MDisrupt One Year On—A Year of Transformation

MDisrupt One Year On—A Year of Transformation

The only constant in life is change. And nowhere is that more true than in your first year as a start-up.

As many of you know, MDisrupt was founded a year ago because we believed the healthtech world was lacking “medical diligence”. We believed this was the missing link in the market and the reason why so many healthtech startups were stumbling on the path to successfully commercializing their health products.

We originally created MDisrupt to identify healthtech companies who were at risk of becoming the next Theranos, or uBiome. Our hypothesis was that if investors undertook more rigorous medical diligence, they would be able to more easily identify and evade potential investments in companies that were not clinically or commercially viable, or who were not taking the appropriate regulatory path.

Like any start-up in its first year, we had ups and downs, learned a ton and we soon identified our true direction – to play an even more constructive role in the healthcare / healthtech industry than we had originally planned. Luckily we were small and nimble enough to be able to react quickly to the market dynamics and, while some of the changes were tough, they forced MDisrupt into a stronger, better place. I want to share with you the ways we have changed and the lessons we learned along the way. 

Changing Focus – Healthtech Investors Were Not The Primary Customers For Medical Diligence

It turned out that healthtech investors were not our primary customers. There is not really a ‘budget’ for medical diligence in an investment transaction. Tech funds source health subject matter experts from within their network to conduct diligence, whereas, bio and life sciences investors already have health domain expertise on staff.

We soon found that it was the bigger and more established health companies that had utility for our medical diligence services to provide an objective external third party view and address their needs in a range of fundamental areas such as: 

  • Benchmarking: 
    • “How do our clinical standards as a laboratory compare to other clinical labs?”
  • Mergers and Acquisitions: 
    • “We are considering an acquisition and want to understand the new market of the company we are acquiring.”
  • Market Sizing: 
    • “We are launching a new product in a new market and want an objective view of the market size and opportunity.”

Our True Market: Healthtech Truth Seekers Wanting Much More Than Medical Diligence Services

While we had limited traction with investors, one of the most inspiring parts of the last 12 months was meeting the healthtech founders who were determined to build their companies responsibly and cared deeply about building impactful, scalable and data-driven health products. But they did not just want our medical diligence assessments, they wanted access to us and other health industry experts to help them build their health products well in the first place. They were aware of how other healthtech companies had stumbled in their early days and did not want to make the same mistakes. 

These companies wanted our help to solve problems such as: 

  • Should my test be an LDT or an IVD?  Is it a health or wellness product?
  • What is the appropriate regulatory path I should take in the US?
  • How do I find a part-time Chief Medical Officer?
  • How do I access the self-insured employer channel?
  • What is the right strategy for engaging healthcare providers and payors?
  • Help me define a marketing strategy for reaching medical audiences.

Even the investors we engaged with in our early days, started to connect us to healthtech companies in their portfolios. Very soon we were overwhelmed with these types of requests and had to start tapping into our network of colleagues to help us on these projects. We quickly realized that our real market was helping the healthtech founding teams themselves.

Uncovering The Unmet Need: “The Gig Economy For Health Industry Experts”

As we began to reach out to our networks for help on these projects, and with all the press coverage we received when we launched, we were inundated with support from experienced health industry professionals and colleagues. The same key themes emerged: 

  • It is about time someone helped improve standards of health products. 
  • How can I help and get involved? 
  • Can I work for MDisrupt?
  • I want to work with healthtech companies and help them get to market quickly and safely.
  • How can I find the healthtech companies who could use my skills and expertise?

We heard from our client healthtech companies that they were struggling to access the experts they needed and here we were with hundreds of emails from passionate, experienced experts ready and willing to help. That was the moment we realized that the real problem we needed to solve was how we could provide easy access to experienced, vetted health industry experts. We knew then what we needed to build into the MDisrupt platform – a health expert two-sided marketplace. 

And so we did.  To date we have 58 consultant subject matter experts spanning the healthcare continuum, averaging 10 years’ experience in their discipline. Our expert consultants include:

  • MDs
  • Scientists
  • Market Access Experts 
  • Regulatory Experts
  • Commercial and Channel Strategists 
  • Lab Test Designers 
  • Clinical Trial Designers 
  • Health Economists

Many of these industry experts are still practicing and so are able to provide the most current perspective within their disciplines. They are able to assist healthtech companies in a variety of capacities including: 

  • Experts-in-Residence 
  • Part-Time Chief Medical or Chief Scientific Officer 
  • KOLs 
  • Medical or Scientific Advisory Boards 
  • Consulting Projects 
  • Expert Opinions

Engaging these health industry experts as consultants has enabled us to solidify our mission of helping to bring the most impactful health products to market faster and more responsibly by uniting the healthtech and healthcare industries – benefiting from the best of both worlds.

The Covid-19 Pandemic: An Unexpected Driver In Uniting The Healthcare And Healthtech Worlds 

As we entered 2020 the onset of the coronavirus outbreak changed the world for us all. Never has healthcare, healthtech and science been more in the spotlight than over the past 6 months. Very soon we started to see healthtech companies make significant shifts in their business models to help address the global pandemic. Some examples of these include:

  • Lab testing companies that wanted to shift into developing Covid-19 Testing 
  • Telemedicine companies that had to scale significantly 
  • Instrument companies that had developed products for adjacent industries wanting to move quickly into clinical lab testing 
  • Behavioral apps who pivoted to address mindfulness and stress-management issues arising from lifestyle shifts due to prolonged shelter in place mandates
  • Regulatory and clinical activities for “Back to Work” scenarios – how employers, colleges and schools can bring people back safely

Once again, we have been inundated with requests for health industry experts to help healthtech companies make these pivots and transitions. Increasingly, healthtech companies are seeing the value of having scientific and medical experts as core parts of their teams to help them navigate the new opportunities that the pandemic has brought to the industry.

