In this episode on helping digital startups sell their solutions, I want to focus on the issue of implementation. It is certainly important to have a wiz bang digital solution. Equally important is how to implement the solution and manage the changes it causes. All startups should understand the concerns the hospital C-suite has around the implementation process. Specifically, the startup must be prepared to answer the following:

1. Is the company going to take responsibility for all the administrative hurdles including the IT security approval? Customers want assurance that the company is going to answer all inquiries and assist with completing documentation. Additionally, customers will want the company to track the progress of all approvals and follow up as necessary.
2. Does the company have previous experience with change management? Although the hospital may have a performance improvement team skilled in change management, it is important for the company to have people who also understand this complex process in order to work collaboratively.

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In my last blog post I discussed the challenges digital health startups face when trying to sell to hospitals and health systems. In this post I suggest some ways to overcome the hurdles and succeed in building a client base.

Startups need to be realistic about where they are in their product life cycle. As I mentioned previously, hospitals are risk adverse with tight budgets. These organizations want proof that your solution is actually going to have the impact you claim. Early on it is beneficial to look at smaller organizations for “proof of concept.” Ambulatory settings, such as ambulatory surgery center or multi-specialty clinics are often good places to alpha and beta test a new solution. These organizations are often nimbler, and as a result, more receptive to innovation. Smaller healthcare settings may present easier access to administrators and clinicians who can help get your solution implemented. Additionally, the information security requirements may be easier to address in smaller settings.

As a startup in healthcare you must understand the economics of the US healthcare system.

There are two key questions you need to answer as you build your business model.

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The pathway to success for digital health startups is challenging. Hospitals are often looked at as the point of entry for digital startups. Trying to work with large hospitals can pose challenges for early stage start-ups for several reasons:

1) Hospitals often are a part of larger systems. As a result, there are multiple layers to the approval process with multiple decision makers prolonging the sales cycle. In my experience as COO of an academic medical center the time from initial interest to contract can exceed two years. Furthermore, complex deployment processes add to the timeline for pilot implementation.

2) Hospitals and health systems have narrow margins. Most hospitals have margins of 2-4%. The Congressional Budget Office has forecasted that up to 50% of hospitals may face negative margins by 2025. There is competition within the budget for both new and replacement capital. Furthermore, there is reluctance to add ongoing new expenses to capital budgets. Read the complete list here.

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