Five Critical Success Factors for Internet Healthcare Tech Startups

Amid the surge of internet healthcare technologies, entrepreneurs have ample reason to remain optimistic as they aspire to develop a blockbuster healthcare application. According to a report by Mercom Capital Group, venture capital funding invested in internet healthcare companies exceeded $4.1 billion in 2014 (Click here to read the report), surpassing the combined total of the previous three years. In the future, healthcare technology will primarily encompass wearable devices for monitoring vital signs, applications supporting outpatient care, and customer relationship management (CRM) systems that facilitate the establishment of strong doctor-patient relationships.

However, entrepreneurs often overlook the key factors leading to success. Few understand this better than Craig Joseph, who evaluates internet healthcare solutions for Texas Children’s Hospital. In the context of clinical informatics, he serves as a physician advisor for electronic health records (EHR) and regularly provides rigorous guidance to startups. As you consider medical innovations for your own projects, Joseph’s insights may prove invaluable.

1. Streamline Supplier Workflows

No matter what kind of health solution you are building, if it creates workflow issues, you are likely to achieve nothing. Joseph commented on a sophisticated application that may store intelligent data, “If it cannot integrate the tasks I perform daily as a physician, I will not use it.”

Streamlining workflows is crucial for healthcare providers. Failure to integrate existing processes and systems will only increase your workload. “No one wants to re-enter information,” said Joseph. “I don’t even want to press Alt+Tab. The integration is not seamless enough.”

In the modern world, electronic health records (EHRs) reign supreme in healthcare workflows. Unfortunately, for startups, this presents a classic “chicken-and-egg” dilemma. “Integration with EHR systems is the primary barrier preventing startups from reaching the next level,” said Joseph. According to his analysis, EHR vendors are generally reluctant to engage with startups, particularly those with unproven connectivity solutions, yet EHR integration is virtually a prerequisite for startups to secure contracts with healthcare providers.

Create applications that simplify doctors’ lives, which will help you persuade hospitals to pilot your app and gain access to critical electronic health records. This will be the key to launching your career.

2. Leading the Era of Performance-Based Pay

There is substantial demand for applications that enable providers to diagnose and treat patients in a cost-effective and efficient manner. The emerging value-based care model is a key driver of this trend.

In the past, provider compensation was based on the services they delivered. If a physician ordered an MRI scan or saw a patient in their office, payment for those services and procedures went directly to the physician. Today, insurers reward providers based on performance metrics related to quality, efficiency, and outcomes.

Joseph provided a simple example: “For instance, patients with rashes would face relatively high costs for hospital treatment under a performance-based pay model. They could simply take photos and send them to their doctors.”

Or consider a completely different health issue, he explained. “I want to identify high-risk patients in psychiatry and have them seek care early to avoid potential emergency department visits, as emergency care is costly. If I can secure a certain amount of funding, I truly aim to keep patients out of the emergency room.”

Joseph believes this will represent a fundamental shift. Payers are now required to pay a fixed amount to maintain health, while it is up to healthcare providers to determine how to help patients stay healthy and how to allocate those funds. To this end, providers are seeking support from emerging technologies to more effectively achieve performance goals, which necessitates reducing the number of clinical visits and keeping patients out of the emergency room.

3. Empower the entire care team to assist physicians

This outcome-based payment model also encourages providers to pursue team-based treatment approaches. With fixed payments, physicians have become the most expensive resource for hospitals. Providers are actively attempting to expand the scope of practice for physician assistants, nurses, and technicians, allowing physicians to focus on the most critical cases while enabling hospitals to reduce costs.

“If there are nurses in my team who can act as doctors, I will train them and leverage their roles to the fullest extent, while also achieving my goals.” Joseph also pointed out that this would open the door to a new wave of diagnostic applications.

These applications may monitor vital signs, assess disease risk, or enable mobile diagnostics, but the most fundamental objective should be to help providers achieve better clinical outcomes at lower costs. If your application can empower the entire care team to accomplish more and perform better, rather than developing tools designed exclusively for physicians, you will be in a stronger position.

4. Do not create lists; create actions.

As health issues receive increasing attention, suppliers are facing growing demand. Insurance companies incentivize suppliers to implement population-based management. For instance, physicians may be tasked with reducing influenza mortality and breast cancer incidence among a panel of 500 patients simultaneously.

Clearly, we can leverage applications to help vendors complete those tasks. However, Joseph cautions that additional lists and spreadsheets are not the solution; information must also be actionable, and applications need to do more.

For example, in the case of influenza, applications should not merely identify patients who need vaccination; instead, they should notify patients, schedule appointments for them, and provide services such as SMS reminders, while also following up with elderly patients through traditional means such as email and telephone.

“I would be more inclined to use an application that allows me to schedule flu vaccinations for all my patients at once,” said Joseph. “I’ve seen many vendors with flashy ideas, but what I need is a solution that handles the final step, sparing me from having to do all the work myself.”

“If someone finds a way to make information more actionable, I would choose them over you, even if their interface is not so user-friendly.”

5. Establishing Connections Between Suppliers and Patients

Due to higher deductibles, patients are increasingly concerned about the cost of medical care they pay. Therefore, as patients become more aware of physicians’ financial incentives, they also evaluate the services they receive. Joseph stated that helping patients make such assessments represents a significant opportunity for technology companies.

Engaging patients will intensify competition among physicians. Patients will evaluate doctors based on criteria such as “Do I like this person?” and thereby inform physicians how to become more likable, a dynamic that extends beyond the scope of medical services.

Customer Relationship Management (CRM) applications take on this task, handling everything from sending appointment reminders to automated phone follow-ups with meticulous care. The application should convey a sense of warmth to patients, fostering a favorable impression of the physician. According to Joseph, this helps patients have a different experience when interacting with their doctor, even if it entails additional costs.

(To stay updated on the latest information about internet healthcare startups, please follow VCBeat’s WeChat official account: vcbeat. We also welcome you to engage with us on topics of interest, contact us via WeChat, and share your startup projects or related research insights.)