As Start-Ups Evolve, So Do Their Teams 

Earlier in my career, while working for a start-up, a wise CEO told me that the people that found a company are not always the same people that grow the company, or scale it or take it public.  Teams evolve and different people and skills are needed for different stages of progression. 

MDisrupt was founded by myself and my close friend and colleague Jill Hagenkord, who I nicknamed the “Godmother of Precision Medicine”. We founded MDisrupt with the mission of helping bring the most impactful health products to market faster and more responsibly by uniting the healthtech and healthcare worlds. Today is the one-year anniversary of MDisrupt and, while that mission has not changed, it is bittersweet for me to announce Jill’s departure from MDisrupt. Jill was offered an incredible opportunity that she could not refuse and she is off to pursue her next amazing adventure. I don’t want to steal her thunder by announcing where she is going until she does, so stay tuned for her announcement. I am so incredibly grateful for the blood, sweat and tears Jill poured into MDisrupt working alongside me over the past year and how she helped turn a glimmer of an idea into a business that can truly make an impact for so many companies. Myself, and the MDisrupt community she helped to build, thank her for her dedication, passion and brilliance and we will be cheering her on as she embarks on her next journey.

We have also been lucky enough over the past few months to add some new and incredibly talented people to our team:

Ragan Hart, MS, PhD – Director of Operations and Business Development 
Ragan is an applied health economist, who evaluates clinical genomics and digital health technologies.  Learn more about Ragan Hart

 Dr Pamela Mehta – VP of Medical Affairs 
Dr. Pamela Mehta is a board certified, practicing orthopedic surgeon and the founder of Resilience Orthopedics. Read more about Dr Mehta 

Please join me in welcoming them to the MDisrupt Community!

A New Year, A New Look

As a health product marketer by blood, I believe it is important that a brand is not only representative of your company’s personality but also a critical communication vehicle for your target audiences. We serve both health innovators and our health industry experts equally. Our goal has been to create a brand that resonates with both sectors, keeping the modern feel that the healthtech industry is accustomed to, but enriching this with content written by our experts to address the real issues entrepreneurs may face as they take on the challenges of responsibly building scalable health products.  

 We also wanted to make it easier to showcase some of our experts’ skills and create simpler ways for health companies to find them. So we gave ourselves a rebrand – take a look at our new website, we welcome your feedback. I want to thank Paul Bohanna, our creative and technical director who has worked tirelessly over the past few months to reimagine our brand and build our website. 

A Company Is Only As Good As Its Network of Supporters – Thank You

As with any start-up, the first year is a year of learning, pivoting and identifying new opportunities. But one thing has been clear – we have been blessed with incredible support: from the clients that believed in us and trusted us to work closely with them on their projects, to the network of health industry experts that joined our platform and have been passionate about not only helping the healthtech companies but also helping us directly, advising us, writing amazing blogs for our website and evangelizing our message.

Finally, I want to acknowledge a few partners who have supported us and provided wisdom and guidance from our very first day.  

One year on, I am humbled and grateful for all the support and from the bottom of my heart I thank you all. 

Ruby Gadelrab
CEO

Ascending the Covid-19 Incline—Reform, Reaction and The Long Way Back

Ascending the Covid-19 Incline—Reform, Reaction and The Long Way Back

Confronting the unimaginable: Covid-19, a surmountable challenge

Each day as I get up and go to work, I have to prepare myself mentally in a way that I have never experienced in my 12 years as a UK Doctor. My colleagues and I witness daily, the gravity and devastation that this despicable thief of life has caused—and it is heart-breaking.

Many of us have been personally affected, directly or indirectly by Covid-19 or have lost someone we love and it is nothing short of brutal. There is no doubt in my mind that we will one day all be living in a post-pandemic world that will no longer resemble much of our pre-pandemic one either economically or socially, but I do hold the firm belief that we will once again, reclaim our independent lives, albeit in some alternate form, at the end of this war.

Adapting to the New Normal

Many healthcare professionals share the same concerns and uncertainty as the rest of the public, but in the thick of it as we are now, our primary resolve is to fire-fight our way to global safety.  

Some healthcare professionals also share the cynicism that many members of the public express about the way our various governments have handled certain aspects of this Covid-19 war. It is undeniable that many positive strategic steps have been taken, such as the rapid deployment and reinstatement of retired healthcare workers, the Herculean effort of everyone involved in the development of the UK Nightingale ITU hospitals – massive temporary hospitals put together in a matter of days to help increase capacity where regular hospitals struggle to admit any more patients – and the active campaign to protect the NHS and global health systems aimed at ‘flattening the curve’ through staying at home, to save lives, have all been pivotal and impressive. However, crucial delays in implementing a hard lockdown, PPE shortages for frontline staff, inadequate levels of testing and the procurement of antibody kits which fail to meet trialled standards have all been hot topics of debate amongst health professionals and our society at large. In response to this, I believe we will see some very significant reforms to our post-pandemic healthcare systems, striking changes within our economy and alterations in our social behaviours that are likely to be long-standing.

Lockdown V Liberty 

My colleagues and patients regularly ask my views on our current state of lockdown. The essential  move to severely curb movement amongst the population has been a globally challenging phenomenon, taking its toll financially, physically and emotionally on every individual. It is, however, the only measure that has been shown to reduce the spread of this highly contagious virus as it clearly deprives Covid-19 of the opportunity to pass from person to person. Hard lockdown has been, and still is, a fundamental step in our fight at the coal face of this pandemic but I am not convinced it can continue in its current form until a vaccine or treatment is established. The impact on the physical and mental health of the population and the socio-economic consequences of a long-term hard lockdown would likely be extensive and far-reaching. The evidence requires detailed evaluation in an effort to find a safe and workable balance in the months ahead.

