What have I learned over 12 years in digital health? Advice for Digital Health Founders (Part 1) – By Ross Friedberg
While my work in the digital health sector is extremely dynamic and rewarding, there can be a Groundhog’s Day aspect to it as well. No matter the company, the innovation, or the level of funding, nearly every emerging start-up that provides services to patients experiences similar growing pains, and many also make the same mistakes. Below are 10 observations and suggestions based on my own experiences over 12+ years in digital health.
Payor contracting and credentialing is a slow, agonizing process, and some payors may never market your services despite what they say.
We still see businesses significantly overestimate growth after signing payor contracts. Even when the payor has incentives to promote your services, plan for slow growth initially and a period of evaluation and validation before it meaningfully accelerates.Payors are skeptical of cost-savings claims.
If you do not have an experienced team of actuaries in-house, do not rely on your own savings-math or take financial risks based on that math. Hire outside experts to help you calculate and demonstrate savings.Beware of reseller arrangements.
When another company agrees to bundle you into their product, you become another step removed from the end-user, one of many products competing for the reseller’s attention, and sometimes saddled with exclusive contract terms that prevent you from entering contracts with others. Also, these agreements often involve difficult contract negotiations.Strive to develop a culture and operating model that successfully balances the clinical and non-clinical (tech) identities of the company.
Companies that skew too far in either direction struggle with internal division or misguided priorities.Having skilled and committed clinicians matters.
If your clinical workforce mainly consists of independent contractors with other day jobs, do not expect them to consistently show up and provide top of the line services to your patients. If you want patients to form longitudinal relationship with your clinicians, build a clinical workforce dedicated to working at the company.AI is an amazing behind-the-curtain tool, but most health care continues to benefit from strong human connections.
Companies that use technology to enhance the quality of clinician-patient interactions (e.g., by removing admin burden, lessening distractions, offering decision support) are more likely to succeed than those that use technology to replace and dehumanize medicine.Do not rely on online marketing for customer acquisition.
If you treat chronic conditions, sick patients, seniors, or children (and are not in the business of promoting lifestyle or cosmetic drugs), do not rely on online marketing for customer acquisition. It is important but not sufficient, and you will strongly benefit from other customer distribution and acquisition channels.Do not assume the law aligns with common sense or common experience or that an activity is legal if you see other companies doing it.
Certain business tactics widely practiced in other streams of commerce are criminally prohibited in health care such as paying for referrals. You can operate aggressively, taking necessary risks, without crossing red lines or compromising patient care.Keep an eye on new and changing laws and regulations.
Changes in policy can significantly impact your business positively and negatively, such as new coverage and reimbursement policies, insurance mandates, regulations on the use of AI, etc. You want to be first, not last, to take advantage of or prepare for these developments.Do not lose sight of legacy medicine providers (traditional health systems, doctors offices, etc.) when considering your competition. Even if you are not competing with them directly for payor contracts, they will often have more impact on your business than the start-up competitors in your category.
