Six Things Healthtech Founders Should Know When Building Health Products

Six Things Healthtech Founders Should Know When Building Health Products

[Updated 10-27-21] Healthtech is a fast-growing industry in which technology (wearables, apps, cellphones, databases and software) is used to solve problems in healthcare around improving access, productivity, delivery and quality of care as well as potentially reducing costs. According to Rock Health, in the first half of 2021, $14.7 billion was invested in healthtech in the U.S. alone.

However, healthcare product development is hard and very different from tech product development. Many innovators from the tech world are flocking to the world of healthcare and attempting to disrupt it through their innovations. There are well-established steps for building health products that scale. What are the key things that healthtech entrepreneurs should know as they navigate this complex industry?

1. Understand healthcare’s many stakeholders.

Within the healthcare ecosystem, there are many stakeholders; often, the user, influencer and payer are not the same people. When building a health product, it’s important to understand from the beginning who the stakeholders are and what they value. You should map out who will use it, who will pay for it and who will make the decisions to implement it because this will have a direct influence on what you build, what features it will have and what the value proposition will be. Some key stakeholders include:

  • Providers: The doctors, nurses, pharmacists, dentists, radiologists, surgeons and other practitioners who are licensed to deliver care to the patient.
  • Health System: An organization or a group of organizations that is responsible for delivering primary and secondary care to a target population.
  • Payers: A company that pays for medical services. Insurance companies are the most common type of payer. In the U.S., these fall into one of three categories: commercial, private and government.
  • Employers: The largest purchaser of health insurance, covering more than 55% of Americans.
  • Patients: The ultimate consumers of healthtech and healthcare products and services.

2. Solve a real problem.

Many of today’s healthtech products started as a technology discovery that was then applied to healthcare to try to solve a problem. Often, this is merely a perceived problem because the founder’s limited experience of the healthcare ecosystem means that they haven’t understood their target audience and the audience’s clinical workflows, intent or guidelines they follow.

The way many healthcare stakeholders think about this is that they look for solutions that generally solve one of these problems:

  • Does it improve patient health outcomes?
  • Does it reduce healthcare costs?
  • Does it improve the patient and physician experience?

It’s important that your product solves real problems in healthcare, and the best way to do this is to consult health industry experts and deeply understand your audience.

3. Generate evidence to convince skeptical audiences.

Evidence generation is one of the most critical steps in building health products. Firstly, people’s lives are at stake, so it’s important to demonstrate your product is both safe and effective.

Secondly, you have to convince doctors to use it. Doctors can be the world’s most skeptical audience, partly because they are scientists at heart and partly because they took an oath to “do no harm” and they genuinely care about doing the best for their patients. In addition, medicine is one of the most litigious industries.

Data, publications and recommendations from medical societies will likely convince doctors to routinely adopt your product in their practices.

4. Ensure that the economics work.

Evidence generation is important not only for providers, but also to convince payers to reimburse your product. Payers and employers will need to be convinced of the financial advantage of utilizing your technology. They will want to know:

• How much does it cost compared to what they are currently doing?

• How much will it cost to implement the solution in its entirety (switching costs, training costs, etc.)?

• How much will it save the healthcare system and over what time frame?

• Does the cost of the solution plus the implementation provide a compelling ROI over a reasonable amount of time?

This is where the skills of a trained health economist come in. Health economists are trained to do health economics and outcomes research. They help compile the dossier with models that you will need to present to payers.

Like all other types of business, even if you have the best product to solve the biggest problems, if the economics don’t work and you can’t convince someone to pay for it, it’s nearly impossible to scale.

5. It’s a marathon, not a sprint.

Most entrepreneurs who build health products and expect them to scale in a healthcare setting have to be in it for the long haul. It can take 10-15 years to get widespread adoption of a health product, including the time to complete all the studies necessary to generate the evidence to convince providers to adopt it and payers to pay for it. This is very different from the tech world, where products can scale and exit within five years.

Often, good healthtech companies run out of money and time before they can fully scale. For example, clinical studies from a healthtech company called Lantern were just recently published, two years after the business folded and sold its IP.