This does not mean lockdown should be lifted at this phase, while death rates continue on an incline, without careful consideration as to how this should happen. If we are too impatient and take action prematurely, this would put us firmly back to square one, if not worse, as saturation points start to be reached within our hospitals. There is an infectivity index (R0), which measures how infective the virus is among people- our aim is to see this become R0 <1, which is what containment and staying at home should achieve and has been successfully reached in many countries. Anything above R0 >1 will result in an exponential growth in case numbers and this would be catastrophic. 

So, what happens after lockdown is slowly lifted? My view is that Covid-19 will continue to exist among us but we will likely step down the ladder from a pandemic state —> epidemic —> virulence levels. We will still be at risk but the probability of contracting this virus will be much lower as the number of cases declines through isolation and social distancing and we would need to exercise sensible limitations to our movements until such a time that the vaccine and treatments emerge.

If the lockdown release is too abrupt, we risk a secondary surge in cases similar to that seen in China last week in its northern borders with Russia – this was thought to be due to an influx of  overseas Covid-19 positive people into China, after which the border was quickly closed and further quarantining was mandated.

I agree with those who express the view that this pandemic will have a permanent effect on general social behaviours.  Personally, I believe there is likely to (or at least should)  be a graded exposure back to mobilising the public to essential activities first, then close family mixing and finally, over time, a more full social interaction.

It is hard to imagine that our social landscapes will ever see the dense aggregation of people that we have previously enjoyed and indeed I suspect that concerts, cinemas and even restaurants that can’t maintain safe social distancing may well need to wait for their lockdowns to be lifted until such a time that vaccines and treatments are more established. This all remains uncertain for now and the coming weeks will be telling as government strategists look at ways to safely rehabilitate us back to our functional lives. 

Collateral Damage—the Forgotten Victims of Covid-19

There is a growing concern amongst healthcare professionals that there is a risk of declining health in non-Covid-19 patients who suffer from other chronic conditions which have been eclipsed by this  pandemic. The fear is that there will be significant consequences if these patients cannot access their healthcare providers or are fearful of attending hospitals over prolonged periods of time. Patients shielding (where extremely vulnerable individuals are advised to minimise all interactions with others and stay home while having access to priority food supplies and other vital services), limited access to health services resulting from Covid-19 surges, cancelled procedures and treatments, delayed presentation and non-surveillance of chronic health conditions will all contribute to the mass grave of the Covid-19 era. 

As primary healthcare providers, we are still able to see many patients (albeit mainly virtually) but access to all our patients needs to improve to prevent an increase in non-Covid-19 mortality over time. Primary care has been forced to digitise at an unprecedented speed with the rapid scale-up and introduction of telemedicine through the use of video consulting, electronic prescribing and other digital applications that enable a more flexible remote working capability. What we can see is an enabled primary care provider that can continue to offer access and services virtually so as to minimise the risk to both healthcare professionals and patients during the pandemic The NHS and private sectors have also harmonised in an unprecedented way with private hospitals and clinics committing their facilities, staff and equipment for the use of NHS patients  Together, they have shown some impressive resolve and flexibility, which will hopefully outlive this viral war and improve national healthcare well after it no longer faces such a colossal challenge. 

Reviving the Economy—the healthcare implications

Our economy will need some serious attention in the coming weeks, not least because at a critical point, and once infectivity is R0<1, the non-Covid 19-related morbidity and mortality caused by a long-term and deep financial depression in our country may potentially outweigh the risk of Covid-19 related tragedies at that junction.

This is a veiled outcome for us all to imagine from where we are all at now but there has been considerable modelling based on Wuhan data and other research to identify the most appropriate way back to some socio-economic ‘life’. One study in the Lancet by Prem, Lui et al. highlights a number of approaches that are being trialled to achieve a return to graded social mixing and with the aim of enabling some socio-economic recovery. They acknowledge their modelling needs further research and analysis but their projections suggest that premature and sudden lifting of interventions could lead to an earlier secondary peak, which could be flattened by relaxing the interventions more gradually

So, to avoid the risk of provoking a second wave of the virus spreading, and a subsequent early second peak, we may need to be prepared to accept a relatively slow approach to lifting the lockdown.

The Marathon, not the Sprint—Uniting for the Win

No one knows how Covid-19 behaves in the long term – we just do not have that insight but an immense amount of research is being undertaken globally and each day we are more informed, more empowered and ever closer to overcoming this pandemic. For now, however, it remains an elusive and unpredictable nemesis. 

I know patience is being tested and it feels like nothing will be the same again but we should try to accept that we are in this for the medium term at least and that we may well emerge with a few positive reflections and adjusted ways of living that, while may not be the same, will still enable us to have our capacitated lives back.

In the meantime, I should say that every single health professional, researcher, and key worker I have encountered has been beyond dedicated and committed to helping us all out of this with the least possible number of casualties and, whatever our political or personal views, for now we are fully united in our fight to shepherd our nations up the incline, to the summit and down the other side safely.

Thank you To All Our Healthcare Colleagues on The Front Line

Please know that I, and many of my colleagues are deeply affected by what we are seeing each day at work, horrified at how unrelenting and unkind this criminal virus is and humbled by seeing other colleagues fearlessly approach the most risky of situations without a second thought to their own safety in order to help someone else. I am optimistic and hopeful that if every person does their bit, people stay at home and give us the time we need,  we will be able to emerge from this and hopefully have some answers. 

I want to express deep gratitude to everyone who is fighting the good fight and sympathy for anyone who has been affected directly or indirectly, or who has lost someone they love to the horror of this disease. Every single person who is staying at home for us, is a warrior in this war.

