By Jaya Pathak
5 ways for Start-ups to Succeed in Healthcare
Healthcare poses significant hurdles for startup ventures due to its risk-averse nature, stringent regulations, and intricate network of stakeholders. Moreover, the industry’s emphasis on perfection and aversion to iterative approaches further complicates matters for newcomers.
However, amidst these challenges, startups like Arrive Health have managed to carve out a niche. Arrive Health offers a platform that enables physicians to access information regarding patients’ out-of-pocket expenses for various medications, including co-pay and co-insurance details. This tool empowers doctors to make more informed prescribing decisions, especially when medications are interchangeable. Arrive Health’s success story serves as a beacon of hope for aspiring entrepreneurs navigating the healthcare landscape.
At the heart of Arrive Health’s mission lies a compelling concept. CEO Kyle Kiser elucidates the fundamental issue the company addresses: the opacity of healthcare costs. He points out that healthcare is unique in that patients and providers often lack visibility into the financial implications of medical decisions until after services are rendered. Arrive Health aims to bridge this gap by providing transparent information about medication costs upfront, enabling patients and physicians to make more financially informed decisions.
Healthcare is really complicated, which makes solving even small problems difficult. Take Arrive Health, for example. Doctors wouldn’t trust a system like theirs unless it had lots of good data they could rely on. But the people who own the pricing data, like health plans and pharmacy benefit managers, wouldn’t share it unless doctors were going to use the system.
And the owners of electronic medical records that doctors use didn’t want to show this information unless there was good data and doctors were actually using it. So, it’s like a three-sided chicken-and-egg problem where each side depends on the other but nobody wants to move first.
01. Pick a stakeholder:
In the complex healthcare industry, startups often face challenges in getting different stakeholders to work together. Arrive Health found success by strategically choosing a key player in the healthcare ecosystem – UC Health in Denver, where it was incubated. By ensuring that physicians at UC Health were excited about their system, Arrive Health gained influence with those who owned pricing data and IT systems.
The startup concentrated on making the system beneficial for doctors, and as their enthusiasm grew, it triggered interest and support from other crucial stakeholders in the health system. The lesson here is to pick a stakeholder strategically, win their support, and leverage that support to bring others on board in the interconnected world of healthcare.
The company carefully examined the specific problems that doctors faced. They aimed to solve issues like reducing callbacks, where pharmacies or patients call doctors to ask if they can switch to a cheaper medication, minimizing abandonment, when patients don’t fill prescriptions due to high costs, and addressing non-adherence to prescribed therapies because patients are trying to save money. They also set criteria for designing solutions: it had to involve fewer clicks, be easier to use, and be consistently accurate according to Kiser, the company’s CEO.
02. Harness Regulation for Progress:
Although regulations in healthcare can sometimes impede progress, they can also act as catalysts for change. Take the example of Arrive Health, which saw a significant shift in 2021 when Medicare mandated that Medicare Advantage Part D plans must provide a “real-time drug benefit tool.”
According to Kiser, this regulatory change was instrumental in advancing their cause. While the full impact is yet to be seen, the extension of real-time benefit capability not only benefits doctors at the point of care but also empowers patients. In healthcare, regulatory adjustments have the potential to ignite transformative disruption, paving the way for innovation and improved patient care.
03. Embrace Experimentation:
While healthcare stakeholders typically prioritize efficiency, reliability, and accuracy over experimentation, it remains a crucial component for success in the industry. According to Kiser, founder of Arrive Health, experimentation played a pivotal role in their journey. In the early stages, they gained access to physicians’ systems and patient data, primarily by visiting the Anschutz campus in Denver or Aurora.
This direct interaction allowed them to gather valuable feedback from users, understand their needs, and swiftly iterate on their solutions. They would implement changes based on this feedback, sometimes even on the same day, and repeat the process continuously.
Even today, these locations serve as testing grounds and learning laboratories as they develop new capabilities. Embracing experimentation enables healthcare startups to adapt quickly, refine their offerings based on real-world feedback, and ultimately, better meet the needs of patients and healthcare providers.
04. Chart the Growth Path:
Achieving initial success is crucial, but sustained growth often involves expanding into adjacent markets. Arrive Health recognizes the potential in exploring such opportunities. According to Kiser, the healthcare industry has seen a reduction in consumer choice with the adoption of e-prescribing.
Leveraging new technologies presents an opportunity to reintroduce consumer choice at the point of care and throughout the patient experience. Arrive Health is actively considering ways to delegate authority to patients or their devices, allowing them to navigate prescription options in a competitive market.
Charting the growth path involves identifying areas where technology can enhance consumer choices and expanding the startup’s reach to address evolving needs within the healthcare landscape.
05. Booming Market:
Startups are finding success in the healthcare industry by capitalizing on the booming market of telemedicine and online healthcare services. The telemedicine sector is projected to reach $5.5 billion by 2025, offering a substantial market for growth. In recent years, healthtech startups have garnered significant investments and cultivated a loyal customer base.
In 2021 alone, there were 3,548 active startups in healthtech, securing $2.2 billion in funding across 131 deals. This funding is expected to surge to $21.3 billion by 2025, with a Compound Annual Growth Rate (CAGR) of 27%. The influx of healthcare startups is marked by substantial investments in innovative technologies and proprietary, patented products, aiming to reduce reliance on imports and address challenges within the country’s healthcare sector.
Healthcare startups face persistent barriers, yet firms like Arrive Health demonstrate that customer-centric approaches, strategic decisions, early testing, and future-oriented visions can overcome challenges. Despite industry hurdles, innovative startups find pathways to success by prioritizing customer needs and navigating evolving market dynamics with resilience and foresight.