6. Pick the right investors.

To the point above, it’s important that healthtech founders choose their investors wisely — the ones that understand the time and money it will take to successfully build and scale a health product and have realistic expectations. The studies and regulatory processes may take years, and revenue and exit expectations should be adjusted accordingly.

There is no doubt that healthcare is ripe for disruption through technology, and there is no shortage of talented entrepreneurs to catalyze this disruption.

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First published in Forbes Business Council.
Ruby Gadelrab Forbes Councils Member

ruby.gadelrab

Ruby Gadelrab, CEO + Founder, MDisrupt

Ruby Gadelrab is a seasoned health executive with a track record in successfully commercializing healthcare and healthtech products. Her expertise lies in developing high-impact B2B and B2C marketing, branding, and commercial strategies. Ruby served on the executive team at 23andMe as vice president of commercial marketing and has worked for many leading companies in the biotech and genetic spaces. Before founding MDisrupt, Ruby consulted for, advised, and mentored more than 25 companies in the healthtech space.

At MDisrupt we believe that the most impactful health products should make it market quickly. We do this by uniting digital health companies with experts from the healthcare industry to help them accelerate their time to market responsibly.

Our expert consultants span the healthcare continuum and can assist with all stages of health product development: This includes regulatory, clinical studies and evidence generation, payor strategies, commercialization, and channel strategies. If you are building a health product, talk to us.

5 Key Trends in Digital Health for 2021—and 10 Companies to Watch

5 Key Trends in Digital Health for 2021—and 10 Companies to Watch

2020 was a challenging year for so many of us. Yet in searching for the silver linings, we’ve noticed a couple of things that stand out. Firstly, the pandemic has brought science and healthcare to the forefront of nearly every conversation. Secondly, it has demonstrated that many of the longstanding gaps in our current healthcare system can be addressed through digital health.

Healthcare has historically lagged behind many other industries in the adoption of digital solutions. Many such solutions have existed for the last decade and yet it had been a struggle to integrate them into mainstream health systems. The onset of the COVID-19 pandemic, with many people unwilling or unable to leave their homes for critical healthcare services, has resulted in rapid adoption of many of these digital health technologies.

Here are five key digital health trends that we see continuing in 2021 and beyond—plus a snapshot of ten companies to keep an eye on.

1. Continued innovative solutions for COVID-19 and other infectious diseases

When the COVID-19 pandemic hit in late 2019, it quickly became apparent how unprepared we were to handle it. Many digital health companies with technology solutions for similar applications in adjacent industries rapidly pivoted to COVID-19 testing, monitoring, and surveillance solutions. To date, the FDA has authorized 309 tests and sample collection devices.

We see this trend continuing as digital companies try to make testing faster, cheaper, and more accessible so we can bring our lives back to normal and re-open our schools and workplaces. In a post-COVID-19 world, many of these companies are likely to expand their applications to address other infectious diseases.

Some notable companies in this area are:

  • Mesa Biotech Founded by Hong Cai and Bruce Cary, Mesa Biotech is developing a portable polymerase chain reaction (PCR) testing device designed to yield rapid results in just 30 minutes. The device is intended to be used outside of the lab setting and to bring testing for COVID-19 and other infectious diseases closer to the consumer—to their workplaces, schools, and even one day their homes.
  • Clear Labs Founded by Sasan Amini, the company has built a fully automated platform that simultaneously screens for and sequences the genome of the SARS-CoV-2 Virus in under 24 hours. This has major implications for monitoring and surveillance applications, particularly now when we are seeing novel mutated strains of the virus emerge.

2. The expansion of telemedicine and virtual care services

Telemedicine solutions have existed for many years prior to the pandemic, but widespread adoption was relatively limited due to patient and physician resistance, privacy issues, and a reluctance by payors to reimburse, other than in a few exceptional circumstances for reaching rural and underserved areas.

However, COVID-19 created an urgent need for telemedicine services as elective visits were cancelled and clinicians were no longer able to see patients in person. According to the Centers for Medicare and Medicaid Services (CMS), in late March 2020 telehealth visits jumped from 10,000 per week to 300,000 per week. While those numbers are expected to come down after the pandemic, it is clear that for many clinical areas, the convenience and simplicity of accessing a healthcare provider from the comfort of your couch is something that both physicians and patients are now seeing the benefits of.