Dr Rasha Gadelrab

Dr. Rasha Gadelrab

MDisrupt Guest Blogger: Dr. Rasha Gadelrab, MRCGP MBBS BSc (Hons), NHS GP & Chief Medical Relations Officer

Dr. Rasha Gadelrab is a portfolio NHS GP, Quality Improvement Manager and a clinical Covid-19 contingency lead in a North London Practice. She is also the Chief Medical Relations Officer of www.myhealthspecialist.com. Since completing her medical training, she has dedicated her career portfolio to clinical medicine, medical education, digital innovation and healthcare quality improvement activities in order to improve patient care.

If you are a health tech founder looking for guidance on building or growing a healthcare savvy product team, talk to us—we can help.

Put the Health Back in Healthtech: A Product Manager’s Perspective

Put the Health Back in Healthtech: A Product Manager’s Perspective

Build a healthcare-savvy team; build successful healthtech products

Good healthtech products are really hard to build. Every year healthtech attracts great technologists who have had personal experiences with the broken healthcare system. And yet, along with myriad silent disappearances, there are publicly reported flops in healthtech from scrappy start-ups and tech giants alike. What are some of the common pitfalls? And what can your company do to safeguard against them?

Map the players – patients, providers and payors – and understand their motivations

61% of digital health companies that start B2C end up pivoting to B2B and selling to insurance companies, employers, hospitals, or other healthcare providers. Some of this strategy change is natural growth – healthtech companies pilot by selling directly to consumers, and then gain traction and bigger partnerships. But many healthtech companies shift to B2B selling after gaining a hard-earned understanding of the healthcare ecosystem from some time in the field.

We’re all familiar with the patient-provider-payor dance in healthcare. Your company is (likely) trying to improve the health outcomes of the patient, whilst also delighting the provider, who bills your payor. Unlike in many commercial technology businesses, where customer usage and retention tells you a good story about the value of your product, the feedback loop in healthtech is more opaque given this complex tri-partite structure.

One way to minimize the swirl created by this fuzzy feedback is to map your patient, provider and payor stakeholder groups. If you like graphical tools, this might be useful. With each group, identify:

  • What success looks like. Simple phrases about each stakeholder, “Make it easy for the provider to pay for our screening test” can turn into company initiatives, which in turn can be used to guide product roadmaps.
  • How stakeholder incentives are aligned with this vision of success
  • How stakeholder incentives are not aligned
  • 3 most-likely failure modes

This exercise (hopefully) doesn’t pivot your direction, but instead helps clarify where you have dark or blind spots. Re-do the stakeholder exercise quarterly or twice a year to ensure alignment between your roadmap and the healthcare ecosystem.

Understand governance, risk management & compliance (or know when to ask for help)

Healthcare is a regulated industry. Depending on your company’s specialization, if you run a lab, you’ll be working with CLIA requirements; if you’re building medical devices, you’ll be working with the FDA, etc. These efforts require specialized dedicated resources. Additionally, almost all healthtech companies will be working with HIPAA protected data. Healthcare data is a hot topic today, including everything from massive data breaches to data-landgrabbing.

Product teams have to account for data compliance in your product strategy, design and implementation cycles. Basics & resources on HIPAA that product teams should know about include:

  • Various public cloud solutions now have HIPAA compliant offerings, including  Amazon Web Services, TrueVault, Aptible & ClearDATA
  • Remember HIPAA is more than technology – the regulations include incident response, risk assessment, operations management, policies & procedures and security & compliance. Training is required for anyone handling Protected Health Information (PHI). Compliance cloud platforms can help you manage this & the associated auditing: Reciprocity Labs, Aptible & ClearDATA
  • Your product managers (as well as your engineers) should be familiar with these HIPAA dev resources published by HHS

Establishing and maintaining trust in your healthtech product offering is core to your success. Give your teams the time and resources to manage the regulated aspects of the product in the right way, and save the headlines for your victories, not compliance violations

Pay extra attention to the seams

So you’ve built a beta release. Now for testing! Health problems are deeply human, and therefore the software solution workflow is embedded in a complex, multi-layered context: the real world. This is the zone in which healthtech products most often fail. Successful healthtech products are 1) integrated into the user’s workflow – and sometimes two or more stakeholders are users, and 2) interoperable with existing software or hardware solutions.

  • Test early. Get your software into the users hands for feedback as soon as you can. Reid Hoffman famously said “If you’re not embarrassed by your first release, you’ve waited too long to ship.” In healthtech it is important to contextualize these early releases carefully – e.g. make it explicit to friendly users or pseudo-users that this release is for feedback only; ask if you can demo live and shadow them in their workflow to see how they use the product etc.
  • When doing customer research and gathering feedback, explicitly ask about the various usage contexts for different users. Pay close attention to what other software or hardware your solution needs to interoperate with to minimize friction. Try to understand what happens if workflow integration and interoperability doesn’t happen – it’ll help you prioritize, and more quickly understand your larger scale usage data later on
  • Articulate priorities around integration and interoperability to get a clearly prioritized roadmap, plus decision documentation. A useful tool for this is MSCW prioritization.

Real world usage context is a challenge for any software development effort. It is even more critical in the world of healthcare which includes high stakes decisions, quirky and complex workflows in a time-scarce environment. Elegant integration & interoperability will beat fancy features anytime.

There are lies, damned lies & statistics. Be rigorous.

There are often two types of evidence generated and used by healthtech companies – marketing data and clinical evidence. Marketing data is used to quantitatively describe the benefits of the product. These results must be real and attained through rigorous analysis, however they have not been achieved in a clinical trial setting. Clinical evidence is generated by running an experiment (the gold standard is a randomized controlled trial, but there are various other methods) which is designed to test the protocol’s impact on the intended outcome given a controlled context. Your product teams must understand the differences between these types of information, and communicate results clearly throughout the organization to avoid confusion around data claims.

