How-To Guide For Framing Your Thesis & Risk Appetite For Digital Health
-Written for Investors, Partners, Employee Candidates, & Health System Executives
image credit: i-scoop
As an earlier stage digital health company, our company Medigram needs to partner with employees/prospective employees, partners, and customers to make meaningful impact. When not even pagers offer reliable notifications to physicians, we’re driven to solve the leading cause of preventable death, a delay in communication. In order to make progress, we have to be razor focused on priorities to execute and quickly identify when our priorities align with others’ priorities. We’re not in the business of judging people or organizations; however to survive and thrive as a Startup, you have to discern. In our case, we’ve survived….and grown stronger from times when completely non technical stakeholders have put up huge roadblocks to our progress. CIO’s need to assert their technical vision and not let noisy technical ignorance derail their projects.
Though we can’t afford to do this more, we need to learn our lessons. Therefore, this post is intended to arm our champions (or would-be champions)with ways to evaluate your own organizations and your personal and organizational capability for the independence and aptitude that is required to drive the gut wrenching 4th industrial shift and all that encompasses mobile, analytics, cyber security and data management requirements to serve healthcare enterprises tomorrow.
The goal of this post is also to save you time whether you are an investor, partner, potential customer or someone interested in joining a Startup — these evaluations and decisions can carry enormous internal and external political friction, coordination, and communication overhead. We welcome you to poke holes in this report, we just want to understand your logic. The purpose of this is just to provide a talking point for you to frame your own ideas which you can refine for yourself about the digital health market. We would love to hear them.
- Investors: I am a VC Investor -How do I position my thesis in both an international healthcare market and the U.S. market which is marked by tremendous heterogeneity tied to distinct and varied employment and payer markets? Am I a Marketing and Patient Engagement investor or am I a real Health IT investor? How do I chart my path, will it be a consumer road or will I invest in the medical data explosion coming? I must choose if I will play in the ecosystem in the orange box or the grey box below. Neither technologies nor companies can “evolve” from orange to grey as depicted.
Consumer web businesses like consumer wearables make money on monetizing consumer data, not by protecting consumer privacy & security. This historical culture and skills focus will prevent successful migration from the orange to the grey box. In addition, desktop requirements and mobile requirements are completely different technology stacks and talent populations that don’t mix.
Congress and other stakeholders will demand grey box players to adhere to increasingly strict privacy & security standards. Companies will have to be born this way. Orange box players can’t change themselves to the grey box. Just like web and desktop companies can’t transform themselves to mobile companies. We will be following up with our point of view on the state of analytics, BI, & AI in Healthcare in a separate article.
If you want to play in the healthcare data sandbox of tomorrow, you must focus exclusively on companies born “grey-box” with next generation tech, security, and performance baked into their DNA.
- Employee/Partner: -I am an individual or leader thinking about working for or partnering with a Digital Health company. How do I know if this is the right move for me personally. Then ask, am I suited more to a consumer-oriented play or a Health IT company? Is my firm’s comfort zone and ecosystem positioned to the left or to the right below? Is it possible to get support from my internal and external partners for a shift?
- Health system executive: I am a health system executive and I need to define digital priorities with my team and align them around a strategy. Then you need to CHOOSE and prioritize between A, B, & C:
A) Marketing/patient engagement, (We believe that this market will be akin to the variation you see in the Spotify personal music market. There will not be incentives for the health system to standardize what is now a highly fractured market just like you have Pandora, etc. in the personal music market. We’re agnostic to the players just as we’re mostly agnostic to the devices that our software runs on).
B) Clinical, operational performance (The Medigram team wants to help here)
C) Preparing for new reimbursement models i.e. MACRA (The Medigram team wants to also help here)
Before providing some frameworks to answer the above questions for investors, prospective employees, or health system execs, let’s settle some facts and set the Stage in two areas: healthcare market dynamics and the state of technology— What Does the “Healthcare Technology Market” mean today?
A) A Complex, Heterogenous Market: According to consulting firm ZS, 97% of U.S. Medicare spending and 95% of patients are contained in 104 local healthcare markets. The influencers and “payers” in each market include all of the stakeholders in each market— payers, providers, employers, etc. — who influence care within these geographic boundaries.
Mobile ≠ desktop
B) We’re Hurtling Towards a High Tech World Our Parents…and Many of Our Friends, Colleagues, & Family Will Not Recognize and Are Not Ready For: There are necessary and long standing legacy systems in hospitals which will remain for some years such as EMR’s. The legacy cultures and technologies these systems of record today embody are juxtaposed to next generation technologies which are required to be designed under the partnership of multidisciplinary next generation digital teams. These systems and their younger SaaS siblings weren’t designed with mobile and IoT security requirements.(I was asked to give a mobile security talk this Summer to cybersecurity execs, let me know if you want an invite). Even the U.S. government concedes that mobile has nothing to do with desktop. These new companies would be staffed and advised with clinicians, software and systems engineers, human factors and user-experience experts, and data scientists. You can imagine that these are very different worlds. It is my point of view that this should be done completely outside the culture of today’s health systems while partnering with them.
- I am a VC Investor or individual employee. Design your work around who you are and what YOUR community values.
A) The denominator of peer pressure: Can you say? “I love brands and my friends, partners, and family are also brand conscious — →you should stick to late stage investing in this segment and as an employee working for a large company respectively.’ Other people in your life who are living in a strict web, desktop, or consumer reality can challenge you in unpleasant ways. I’ve seen this many times.
B) Can you say “I am independently minded and I do not care about brands. I get to spend holidays and go home to family and friends who both solve problems and are defined via critical thinking skills. I am surrounded by colleagues defined by their critical thinking abilities. My community prizes intellectual independence. — ->You then may have the support you need to invest relatively early in next-generation technologies or work at a Startup respectively.”
C) You can say “I have a spouse or other family or support network with a risk appetite which allows me to delay compensation rewards instead of focusing on the most cash I can make today.” — → Then you can AFFORD to work in a Startup.
2. I am a Health system CEO and My Board is Demanding My Digital Strategy: I am a health system CEO and therefore I have to decide between the three distinct priorities of A) Marketing & Patient Engagement, B) Clinical & Operational Performance i.e. Safety & Quality, & C) Preparing for new Business Models.
How To Decide — what resonates for you and your organization?
A) My payor mix is driven by a hot employment market and does not reward outcomes — ->your priority might be Marketing to win patient market share.
B) Our employment market is NOT hot and we are our own payor or we’re experiencing pressure to be more efficient. — — →your priority might be efficiency, quality, and safety.
C) Decide what the reputation and financial impact of legacy company philanthropic relationships against being left behind technologically is. Discern what matters to your constituents and assign weightings (patients, media/security breaches, employees, clinicians, and donors) or decide it doesn’t. — -> Decide to embrace status quo stakeholder priorities or make a plan to explain why emerging risk areas have to be addressed in new ways that legacy workforces are not suited to. You might decide to assert a percentage of partnerships to next generation companies.
We hope that this post is helpful in crystallizing and communicating your priorities as they relate to the growing digital health market.