Digital health startups need to analyze stakeholders

Cracking the Code

While some forms of high technology succeed using a “move fast and break things” approach, digital health startups have to go deeper into the requirements of the industry to “truly transform healthcare,” according to an article by Paul Yock, a cardiologist, health technology innovator, professor of medicine and bioengineering and founder of the Byers Center for Biodesign at Stanford University. Dr. Yock, writing in Fast Company (www.fastcompany.com/90251795/why-do-digital-health-startups-keep-failing, said that money and buzz are not enough to be successful in healthcare, “a much more complex and regulated industry.”

Instead, he said, digital health products have to work for consumers as well as a plethora of stakeholders, including doctors, regulators and insurers, who can determine whether a new technology is accepted. Medical devices could require years of clinical and regulatory scrutiny to get to the market. Further adaptations may be necessary along the way. Because consumers are only part of the mix, nearly two-thirds of digital health companies end up selling products to “insurance companies, employers, hospitals or other healthcare providers,” as opposed to consumers.

Dr. Yock said would-be digital healthcare purveyors should focus on “need-driven innovation,” in which they have an in-depth understanding of a critical healthcare problem and then creating “a technology that is uniquely suited to solve it.” As he explained, “After identifying an unmet healthcare need, the innovators take a deep dive to thoroughly understand the problem, existing solutions and the needs and perspectives of all the stakeholders involved, trying to avoid any preconceived ideas about what a solution should look like or what product they should build. This process typically involves research into the medical literature; interviews with doctors, patients, and other stakeholders; and in-person observations to see how the problem plays out in different healthcare settings.”

In doing so, the inventors come up with “need criteria,” a set of mandatory characteristics that must be available to satisfy “various stakeholder needs and improve on the current standard of care.” Such characteristics could be accuracy, simplicity, cost, and connnectivity. By taking the approach of looking at the need criteria, innovators have a much better chance of developing an appropriate solution that will be adopted by the healthcare industry.

However, the process can take a long time, and some innovators want to succeed as quickly as they do in other industries. According to healthcare venture capitalist Rob Coppedge, “Considerable capital was burned [by digital health startups] without building truly sustainable businesses” because founders “lacked expertise, underappreciated healthcare specific workflows, [and] misunderstood the full healthcare consumer journey.” That sentiment was also stated by Arlen Myers, president of the Society of Physician Entrepreneurs, who said that many digital health startups fail because they “don’t involve end users early and often enough . . . don’t satisfy the needs of multiple stakeholders . . . make products that interfere with physician workflow instead of making it easier . . . [or] launch products that are not clinically validated.”

Instead, Dr. Yock and his colleagues have been “developing, studying, and teaching a need-driven health technology innovation process at the Stanford Byers Center for Biodesign for nearly two decades and have seen powerful evidence that it works.” He said that 48 medical device and digital health companies have emanated from “projects undertaken in Stanford Biodesign’s fellowships and classes, and the solutions they have developed have provided care for more than 1.5 million patients.”