Most healthtech products that are aspiring to be paid for by insurance companies will likely need to run a clinical evidence effort at some point. Get your team ready for this by familiarizing them with scientific writing. It’ll also keep them current on the medical research in your product area. Some resources:

These are good tactics for building a rigorous culture of scientific literacy in your product teams. Deepest expertise in this area, will come from team members with degrees focused in epidemiology, e.g. Masters of Public Health (MPH), or MS in Epidemiology and Clinical Research etc.

We all know healthcare is broken and we believe in the power of healthtech improve our lives. Understanding the complex healthcare ecosystem, accounting for governance requirements, thoughtfully developing for real-life user workflows and establishing a culture of scientific rigor will help you change healthcare for the better, ultimately both faster & stronger.

Elizabeth Brook Garrity

Elizabeth Brook Garrity

MDisrupt Guest Author

Elizabeth is a product manager with experience developing machine learning software-as-a-service. She developed her healthcare chops as a program manager at at UCSF, and at Dartmouth’s Masters of Public Health program. She started her career as a management consultant, after graduating from Harvard.

If you are a health tech founder looking for guidance on building or growing a healthcare savvy product team, talk to us—we can help.

Understanding Medical Necessity: Guidance for Healthtech Companies to Address Medical Insurance Coverage Limitations

Understanding Medical Necessity: Guidance for Healthtech Companies to Address Medical Insurance Coverage Limitations

Many healthtech companies want to access the self-insured employer market.  In my previous blog, How Healthtech Companies Can Successfully Access the Self-Insured Employer Market I highlighted the important factors that healthtech companies need to consider when accessing this channel.  Many companies focus on this channel as a way to commercialize and drive adoption before their product is reimbursed by a health insurance plan.

The goal of this blog is to help you understand some of the key definitions that are important to understand in this channel and the process by which decisions are made.

Let’s get familiar with the important definitions: 

  • Self-Insured Employers: While the risk falls on the insurance company in a fully insured plan, in a self-insured plan the employer or company assumes most of the risk. Businesses that have self-insured plans must pay for employee medical claims and associated fees from their own general assets. Larger employers tend to be self-insured. The percentage of medium and smaller companies that self-insure is growing significantly.
  • Insurance Company: A company that offers health plans to customers. These can also be known as medical insurance companies or health insurance carriers.
  • Health Plan: A health insurance policy with defined benefits coverage. An employer can offer several health plans, from one or several health insurance companies.
  • Benefits Coverage: Defines both the dollar amounts of coverage (i.e., contributions, deductibles and copays) and the medical services covered.
  • Medical Necessity: A determination as to whether and when a medical service should be covered (paid for) by the insurance company.
  • Clinical Policy: A written document containing the clinical rationale for medical necessity determinations for a particular medical treatment or diagnostic.

Now that we understand the terms, let’s get back to the central conundrum that new healthtech companies face: 

“Why should I pay for this if it isn’t covered by the insurance company?”

In other words, If an employer’s medical insurance company doesn’t cover a diagnostic or therapeutic service, why should the employer consider buying it separately?

The answer is found in the corridor between “medical necessity” and what can be argued is genuinely “medically necessary.”  In order to prove that your product/service is medically necessary, you first need to understand the medical insurance company’s medical necessity policies for your technology.

Medical Necessity: Health Plan Clinical Policies

As defined above, medical necessity is the process for determining benefits coverage and/or provider payment for services, tests or procedures that are medically appropriate and cost-effective. 

Some policies may be developed internally, some externally. Most medical insurance companies maintain a clinical policy unit of internal and external clinical advisors that apply their own process of medical diligence which includes: 

  • Regularly monitoring new treatment, technologies and indications

  • Reviewing new treatments submitted for coverage

  • Searching the National Library of Medicine’s PubMed database of peer-reviewed medical literature

  • Assessing regulatory statutes of new technologies (e.g., FDA)

  • Reviewing evidence-based clinical practice guidelines, such as the Agency for Healthcare Research and Quality’s (AHRQ) National Guideline Clearinghouse database

  • Reviewing recommendations of national medical societies and their guidelines.

  • Considering the indications accepted by the USP DI (United States Pharmacopeia-Drug Information) and ASHP (American Society of Health-System Pharmacists) for drug treatments

  • Assessing the opinions of relevant experts where necessary.

As described in my previous blog, most employers have insurance companies, or some other plan administrator, process medical claims. These insurance companies and administrators abide by a set of clinical policies around medical necessity established by the clinical policy unit(s). These policies apply these criteria for assessing a service, test or procedure:

  • Is it in accordance with generally accepted standards of medical practice?

  • Is it clinically appropriate and effective?

  • Is it not primarily for convenience?

  • Is it not more costly than an equivalent alternative service?

  • Is it endorsed or recommended by national medical societies and associations?

  • The technology must have final approval from the appropriate governmental regulatory bodies, when required. FDA approval, where applicable, is necessary but not sufficient to meet coverage criteria.

  • Medical insurance companies are not obligated to follow Medicare policy for their commercial members. Medicare coverage policy is often considered, however, in formulating clinical policies for commercial plans.

Medical necessity determinations arise most commonly where the service requested is subject to pre-authorization procedures. Here are some of the most common categories for pre-authorization:

Frequently Required Pre-Authorizations

Understanding Medical Necessity: Guidance for Healthtech Companies to Address Medical Insurance Coverage Limitations 1

The challenge, then, is how a healthtech company justifies the cost of the new service in light of the medical insurance company’s clinical policy. In order to do that, a healthtech company needs to understand what the clinical policy language is for medical insurance companies,recognizing that they can often vary.  In some cases, levels or degrees of coverage (including frequency, duration, pre-authorization requirements) may vary based on group plan design. Examples include: number of allowed physical therapy visits, coverage for alternative treatments such as acupuncture, and length of stay for substance abuse rehab.

