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Technology is Not the Problem in Consumer Healthcare

By Russell Benaroya

We don’t have a technology problem in consumer healthcare.  What I mean is that it is not a lack of technology that is holding back progress.  The reason our healthcare system is broken is because improving process (that can be aided by technology) is stymied by a cryptic maze of perverse incentives, misaligned interests, and regulatory misunderstandings. 

If we don’t have a technology problem, then why did digital health take in $2 billion in venture funding in the first half of 2016 with over 150 companies raising in excess of $2 million (source:  Rock Health)? Because professional investors (and I used to be one) are chasing shiny objects unaware of the structural chasms that exist to commercial traction.    It’s not like mobile apps are a failure in healthcare so we need to move to AI and chat bots.  No, the technology isn’t the problem here.  The problem is that most digital health startups are in the “pilot” abyss and can’t get enough adoption to gather the necessary data to iterate smartly. 

We mask progress by inventing new terms that look like the industry is advancing.  Wellness is now “Wellbeing” and Engagement is now “Personalization”.  But terminology doesn’t trump traction and digital health is hungry for traction.  Here are some key suggestions for digital health companies that want to overcome the non-technology obstacles to building a viable business:

Align with strategic distribution early.   Whether you bring on a strategic investor like we did at EveryMove or sign a strategic alliance relationship like Jiff did with Towers Watson it is very valuable to bake in some early distribution.  There are no guarantees here but it gives you a leg up early.

Build an end to end solution.  If you can build a business that is not reliant on another party disintermediating your relationship with the consumer (e.g. a health insurance plan), then you’re in more control.  It’s why companies like Oscar and Clover garner such attention because they obliterated one of the biggest healthcare obstacles by going around traditional health insurers that tend to be highly risk averse to innovating quickly.

Recruit “adults” to your company.  Many digital health businesses get started by great technologists that don’t have healthcare experience.  It’s refreshing in some ways but utterly terrifying in others.  I have found a lot of value bringing in experienced leadership (and advisors) that has been on the “inside”, understands the buying behavior, and can help navigate with added credibility.

Get very, very, very targeted with your application.  We all want to be a “platform” company or that’s what gets the investors excited, right?  You earn your way into being a platform. Companies should start out solving a very specific, targeted problem that they understand very clearly how to overcome the process obstacles to deliver value quickly.  Start-ups can ill afford to apply their technology too liberally when the real problem that needs to be solved is navigating some very specific use cases.

Technology certainly lubricates business development, marketing, PR, and speaking engagements.  People get excited, intrigued and inquisitive.  But we need to be careful that consumer digital health is not innovating its way beyond the problem that really needs to be solved and thus finds itself “too early” and unable to showcase its potential.

Posted on October 8, 2016 12:10 AM