Diana Mereu has 10+ years of extensive expertise in the Healthcare and Life Sciences industry. She is a Healthcare Professional, with aMSc. in Pharmaceutical Sciences, a Master’s Degree in Public Health Management and an Executive MBA. Diana advises start-ups and consults scale-ups in HealthTech to navigate through the complexity of the global health ecosystem, while capitalizing on delivering high-quality solutions to benefit patients and consumers.
As a healthcare professional myself, with an MSc. in Pharmaceutical Sciences and a Master’s degree in Public Health Management, one would think that I have all the expertise to navigate the complexities of the healthcare system. Let me disappoint you. With an extensive background and leadership positions in the European healthcare industry for the past 10+ years, I came to terms with what I can change with the things I know and what I should reconcile myself with.
Yet, with an EMBA and a coaching accreditation, there comes the self-motivation, proactivity, and that dose of craziness needed for one with an entrepreneurial spirit to believe they can revolutionize not only the healthcare system, but the world. I advise caution when reading this article because it might be contagious. Like me, many others who have their own business in healthcare have identified some common struggles that challenged them in starting up or scaling up.
For those healthcare enthusiasts that want to build their startup in this sphere, I have put together a list of red flags to consider before launching, to gain better insight into how to turn your idea into success without losing grit, drive or focus.
#1 The healthcare system
In fulfilling its promise to society, the healthcare system has some strict regulations in place that allow it to be a “safe space” for the patient. But how safe is this space for startups? The same regulations that protect the interests of patients are the ones that give headaches to entrepreneurs in this field, and there’s no treatment for it. A legal advisor will help you navigate the complexity of the healthcare system – beware of the continuously changing legislation and Europe’s fragmented market.
There is a certain cautiousness about disruptions and a slower pace of adapting to change, which you should consider while setting your milestones. Don’t dismiss the variety of stakeholders and ensure that your product has their interest at heart – payer, provider, regulator, industry, etc. Although there is less room to experiment in this low-margin industry, you are one step ahead if you prove that your solution is compliant and efficient.
#2 The reimbursement model
Reimbursement in healthcare is the cost of your medical service paid back in full or in part by a health insurer or a government payer. Given the different reimbursement models of countries, these can make or break a solution, as patients are not used to or willing to pay for these costs themselves, especially when the majority already has public or private healthcare insurance in place. Depending on the provided solution, make sure to double-check how reimbursement impacts your business.
#3 The user dilemma
No matter if you are a B2B or B2C startup company, make sure that those to whom your solution is addressed are willing to pay for it. People have been proven to make emotional purchases – yet, you never see someone who would buy a friend for their birthday a year-long medical subscription, but rather a day at a spa (although costs might be more or less the same). Take some time to understand your users – health is a necessity, not a commodity. Still, the adoption speed is slow.
#4 The talent pool
We all know how important the team is – especially at the early stage of a startup. Having to deal with such a specific market, the talent pool is scarce in terms of knowledge and the best professionals are headhunted by multiple interested parties – which makes it a competition only one can win. My advice here is to look for a health-knowledgeable co-founder in advance and be creative about where to recruit them from – medical schools, the pharma industry, and patients’ associations.
#5 The relationship management
Despite the regulations in place, the healthcare space is a very human one – couldn’t be any other way as it’s dealing with people. Hence, relationship management is essential for earning the trust of stakeholders to proving to them you are there to stay. Although the system is complex, it is also very traditional. Experts stay in their roles for a long enough time to have earned a solid reputation and established a strong network – these are the ones you want to have on board and vouch for you.
#6 The investment opportunities
Let’s get down to business. Each country allocates a certain % of its GDP on healthcare to incentivize the high quality of health services provided to its population. Apart from this, there are grants supported by national governments or European bodies for game-changing innovation. The healthcare sector presents itself as an attractive arena for private equity or venture capital funds. Look into financing opportunities early on as they depend on the sector you are addressing and involve a lot of paperwork.
#7 The entrepreneurial mindset
There are two important categories of innovators in the field – the health specialist that has identified the need from the inside but lacks the entrepreneurial skill set and the entrepreneur that has identified the need from the outside but lacks specialized knowledge. Building bridges to connect specialists with entrepreneurs and software engineers who develop technical solutions is essential. Consider it the Holy Trinity of a health start-up success investors seize – co-founders complementarity.
#8 The technology behind
Despite the stability of the sector, you also have to take into account its preference for standardization. Most hospitals require on-premise deployment, integration with their system, and compatibility with existing solutions. The market is still conservative, a lot of the workflow is paper-based and healthcare professionals are hesitant to adopt innovation. There’s an acute need for training to be performed and reassurance to be given on the safety and compliance of the latest technology.
#9 The health data
There is a complexity of healthcare data from multiple sources and rarely does it come in a standardized format. The ownership of data is somewhat disputed between medical providers and patients themselves. Given the sensitivity of the topic, although there are efforts to make high-value health data available to entrepreneurs, researchers, and policymakers with the purpose of better health outcomes, there is still a need for transparency, consistency, and standardization to close the gap.
#10 The work-life balance
Last, but not least – give yourself room for creativity and permission to have fun in the process. Starting up might be a sleepless journey, but try to supplement it with power naps. Time is essential to launch a product, but also to show up in your personal life. Because what better place to take care of yourself other than the healthcare industry? Prevent, rather than cure, excess of revolutionizing the system, and better focus on what you can practically, timely, and effectively optimize.
Now that you’ve got more familiar with what to look out for and what to tackle before starting up in healthcare, tap into the full potential of this market that can make the world a healthier place to live in – we owe it to ourselves to give health an honest try.