Each policy includes: 

  • Coverage rationale that includes the scope of the decisions rendered, as well as their context

  • Documentation requirements for treating providers

  • Definitions of terms used in the policy

  • Applicable codes including CPT (medical procedures) and ICD10 (medical diagnosis) codes 

  • Description of services, e.g. a more complete review of when and how the services addressed shall be treated

  • Clinical evidence including a discussion of major studies, guidelines and other research used to craft the decision. These are defined here in the blog The Formula for Widespread Adoption of health Products that Every Investor and Healthtech Entrepreneur Needs to Know.

  • US Food and Drug Administration status, including relevant approvals from the FDA

  • Centers For Medicare And Medicaid Services status, including relevant information about what Medicare and Medicaid typically cover in the area addressed

  • References e.g. a useful bibliography for healthtech companies

  • Policy history/revision information e.g. a review of previous iterations of the current policy

  • Instructions for use e.g. a description of how the medical insurance company administers the policy.

Depending on the type of service, some healthtech companies may directly pursue the insurance companies. In most cases, however, marketing healthtech services directly to the self-insured employer should include a rationale as to why the covering insurance company does not cover the product or service.

Clinical policies can also be leveraged to identify what sources are used to establish the relevant clinical policy. The sources include: individual academic studies, national medical society guidelines, federal agency criteria (such as the FDA), federal institute guidelines (such as the CDC and the NIH), specialty and subspecialty medical colleges and organizations, and a fair number of others. These materials may be useful to make the case for your product or service.

Examples of Medical Insurance Company Clinical Policies:

For purposes of illustration, the following is a small subset of some of the clinical policies published by United Healthcare in a single year period.

Understanding Medical Necessity: Guidance for Healthtech Companies to Address Medical Insurance Coverage Limitations 2

Key Points For HealthTech Founders

  • Healthtech companies need to understand how health insurance companies define medical necessity in order to make the case for the solution they are bringing to the self-insured employer.

  • Medical necessity defines what is covered by a health insurance plan in a general population. That definition is intended to protect the self-insured employer and its covered members from paying for medical services that are excessive, cost-inefficient, or not clinically warranted. 

  • The opportunities for healthtech companies looking to directly reach self-insured employers lie in making the case for the business value of the solutions offered. 

Medical Necessity: Finding the Leading Edge, Avoiding the Bleeding Edge

In my next blog post, we will examine how healthtech companies can make the case for medically necessity even when an employer’s health plan does not cover the service. 

This includes addressing the following questions: 

  • What are the major reasons that a new approach should be covered even when the medical insurance company doesn’t cover it?
  • What advantages does your approach have (i.e., selection of appropriate members, place of service, etc.) that are not currently in place that can help maximize the return of investment for the service?
  • Why should an employer proactively include this service and pay for it above and beyond what is covered by the medical insurance company?
  • Will the service bypass, reduce, pre-empt or help avoid other costs incurred by the employer’s health plan?
Understanding Medical Necessity: Guidance for Healthtech Companies to Address Medical Insurance Coverage Limitations 3

Ronald S. Leopold, MD, MBA, MPH, Physician Consultant

MDisrupt Guest Blogger Specializing in Employee Benefits, Medical Cost Solutions, New Medical Technology

As a credentialed and experienced professional, Dr. Leopold brings credibility and a breadth of knowledge as a consultant, client advocate, and marketplace spokesperson. He is an industry thought leader in employee benefits and health and productivity.

Specialties: Medical Costs, High Cost Claimants, New Medical Technologies, Employee Benefits, Heath and Productivity, Population Health Data Analytics, Global Workforce, Generations in the Workforce, Financial Wellness, Thought Leadership, Public Speaking.

Accessing the self-insured employer channel correctly takes special expertise. If this channel is key to your commercial strategy, talk to us—we can help.

Bridging the Cultural Divide Between Healthcare and Healthtech

Bridging the Cultural Divide Between Healthcare and Healthtech

Bridging the Cultural Divide Between Healthcare and Healthtech 4

From Healthcare to Healthtech

Jill Hagenkord talks about her transition from Healthcare to Healthtech and shares the lessons she learned. In this podcast Jill shares some of the cultural differences she observed between the two industries and the ways that healthtech companies can collaborate with healthcare experts to create clinically and commercially viable health products that can scale.

jill hagenkord

Jill Hagenkord, MD

MDisrupt Guest Author

Jill is a board-certified pathologist with subspecialty boards in molecular genetic pathology and a fellowship in pathology/oncology informatics. She brings expertise in health product strategy, coding, coverage, reimbursement, medical and regulatory affairs, health policy, clinical laboratory medicine, population health, provider education and patient engagement.

Accessing the self-insured employer channel correctly takes special expertise. If this channel is key to your commercial strategy, talk to us—we can help.

8 Common Mistakes Healthtech Companies Make When Building Health Products

8 Common Mistakes Healthtech Companies Make When Building Health Products

Written by Ruby Gadelrab, CEO and Co-founder of MDisrupt

Most of us in the health industry want to get meaningful health products to market, and to the people who need them, as fast as possible.  Yet in the growing healthtech sector, despite over $50B invested since 2011, there have been relatively few successful exits.  

Over the past five years, since before we founded MDisrupt, we have worked with, advised, reviewed or consulted for over 100 healthtech companies.  We were surprised to find that the mistakes these companies are making are shockingly consistent. Even more striking is that many of these mistakes are completely avoidable.  Here are a selection of the most common things we have seen. 

1. Not Having the Right Product-market Fit 

Many of the health products we reviewed often just don’t solve a real problem in healthcare.  At best, some are nice to have, but for the most part many of the companies we talked to hadn’t actually understood the workflows and nuances of what their intended customers were trying to accomplish. Often it’s a case of trying to commercialize a technology by “backing into” a perceived problem. 

