This article was originally published on MedCityNews – https://medcitynews.com/2021/01/healthtech-is-great-at-innovation-but-less-so-at-commercialisation-heres-how-we-change-that/
By Dr Ben Evans, Managing Director at InHealth Ventures
Many digital health entrepreneurs fall into the trap of assuming that because their tech solves a problem – such as reducing costs, improving access, better clinical outcomes – it is inevitable that customers will pay for it. But in healthcare, solving a large and significant challenge for the customer is only half the battle. Sales cycles in enterprise healthcare rarely come in under 18 months and the process can be convoluted and variable; navigating from the initial contact, through to a small-scale pilot, and eventually to a paid contract in a single hospital or clinic, is a complex endeavour.
Exceptional execution of a carefully considered go-to-market plan consistently separates the winners from the losers when it comes to building an early stage healthcare company. So what are the keys to a successful go-to-market strategy?
Understand the organisational reality
B2B sales cycles in healthcare are longer and more complex than for software products in other industries. Several aspects drive this. For example, healthcare organisations are typically large and have evolved to manage a diverse range of needs; with a focus on quality and risk-management over pace. This means there is distributed decision making. Decisions tend to be made by committee, even in smaller departments, and it takes time and skill to build consensus towards adopting new products and practices.
Likewise, to make matters more challenging, companies often need buy-in from a diverse group of stakeholders. Depending on what you’re offering, stakeholders could include administrators, physicians, nurses, other allied health professionals, and patients. Each of these groups can have different perspectives and motivations. It takes time to develop relationships and understand where stakeholders are coming from
Healthcare leaders also have a finite amount of cognitive capacity and time to focus on ‘vendors’, meaning that unless you’re selling a solution that addresses a deeply painful and pressing problem, other aspects of day-to-day operations – such as patient care – will quite rightly take precedence. Understanding the prioritisation of your customers is therefore key. As a result, growth and adoption of new technologies can often be lumpy, and the mechanics of lead generation and sales conversion may not be obvious. It is therefore vital to set investor expectations around realistic milestones and revenue targets. In the same vein, a constant emphasis on capital efficiency is important.
Find your inner health policy wonk
Because there is huge variation in size, structure and business model across provider organisations, it’s crucial to develop a deep understanding of your target market early on. For example, in the US alone there are 4,000 hospitals – of which approximately 1,000 are Academic Medical Centres (AMCs). The remaining 3,000 organisations span national and local chains, as well as urban and rural community hospitals. In addition, there are ambulatory surgery centres, urgent care centres, outpatient clinics, and outsourced speciality providers. Significant time and capital can be wasted trying to sell your product or service to the wrong customer in this complex web. The most effective teams put time into analysing this diverse landscape, identify the best beachhead market for their solution, and then build out a broader go-to-market plan based on this.
See with the eyes of another
It’s so important to think deeply about what matters to the different stakeholders you’re engaging with, rather than what you want them to care about. All service providers must spend time to understand their potential customer’s organizational structure, key stakeholders, their needs and issues – that’s enterprise sales 101. But, as described above, the complexity in healthcare sales comes from the sheer breadth of roles and perspectives you’ll be exposed to.
Smart companies recognise that administrators, clinicians and patients will likely come to decisions based on very different motivations that can often stand at cross purposes with each other. A product that increases reimbursement for one clinician may result in lower activity for another. Pitching the efficiency gains generated through clinical pathway automation may appeal to an administrator trying to reduce spend, but less so to a physician who fears their role is being commoditised. Be aware of these contradictions and have empathy for where they are coming from.
Regarding clinical staff specifically, don’t be surprised to face an element of suspicion towards products that are digitising aspects of the healthcare value chain. Clinicians have seen many health IT solutions initially billed as “game-changing” that ended up making their daily lives significantly harder. Partnering with clinical opinion leaders as a means of creating awareness and credibility around your solutions can be a useful way of demonstrating why you are bringing something different to the table.
Extraordinary claims require extraordinary evidence
Even if a product demonstrates clinical impact, there needs to be an associated economic case for its implementation. Healthtech teams will often develop population-level economic analyses based on theoretical operational gains, but there is no substitute for a case study unequivocally demonstrating the top or bottom-line impact your product makes. It goes without saying that the larger and more rapid the return on investment for the healthcare organisation, the better. It’s not easy to get a robust case study done, and often relies on some level of resource commitment from your early customers, but having one will reap dividends. Prioritising how you plan for and execute this is really important
Be clear about your goals
It is vital that all your interactions with customers have a clear destination. This could be revenue, a return on investment case study, or purely a means towards developing your product. But whatever it is, you need to be explicit about the end-goal and ensure the client is fully aligned. Without this clarity, it’s way too easy to wind up stuck in a quagmire of meetings and bureaucracy, or delivering far more than you planned to, with little to show for your efforts.
When it comes to running a pilot, it’s always optimal to negotiate the paid contract at the same time. Again, clarity is good here. If you can align on a set of KPIs to demonstrate success, then you have a better chance of converting to revenue once the pilot is complete. This may take more time upfront, but it saves time downstream, creates some skin in the game from the client’s point of view, and creates a smoother path towards sales in the long-term.
Building a B2B digital health business is hard. But the potential for software solutions to have a substantive impact on the health and wellbeing of customers – be they hospitals, healthcare workers, or patients – is immense. We’re witnessing a pivotal moment, as the coronavirus pandemic accelerates tech adoption in healthcare in a way that was unimaginable at the beginning of 2020. For digital health entrepreneurs to truly seize the moment, the focus has to be on developing an exceptional go-to-market engine, alongside those transformative products.