Customer Who? The Art of Customer Discovery in Healthcare
The customer is always right. This classic adage is used by businesses owners to emphasize that the customer is an essential component of a well-run business. Understanding the wants, needs, and desires of your customer is of upmost importance and in many cases, they are easy to describe. A restaurant owner knows their customers want good food and an appropriate setting. A dentist knows their customer wants their teeth fixed. A B2B SaaS company knows that their customer wants to improve the efficiency of their organization. However, for a medical device startup, discovering your customers needs isn’t so straightforward. This article will describe the ins and outs of marketing and selling a medical device, the most important individuals (or “customers”) to focus on, and the different values that each customer brings to the industry.
As a member of the EdgeSense team, I have many hours of experience in need and market validation, customer calls, and I have interacted with many different individuals within the medical device industry. Our team is currently in the prototyping stage of our venture development, and I would like to share my experiences in customer discovery with entrepreneurs and business leaders alike. What distinguishes the medical device industry from other venture spaces is the long road to development and adoption, which is made more difficult by the complex and often intimidating group of stakeholders, all of whom have a say in whether or not your product is adopted.
Who are you selling to?
Unlike most industries, in the healthcare space you must make the distinction between the main beneficiary, the user, the buyer, and the payer. All of these groups together make up your “customer.” It is important to understand what each group values, so you can ensure that you satisfy all their needs with your solution.
The Main Beneficiary
In most cases, the patient is the person who primarily benefits from your innovative technology, your product could provide a better standard of care, and even save a life. Generally, the patient is willing to do anything within reason that will improve their outcome. However, it is not always the job of the medical device company to prove effectiveness to the beneficiary, that responsibility often lies with the physician (more on them later). It is essential to realize that while the patient benefits the most from your product, they are usually not the ones who decide whether it gets used.
The User
The user is the person (usually the healthcare provider) who will actually implement your product in their treatment of the patient. If you’ve reached the point of FDA approval, large fundraising, and clinical testing, the effectiveness of your product should no longer be in question. For the doctor providing the care, they want to use a product that is not only effective, but doesn’t interrupt their general workflow. In many specialties, surgeons will perform similar operations day after day, and they develop processes that they prefer to use. A doctor will only want to use your product if it improves outcomes and is easy to implement into their process.
The Buyer
While doctors use your product and the patients benefit most from the use of your product, neither are the party that actually purchase it. That decision is left to the hospitals, specifically, Hospital Value Assessment Committees (HVACs). These committees are made up of prominent doctors and nurses, as well as liability specialists, administrators, and supply chain managers. Their job is to control what the hospital purchases and uses, how much they spend, and how the products they buy will be used. The magic words that HVACs want to hear is “value delivered.” They want a product that will improve the outcomes of their patients and be available at a reasonable price. The key is to highlight reduced cost of implementation, and if that isn’t possible directly, then you need to prove that the hospitals will save financially over long term use of your product.
The Payer
The hospitals that buy your product will be the organization that pays you for it, but in most cases they won’t think about using your product if they can’t be reimbursed by insurance (private healthcare, Medicare, Medicaid, etc.). Healthcare insurance companies will be sent a claim from a healthcare provider, where they will then reimburse the provider for the allowable amount. Hospitals want to make sure that they can get reimbursed for using your product, so the cost doesn’t fall to the patient. This means that in order for widespread adoption of a medical device, it needs to be covered by most healthcare insurance. Insurance companies decide what to cover by evaluating how much money they bring in with premiums vs how much they pay out in claims. The most important aspect of their business in relation to medical device usage is the monetary value that can receive. If your device costs more per use case than an insurance company can expect to receive from that patient in claims over a certain period of time, they generally won’t cover it. If possible, it is important that your product is priced such that insurance companies can realistically make money and still cover the cost for the providers.
How to Pitch
Every pitch should focus on the individual needs of the stakeholder you are interacting with. For example, as discussed above, doctors and surgeons often value how easy your product is to implement to their surgery, meaning that when pitching your device to these doctors, you should focus in part on the implementation process. Every person you talk to will have different factors that they value, and it is important to understand what each party needs so you can effectively sell your product on the marketplace. There are a number of different strategies that can help you manage this process. I’ve outlined the things that have helped EdgeSense below.
Customer Calls
Perhaps the most important aspect of building a venture, customer discovery can help you understand the needs of stakeholders specific to your product. By interacting with major industry players, you can get a better understanding of the different values of these individuals. Every product is different and it is essential to know the ins and outs of your specific field. These conversations should be done before, during, and after your prototyping process. By continually updating yourself with the needs of the industry you will put yourself in a better position to change design constraints and pivot as you develop your product.
Adjustments
There is no doubt that the vision of your final product will change in the process of development, but by maintaining an understanding of what each aspect of the customer needs, you can stay on top of these changes and pivot while still making progress. There is nothing more demoralizing than receiving IP protection on your product before realizing that you have to readjust various components of your device, rendering the protection useless. To ensure that you are always in a good position to make adjustments, you must always be “selling” your product to the key stakeholders, giving you the best possible perspective on their needs.
Network with the Right People
Each of the stakeholders that I detailed are often large organizations whose decisions are made by a few select thought leaders. When you go to a hospital to interact with doctors about their needs, don’t focus on anyone, but be sure to talk to the decision makers within the organization. Every company, hospitals and insurance companies included, contain a few members who hold more power than others. If you want your device to be adopted, make sure that the most highly respected members of the organization are on board with the use of your product.
My experience as part of the EdgeSense team has shown me how challenging it can be to approach customer discovery in the healthcare industry. It is difficult to make sure that you check the boxes of every stakeholder in the space, but it is essential. Every conversation you have will bring you one piece of information closer to successful market adoption, and by tightly managing the customer discovery for each stakeholder that makes up your customer, you will slowly gain the industry knowledge that will help your product succeed on the market.