As a response to the pandemic, the CMS in March issued a waiver to extend coverage to telemedicine services. On Dec. 2, 2020, CMS Released its Final Policy, Payment, and Quality Provisions Changes to the Medicare Physician Fee Schedule for Calendar Year 2021, showing roughly 60 new telehealth services expected to be reimbursed by Medicaid. And Teladoc’s $18.5B acquisition of Livongo provided further validation that telemedicine is here to stay.

One note of caution: While telehealth has many advantages for clinicians, patients, and potentially payors, more widespread adoption will also require a massive overhaul of our health system. Furthermore, we must be able to deliver care to patients through the channels that are most appropriate for them. For example, for seniors who may not be technologically savvy or for those without access to good internet or streaming devices—how do we ensure they don’t get left behind and we don’t widen gaps in access to care? This was one of the fascinating topics discussed at the Social Determinants of Health in the Virtual Care Setting webinar that we hosted last year at MDisrupt.

Some notable telehealth companies we would like to highlight:

  • Dr Consulta, founded by Thomas Srougi. It’s a Brazil-based digital health company using telemedicine to increase access to primary care and some secondary care services for some of the poorest people in Brazil. The company has raised $100M and provides a virtual clinic and diagnostic services delivered by telemedicine. We highlight Dr Consulta as an example of how telehealth can be used to close gaps in access to care in underserved populations.
  • Genome Medical, co-founded by Lisa Alderson, is a US-based nationwide genetic medical practice which delivers its services via telemedicine. Often when people think about telehealth, they think about applications in primary care. We highlight Genome Medical as an example of a specialized telemedicine clinical service. In the US, there are fewer than 6,000 genetic experts available to serve 330 million people. Genome Medical makes genetic health services accessible to everyone through on-demand access to its genetic experts.

3. Increased demand for at-home testing

Consumer genetics giant 23andMe first brought lab testing into the home. The company demonstrated not only that consumers had an appetite to access health information about themselves, but that they were willing to pay for it directly and could effectively collect a sample at home and ship it to a lab.

Throughout the pandemic, we have seen states struggle to deliver COVID-19 testing efficiently. They have faced challenges with test availability and distribution as well as long turnaround times. And as we see new surges in infection rates, these problems have worsened. Furthermore, as many people have been reluctant to leave their homes and wait in long lines for testing, we’ve seen a new demand for at-home tests.

Here we highlight:

  • Everlywell Founded by Julia Cheek, Everlywell is a digital health company delivering at-home lab testing for consumers, including tests for food sensitivity and HbA1c.
    Back in March, Everlywell began working with its lab partners and the FDA to create an at-home COVID-19 test. In May, the FDA issued an emergency use authorization, making Everlywell’s test the first stand-alone at-home sample collection kit for COVID-19. Everlywell has now sold over half a million tests, validating both consumer demand for at-home testing and consumer willingness to self-pay for diagnostic testing. In November, Everlywell raised $175M to expand its consumer lab testing and digital health offerings.

And if we can do at-home testing for COVID-19—why not all other types of lab tests? Of course, these tests may take longer to develop. But we believe that digital health companies who take the right steps in consumerizing and democratizing access to healthcare services responsibly are here to stay.

What are the right steps? Digital health companies need to be willing to:

  • follow the appropriate regulatory paths
  • conduct the necessary studies and generate the evidence to show that their tests work
  • deliver incredible consumer health experiences that simplify access to health information, and
  • engage and empower individuals and their care teams with accurate health data.

4. Addressing gaps in health disparities

In 2020, both COVID-19 and the death of George Floyd turned the spotlight onto racial injustices and health disparities. Many articles and studies have shown that digital health products are being built with inherent biases and are not serving important segments of the population. The problems range from wearables not being built to accurately detect the heart rates of people with darker skins to genetic databases being developed primarily based on the genomes of Caucasian populations to algorithms being built with inherent racial biases that impact how health services are delivered and who gets them.

Furthermore, at the 2020 Rock Health Summit, a large part of the discussion was about how digital health investors tend to only invest in founders they relate to and problems they’re familiar with. Yet by widening the lens to consider a broader range of people and their needs, these investors could make bigger returns by solving health problems that impact larger segments of the population.

