the innovation fit in established care pathways?

It is important for entrepreneurs to remember that use of healthcare technologies occurs within care pathways. These are either prescribed as standards of care by a governing body or are practices, which have been taught at medical college or recommended as due process in a healthcare setting. Disrupting established care pathways has traditionally been a less successful way for innovations to enter into the healthcare industry, so it is important that new technologies fit seamlessly into these established care pathways.

How does the payment landscape work?

Healthcare markets are distinct from normal consumer economies. Patients, who benefit from the technology, are different from the doctors, who select the technology on their behalf, who again are different from the budget holders (e.g., care commissioners, insurance providers, hospital purchasing committees, the NHS), who are paying for the technology. Understanding the national payment and reimbursement landscape ensures that innovators increase the chance of their technology generating revenues in the targeted markets.

What are the technology’s benefits?

A technology may have been specifically designed for a particular indication, or it may provide benefits in several indications. In both cases, it is advisable to research further into the indication and a technology’s suitability for use in that specific indication. Additionally, early-stage modelling of its use in different disease areas will enable greater focus on those indications where a technology can generate optimal impact in terms of health outcomes and budget savings.

What is the right business model to use?

As it avoids the process of clinical validation and regulatory approval, selling directly to patients in the healthcare market may seem like a good option. However, this approach is rooted in the assumption that patients are prepared to pay out-of-pocket for health-related products and services. The provision of healthcare in the most developed countries is through a collectively financed system where funds are raised through insurance premiums or taxes. Consequently, patients expect their healthcare expenses to be either covered by a single payer such as the NHS or reimbursed by an insurance provider (such as the statutory health insurances in Germany), and willingness to pay out of pocket tends to be low.

Where is the evidence?

Finally, while innovators can, and must, believe in their product, this is not something you can reasonably expect a clinical decision maker or a budget holder of a collectively financed healthcare system to do. Solid evidence is needed to demonstrate a product’s value to stakeholders, so thought needs to be given to developing an evidence generation strategy alongside the product development plan that covers the entire clinical pathway, including clinician experience as well as patient impact. This very process will invariably enhance product development, leading to a product that appeals even more effectively to investors and healthcare procurers alike.

Breaking into the healthcare market with a new product or technology can be an incredibly tricky process for start-ups and entrepreneurs to navigate. Unwavering belief in the innovation’s potential is simply not enough. However, by reaching a full understanding of the market itself and its surrounding forces, recognizing the varied and distinct needs of each customer group, and gauging benefits in the round with a developed evidence generation strategy, this in turn will increase chances of securing investment and will boost the odds of wider adoption.

ABOUT THE AUTHOR

Evelyne Priestman is Health Economist at medtech innovation hub Health Enterprise East (HEE).

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Published on: 26th July 2021