Five Unique Challenges Your Technology Business Will Face in the Healthcare Industry

This post is most relevant to technology entrepreneurs considering a first-time foray into healthcare. Before making the leap into your new health technology venture, beware that while the healthcare space is exciting and full of opportunity, it also comes with its own set of unique challenges. I have put together a list and explanation of challenges germane to healthcare that I encountered building my last business.

1.) Interoperability Required

Monolithic apps are difficult to take to market in general, but much more so in healthcare and point of care settings. The health IT industry has a very unique and well-defined landscape of technology providers, of which the EHR (electronic health record) is the central piece. All healthcare provider workflows live here, from scheduling and charting to prescribing and billing. If you want your app to succeed, don’t disrupt the provider workflow. The bottom line is providers are highly averse to adopting new technology that alters their status quo. As such, successful apps interoperate with EHR’s and plug-in seamlessly to the provider workflow. This means API first development is key, along with developing channel partnerships with EHR companies as a part of your go-to-market strategy.

2.) Dense Regulatory Environment

Welcome to healthcare people. This industry has significant regulatory hurdles that make executing a business model more difficult than other environments. Early on, your company will have to learn and make decisions to address HIPAA and HI-Trust, SOC I, SOC II compliance. Here are a few associated challenges:

· Early Expenses — Expect to pay for services like third-party risk assessments, penetration testing, and consultants that advise you how to achieve advanced certification, like HI-Trust compliance.

· Bandwidth issues — Your team’s time will be taken up by managing things like compliance, developing extensive security policies, and complying with intensive security audits required by your prospective clientele. Your product roadmap will have to include building security infrastructure, like user audit logging, into the solution, as well.

· Grow Up Fast — Addressing security compliance expectations, especially in up-stream enterprise markets, forces a company to develop policy and systems that may not always make sense given your company’s maturity. For instance, a payer made my last company develop a policy which required documentation for all on-site visits and have employee escorts for visitors at all times. At the time, our office was an 800-square foot room. On the plus side, these intense regulatory expectations do help young companies prepare for growth early.

· Balancing Convenience With Security — Sometimes you will have to choose between the two. For instance, will you remember passwords? When will you log a user out for inactivity? How often will you make users reset login credentials? There is much grey area on security rules and companies take different tacks based on their risk tolerance.

3.) Longer Sales and Revenue Cycles

No surprisingly, healthcare has longer sales cycles due to the increased diligence factors and a general tendency for organizations to adopt new technologies slowly.

Also, longer revenue cycles are a reality for [technology enabled] health service providers. Most revenues are generated by claim submission to Medicaid, Medicaid, or private payer. You may have a 90-day lead time to recognize revenue from the time of service, IF the claim isn’t rejected. This reality makes revenue cycle and cash flow management a perpetual challenge for any health services company.

4.) Reimbursement Challenges for Newer Technologies

One reason for slower adoption of new technologies is reimbursement. A solution could make all the sense in the world, but if it isn’t universally acknowledged/reimbursed it won’t be adopted. The reimbursement landscape could very well affect your business model and go-to-market strategy. Telemedicine is a prime example of this, although that is changing.

5.) The Stakes are Higher

Healthcare is a zero-tolerance environment. If your solution does not work reliably, especially for products used at the point of care, your company won’t last long. Healthcare providers will drop you and never look back. Why? Because they have no patience for anything that hinders their time or the patient experience. Indeed, in many environments patient lives are on the line. Standards are high, and rightly so.

The stakes are also higher for businesses from a liability perspective, as well. The HIPAA Omnibus Rule makes all third-party suppliers and care providers (a.k.a. Covered Entities) equally liable. That means even if your company doesn’t provide care, you will be held to the same standards and penalties as healthcare providers, relative to information security and privacy.

Final Thought

If you are considering a venture into the healthcare technology space, make sure you do your diligence and go into it with your eyes wide open. Surround yourself with advisors, investors, and employees that know the space and have been there before. This industry is not for the faint of heart, but has huge opportunity for those willing to brave it.