In many cases entrepreneurs start with a technology and then seek a market. In one case, an entrepreneur had built software for physicians of a particular type of medical specialty, but had never actually spoken to one of those physicians. She hadn’t engaged them at any point before building the product to check that it solved a real problem, or during the build to understand what features were important.  

Understanding your target audience—and especially where the user fits within the complex healthcare setting—is critically important when building health products. There are many nuances, stakeholders, workflows and dependencies that differ for each case and are critical to understand.  Involving healthcare experts from your target audience early and throughout product development is mission critical to building a clinically viable health product.

In short, no product-market fit = little or no scale. 

2. Building Products With Economics That Don’t Work

Having product-market fit is one key to building a clinically viable health product.  Equally important is commercial viability, in particular, ensuring that your product creates value for its user. Does it come at a price point where the ROI of adopting it is clear? How much does it save compared to other technologies or to the status quo? How much does it cost to implement? Do the combined costs of the product and the implementation provide a compelling financial argument? 

To answer these questions (which stakeholders WILL ask) it’s essential to do a Health Economic Study or Health Economics Outcomes Research (HEOR).  This needs to be conducted by an experienced health economist and definitely not by the internal commercial teams. 

One type of Health Economic study is  a Cost Effectiveness Analysis (CEA). The CDC has a great definition and example here. 

“Cost-effectiveness analysis is a way to examine both the costs and health outcomes of one or more interventions. It compares an intervention to another intervention (or the status quo) by estimating how much it costs to gain a unit of a health outcome, like a life year gained or a death prevented.”

There are several different types of health economic models. Different stakeholders prefer one over the other and they are not easily converted. For example, self-insured employers may prefer a Budget Impact Analysis.   For either channel, you will absolutely be required to show these analyses as part of a BD negotiation before they would even consider a pilot.  

Beyond the healthcare setting, another mistake entrepreneurs often make is overestimating what consumers are willing to pay for a health product.   While it’s good practice to conduct price elasticity studies to gauge the value consumers perceive in your product and where the right price point may be, it’s important not to over-index on these results.  Consumers behave very differently in research settings than in a real world setting when they have to pay for health products. 

Even if you have the BEST technology that solves a REAL problem, if the economics don’t work, then there is no viable business. 

3. Under-representing Medical Expertise in Their Teams 

Many healthtech companies we spoke to, had no healthcare experts on their leadership teams at all. Very few had hired medical professionals as employees, consultants or advisors, and those that had them rarely involved or listened to them. This feels counterintuitive if you are building a health product.  As a marketer, I (Ruby) have been hired by multiple companies to consult because the founders know and freely admit that they don’t know marketing and so they hire an expert. However, rarely have we seen them say the same thing about hiring medical people.  

In one case, I met a founder who was building a clinical genetic test and seeking advice on his first hires and advisors. When I suggested that the first hire should be a medical geneticist, or a chief medical officer,  he was horrified and asked “Why would I hire that skill set now – what would they do? What value would they bring?” These questions are answered by Dr. Daniela Crandall in her blog The Critical Role of Medical Affairs in a Healthtech Start-Up

4. Undervaluing Medical Experts in their Teams

After we founded MDisrupt, we were overwhelmed with support from the healthcare industry. Hundreds of people reached out to say how glad they were that we founded the company and how much Medical Diligence is needed. As we started talking to them, they all told us similar versions of the same stories of their experiences in healthtech companies: 

  • Many were hired by healthtech companies for “optics” purposes only

  • Very few had a significant role or say in product development

  • When they suggested that certain mission-critical studies should be done they were often ignored or put on performance improvement plans for overstepping

  • Numerous medical professionals told us they were asked to join sales calls and state their name and credentials only and not speak beyond that 

  • When marketing material was created, it was rarely passed to the medical teams to review for accuracy of clinical claims.  On the rare occasions that it was, commercial interests often trumped medical truth. 

Most of the healthcare experts we met were talented, passionate and eager to be part of the creative disruption of health care. Although they had had bad experiences, they still had faith that if healthcare professionals could be given a real seat at the table and a significant voice in building health products, they could help accelerate the path to market in a responsible way.   

There is no doubt that health care needs to be disrupted and to become a better experience for all of us. Healthcare experts and healthtech founders are equally frustrated and united in the mission to make this happen quickly, but it needs to be done responsibly.  Healthtech entrepreneurs can save themselves years of time and millions of dollars if they engage health experts early and often in a meaningful way.  

5. Failing to Understanding the Difference between Scientific and Medical Expertise

Many of the founders we talked to mistook “scientific” advisors for medical ones. Often when we asked where they were seeking medical guidance, we heard “Prof. X from high profile institution Y is one of our founders/advisors/board members.”  We would say, “That’s great, but does Professor X have any medical training? Has he or she ever commercialized a health product?” Usually the answer was no. 

It appears that many healthtech entrepreneurs don’t know the difference between scientific and medical expertise. It’s important to have the right type of expertise for the task. Jill broke this down in her blog where she defined the differences between scientific and medical expertise.  

Even scientific discoveries which are peer reviewed in high profile journals  and widely cited need to be successfully translated into products that can be used on patients. Great science doesn’t always translate into great health products‚ the discovery may fail on some other aspect of its clinical or commercial viability (see the point about product economics above, for example). There is a difference between scientific validation and clinical validation.   Most scientific publications are not designed to demonstrate the clinical validity of a medical test or health-related claim. (We will address this in a future blog.)

Sometimes healthtech founders are not even aware that there is a scientific or medical discipline well-matched to the task they are trying to accomplish. An example of this is where a health product is designed to incentivize behavior change. I have met numerous founders who gave the role of creating these products to their Head of Product, typically a person with a commercial background. It comes as big news to them that behavioral science is an actual scientific discipline and there are specific scientifically proven methodologies for incentivizing behavior change.  In her blog, Dr. Gina Merchant, who has a PhD in behavioral science, describes why engaging a behavioral scientist is so important when building health products. 

