7 P’s to evaluate healthcare companies: A framework for physicians
Physicians are increasingly interested in medical innovation for several reasons:
- We have an innate intellectual curiosity.
- We desire to offer the best care for our patients.
- Many of us have experienced burnout from COVID and administrative frustrations.
- Many of us are looking for opportunities for additional income.
- Some of us are interested in career transition.
Whether your entrepreneurial background includes an InnovatorMD Conference, a Society of Physician Entrepreneurs event, a StartUp Health Festival, or an AngelMD Pitch Club, I wrote this article to describe a healthcare framework physicians can use to evaluate healthcare companies and to encourage investment and involvement in the innovation process.
Use the 7 P’s below to identify a company’s strengths and areas of improvement, describe opportunities for improvement, and influence future company goals. This framework informs investment decisions. It can also be paired with your unique professional background to offer relevant insights as a company advisor or chief medical officer (CMO).
The first step is to evaluate the proposed solution and how well it addresses a medical practice pain point. The company may be in the idea phase, may have a minimum viable product (MVP), or have a functioning prototype.
- Is their solution better and cheaper than the available alternatives?
- How big of a pain point are they addressing?
- How big is their potential market?
- Was the solution built by experts in their space?
Process for product clearance
While not every health innovation requires FDA clearance, understanding how a product you’re evaluating is regulated is important for assuring patient safety and mitigating potential risk. Understanding the approval process also helps you budget for future regulatory needs.
- Does the product have 510(k) clearance for a medical device, early-stage FDA clinical trials for a pharmaceutical, or Software as Medical Device (SaMD) approval for an artificial intelligence algorithm?
- In addition to US clearance, have the company applied for a CE mark to sell their product in Europe?
- Has the company looked at product approval for other international markets?
Patents can be obtained for medical devices, pharmaceutical compounds, and digital health assets. These provide protection from knockoff products and also provide companies with a valuable asset that is the core of many healthcare acquisitions.
- Does the company have utility and design patents?
- Do they own a company trademark?
- In addition to US intellectual property protection, do they have intellectual property protection in other countries?
Healthcare startups achieve traction by obtaining early customers. The first product users from physician offices and hospitals provide feedback that can be used to improve the solution before scaling the company. When evaluating a company, ask about current pilot programs and how they are going.
- Are there currently pilots in place with individual physicians or healthcare institutions?
- How has the product been received?
- Has this process led to product changes and iterations?
- Have the newer versions been evaluated in pilots also?
This ‘P’ recognizes the cost of the product and how a company is reimbursed. This includes the company cost to product the product. You’ll also want to know how much the company charge patients, offices or hospitals to use their product and whether that is covered by billing codes.
- What is the company’s cost per unit?
- How will physicians generate revenue by using the product?
- If it is a digital health tool, are physicians able to use one of the new American Medical Association billing codes listed below for reimbursement?
- As this is a newer process, does the company offer assistance in training their billing team?
Particularly for diagnostics, medical devices, and drugs, track the efficacy of treatment. Sometimes this is internal information, but companies will publish studies related to their product’s performance. Even if they don’t have peer-reviewed journal publication, they will have materials you can review and assess.
- Is their idea evidence-based and does it work?
- Have they compared it to the current gold standard and published their results in peer reviewed publications?
- Have they entered their product into evidence-based events such as NODE.heatlh’s ‘Evidence Matters’ pitch event, or the like?
- Have they published research on patient safety or product efficacy?
Physician and patient feedback
This ‘P’ is affiliated with Pilots. How is the product perceived by patients and physicians? It’s important to evaluate what kind of feedback was sought from patients and physicians as the product was developed.
- Was a patient involved in product design and how do they like using the product?
- How has this been evaluated?
- Were the physicians involved in pilot studies happy with the product?
- Did the product/service solve problems and make life easier for the patient/physician?
- More importantly, does the company have a physician co-founder or advisor?
As a physician, you are a healthcare expert. You are acutely aware of your practice pain points, whether a product could be incorporated into your workflow, and their current market competition. You are able to offer valuable insight into the viability of an idea, potential use cases, and how to bring it to market. Based on your specialty and professional background, MDisrupt can connect you with healthcare companies who value your input. They provide opportunities to work either as a paid advisor or in a CMO (chief medical officer) role.
John R. Dayton, MD, FACEP, FAAEM
John Dayton, MD is an Emergency Physician and the first Medical Innovation Fellow with Stanford’s Department of Emergency Medicine. He is a physician consultant for Zus Health, a Venture Partner for SpringTide, and he writes about healthcare innovation for several publications, including Emergency Physicians Monthly. He also founded MedForums, a ‘yelp’ for physician feedback, that focuses on social proof and research related to education resources and healthcare innovations. You can reach out to him via LinkedIn.
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.