Healthtech is hard, but extremely rewarding

1. Know your playground

In any other case I would strongly advise to avoid analysis paralysis and start creating first prototypes of the idea and validating it with customers as soon as possible. While that is also crucial, the first priority for healthtech startups (even before establishing the company) should be learning how to navigate the healthcare industry's complex maze of interconnected players and regulations. And how these differ across different countries.

Primary care centers, community health providers, hospitals, pharmacies, government, insurers, manufacturers, technology platforms and more are all part of the giant ecosystem. Who is the payer, who is the provider, who is the user? Is the market's healthcare system very centralised or are different players down to the smallest clinics allowed to make their own investment and budget decisions? Understanding the value chain and knowing where and how you fit into that puzzle is key because your business model and your overall success will depend on it. 

2. Understand the type of software you are building and the regulatory requirements

Developing a novel technology solution requires a deep understanding of the complexities and specifics of the healthcare system. So, before delving into product design, make sure to understand the context in which the product will be used, including organizational settings, relevant stakeholder groups, and stakeholder relations.

You might need your company and software to be assessed by a third party to get a proper evaluation, which regulatory requirements apply or even create a regulatory strategy for you.

When it comes to regulatory requirements, some of the key legal aspects to consider:

Data Privacy and Security. (Medical) software typically handles (sensitive) personal information and health data, so it's important to ensure that the software is designed with strong data privacy and security measures in place. You need to think about data usage, storage and sharing as well as implementing encryption, secure storage and transmission processes. Follow GDPR and potentially ISO 27001.

Regulatory Compliance. software may be subject to various regulatory requirements, depending on the jurisdiction and the intended use of the software. Think about CE marking in case of medical software. Getting your software CE marked might be a year long process.

Liability. It's important to have clear terms and conditions in place that outline the responsibilities of the software developers and users.

International Regulations. If the software will be used in multiple countries, it's important to consider the different legal requirements and regulations that may apply in each jurisdiction.

Legal and regulatory requirements are the reasons why many healthtech startups fail, as the long timelines for getting the legal framework in order and the resource needs drain the runway dry before they even get to the first client. The better you understand very early on what you need to be able to sell to customers and the better you are able to factor in the time and money needed, the lower the risks.

3. Be ready for abnormally long timelines

If you want to make a difference in healthcare, the world’s most rigid industry, be prepared for a long and very bumpy ride uphill. While the road is icy. As it's one of the most highly regulated sectors in the world, the usual startup approach of finding use cases and quickly putting out a minimum viable product is often met with resistance. This makes pilot programs and fast testing extremely difficult. Healthcare organizations are risk-averse and rarely take a chance on new technologies that can’t demonstrate the gains from their solution with data from either first adopters or independent parties.

Average sales cycles if selling to public health organisations range from 12 to 18 months. If you’re in consumer business, it’s of course a different story, but the timelines of your partner organisations will still affect you. Think through your whole delivery chain from the perspective of interdependencies: regulators, manufacturers, consultants, clients. We have waited for more than 3 months for a reply to a grant application, similarly we have waited for legal assessments when it comes to either market risks or product requirements. All this may mean months of delays before you are able to sell your product on the market. 

This brings us to the next point: managing your runway wisely. And that will be the topic for the next post. Stay tuned!