Study Up on These Dynamics for Health IT Startups
On the face of it, startups focused on health-related solutions are in a good space. During the first quarter, investors poured $858 million into health IT, according to Mercom Capital Group, including $198 million into mobile technologies. Despite the more than 40,000 health, fitness and medical apps already available, the global mobile health market is expected to reach $20.7 billion by 2018, says researcher MarketsandMarkets.
Still, the market is fraught with pitfalls, according to Beth Seidenberg, M.D., a general partner with investment firm Kleiner Perkins Caufield & Byers. Writing at Re/code, she warns of six “truths” creators of these technologies should keep in mind:
- New tech solutions should cut costs, increase revenue or cut red tape: They should be simple and address the increasingly difficult reimbursement landscape for providers, or somehow simplify workflow.
- A single app without an open API is an adoption- and scale-killer: Healthcare is struggling with interoperability, and you don’t want to create yet another silo of information.
- Customer leverage is key to success: More patients want to manage their own healthcare and new federal regulations require providers to give patients access to their health information. More providers are doing so through Web portals.
- Build a revenue model before you build your service: Know your customer—consumers, employers, health-insurance plans, hospitals, pharmacies or labs—and think creatively about pricing models.
- High-tech and high-touch are not mutually exclusive: The human element is still important. Use tends to fall off after a while with most healthcare apps, so developers need to make them as social as Facebook and Twitter.
- Tech and healthcare entrepreneurs need to join forces: To be successful, it’s vital to understand public policy, payer/provider dynamics and healthcare’s unique workflow.
In addition, developers should take into consideration the patchwork of policies related to medical licensure, privacy and security, as well as malpractice liability, warns Health Affairs.
As you evaluate potential employers, try to suss out whether their product and approach have taken account of these dynamics. Healthcare’s hot, no doubt about it, but that doesn’t guarantee success.
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