Fortunately, there is a new breed of investor emerging who wants to invest in minority founders. With that, we will see more companies working to close gaps in health disparities. This extends beyond racial disparities and into areas such as femtech, elder care, and solutions to ensure that LGBTQ communities have more health solutions available to meet their needs.

Interesting companies to watch in this category are:

  • 54gene Founded by Abasi Ene-Obong, 54gene is building the world’s first biobank made up of African genomes. The hope is that the company can use this asset to ensure that people of African descent are represented in new classes of therapeutics and diagnostics.
  • DotLab Female-founded Dotlab is a women’s healthcare technology company using blood-based biomarkers to diagnose active endometriosis across all stages of the disease.
  • Queerly Health Founded by Derrick Reyes, Queerly Health is a digital health company created to deliver safe, inclusive health and wellness services for the LGBTQ community.

5. Renewed focus on population health management solutions

The COVID-19 pandemic has highlighted divides not only in how people access healthcare but also in how those who have caught the virus have experienced it. Some have had only mild symptoms, while others became severely ill and many hundreds of thousands have died. Furthermore, some survivors, known as COVID long haulers, have suffered long term symptoms.

What is clear that for health systems, governments, and payers it is critically important to be able to identify the highest risk patients much more swiftly and, where possible, to proactively deliver preventive interventions earlier. And while COVID-19 has highlighted this need, this principle applies to all aspects of chronic disease management.

In order to do this we need a more holistic approach toward patients within a health system. This will require a variety of datasets beyond just medical records, particularly those that can be predictive or preventive of chronic disease.

There are new opportunities for digital health companies to innovate in this area including adding datasets such as: genomics, lifestyle and behavioral health and social determinants of health.

Some examples of companies and health systems taking a novel approach to population health management are below.

  • Genomics plc Co-founded by Prof. Sir Peter Donnelly in the UK, Genomics plc is developing a new class of genetic tests, which deliver what’s known as Polygenic Risk Scores. These tests can potentially identify those within a population who are at the highest risks of chronic conditions like cardiovascular disease and diabetes. And if we can identify those at highest risk of chronic disease, within a population, we can proactively deliver preventive interventions earlier.
  • Renown Health Northern Nevada’s health system, led by CEO Anthony Slonim, is taking a holistic approach to population health management, addressing issues such as mental health, substance abuse, lifestyle, and behavioral and social determinants of health. Renown was also one of the earliest health systems to implement a genomics-based approach to population health, in partnership with the Healthy Nevada Project.

These solutions are complex to build. In the US, as we shift to value-based care models of payment, the pressure on digital health companies to demonstrate their ability to deliver improved outcomes will also increase. Another fascinating discussion about Reimagining Population Health Management can be heard at our recent webinar featuring health system executives, payors, and digital health entrepreneurs.

2021: An unprecedented opportunity for digital health companies

Back to silver linings. We are at an inflection point. We believe 2021 will be another year when science, healthcare, and digital health will be thrown into the spotlight and have the opportunity to make a significant impact on the health of humanity. The pandemic has shone a light on the gaps in our healthcare system. That, together with changes in regulations, reimbursement, access to funding, and physician and patient willingness to adopt novel health solutions have created an unparalleled opportunity for digital health companies.

At MDisrupt we believe that the most impactful health products should make it market quickly. We do this by uniting digital health companies with experts from the healthcare industry to help them accelerate their time to market responsibly.

Our expert consultants span the healthcare continuum and can assist with all stages of health product development: This includes regulatory, clinical studies and evidence generation, payor strategies, commercialization, and channel strategies. If you are building a health product, talk to us.

ruby.gadelrab

Ruby Gadelrab, CEO + Founder, MDisrupt

Ruby Gadelrab is a seasoned health executive with a track record in successfully commercializing healthcare and healthtech products. Her expertise lies in developing high-impact B2B and B2C marketing, branding, and commercial strategies. Ruby served on the executive team at 23andMe as vice president of commercial marketing and has worked for many leading companies in the biotech and genetic spaces. Before founding MDisrupt, Ruby consulted for, advised, and mentored more than 25 companies in the healthtech space.