6. Not Conducting the Appropriate Studies or Generating the Right Type of Evidence 

When building a health product, the bar for evidence that it ACTUALLY WORKS and is SAFE to use on real humans is much higher than when building consumer products.  

The studies aren’t a “nice to have”—they are mission critical for  building clinically and commercially viable health products. The studies that need to be conducted are an essential part of the formula for successfully building a health product.  This formula isn’t magic or a secret sauce: It is well known by healthcare professionals and is a standard series of studies and activities that every company building a health product has to do.    

We outlined these essential steps here in our blog The Formula For Widespread Adoption of Health Products that Every Healthtech Investor and Entrepreneur Needs to Know. As we talked to healthtech companies over the past few months, we realized that this formula seemed to be unknown to them. Many hadn’t planned on doing these studies simply because they didn’t know they had to. 

8 Common Mistakes Healthtech Companies Make When Building Health Products 5

7. Being Vague about a Product’s Intended Use 

The first step in health product development is to define the intended use statement (also called the intent of use). This statement informs the regulatory risk category and determines the types of studies that will be needed. Failure to optimize the test for its intended use will result in an unacceptable number of false results. But done properly, the intended use statement will serve as the “North Star” for product development, medical and scientific affairs, marketing, and financial forecasting. 

Many variables can influence the performance of a test, such as population characteristics, the prevalence of the target condition of interest, the setting, and the type of test, among others. Thus, it is important to design the performance evaluation studies to match the intent of use.

The intended use of a test describes:  

  • The clinical purpose of the test: e.g. screening, diagnosis, prognosis, risk prediction, therapy or treatment selection for patients

  • The type of technology used: e.g. next generation sequencing, spectrophotometry, or electrophoresis

  • The target condition e.g. disease, disease stage, or any other condition of interest

  • The analyte being measured  e.g. DNA, HbA1c, LDL, Vitamin D

  • The type of specimens acceptable for testing e.g. whole blood, plasma, serum, tissue 

  • The location where the test is conducted e.g. clinical laboratory, point of care, home use

  • The type of results: e.g. quantitative, continuous, ordinal, or qualitative

  • The population for which the test is intended e.g. adults over age 50, adults with a diagnosis of major depressive disorder who have had an inadequate response to at least one psychotropic drug, high risk pregnant women

  • Skill level needed for interpretation of the test the need for a trained or skilled user of the test or test interpreter

In our experience, founders often don’t understand the concept of intended use. When we ask them who  the product is created for, they often answers “Everybody,” or a very wide subset of the population. Usually the reason founders are keen to maintain a broad intended use is for commercial purposes; they don’t want to limit their TAM and SAM projections, particularly when fundraising. However, the fastest path to market is usually the simplest, narrowest intended use. The intended use can be expanded over time as additional studies are completed to substantiate the claims.

8. Misunderstanding What is Required to Access a Particular Channel 

I (Ruby) have consulted for about 35 companies over the past two years.  Almost all of them ask me one or more of the following questions: 

  • How do I get a deal with a self-insured employer (SIE)? 

  • How do I get physicians to buy and use my product?

  • How do I get a deal with a health system?

  • How do I acquire consumers?

I will save consumer acquisition and health systems for future blogs, since they are entirely unique channels. Here’s what’s important to know about self-insured employers and physicians. 

Self-insured employers 

Often entrepreneurs choose to access this channel as they believe it’s a way to accelerate commercialization and revenue before the necessary studies are done to get into medical society guidelines and reimbursement.  This assumption is often not the case, SIEs also have a minimum bar of clinical evidence required. SIEs may consider small pilots that are usually funded by the healthtech company without seeing the studies. But ultimately, the final decision for adopting a health product widely in this channel will be made by a CMO (Chief Medical Officer). She will often ask for the same level of clinical evidence as required in a healthcare setting.  

In addition, the ROI analysis is also critical for this channel (see product economics section above). Again, if the economics don’t work, there is no opportunity for scale. Our physician consultant and expert Dr. Ron Leopold covers this in his blog How Healthtech Companies Can Successfully Access the Self-insured Employer Market.

Physician adoption 

When it comes to achieving widespread adoption in a healthcare setting by physicians, there are two additional critical steps (assuming all the other steps have been done correctly). These are 

  • Incorporation into medical society guidelines 

  • Reimbursement

Healthcare professionals and scientists are the most skeptical audiences. Glossy marketing material alone isn’t going to convince them of much; in fact it will barely get their attention.  

The biggest influencers of these professionals are their peers. For them, convincing content needs to be in the form of credible data and evidence. And the most effective communication medium is medical society meetings. 

For healthtech companies, a critically important part of entering this channel involves developing a KOL (Key Opinion Leader) program. KOLs will help to generate the data and evidence necessary to get into medical society guidelines, convince payers to reimburse for their products and will also create “medical influencers” who can educate their peers. How a KOL program works and its purpose will be addressed in a future blog. 

We have often heard from healthtech companies, “We don’t have time to do all these steps; these studies take years; we need to get there faster – what can we skip?” The reality is that when it comes to health products, there are no shortcuts. 

So how does a healthtech company in a rush to commercialize get there?  Well, the easiest way is to engage healthcare experts early, listen to them and follow the formula to avoid making costly missteps. The hard way is to try to skip a few steps and waste years of time and millions of dollars trying to recover.


How Can We Help?

The path to getting your health product widely adopted may be longer than for a consumer product, but it doesn’t have to be hard.  At MDisrupt, our goal is to help healthtech companies create clinically and commercially viable health products. We have built up a network of experts from across the healthcare continuum and they are all passionate and eager to help healthtech founders get the most impactful products to patients faster. If you need a healthcare expert, talk to us