There’s no denying it, America is in a full-blown startup craze. Combined with the Affordable Care Act’s new rules and regulations, more and more entrepreneurs look to healthcare as the place for the next big thing. With estimates placing the value of the healthcare industry at $2.8 trillion, they might be onto something.
Unlike other industries, though, healthcare has its own set of problems and obstacles. The flipside, of course, is that entrepreneurs can bring in fresh eyes to look at these problems and create new and inventive solutions.
Startups that are looking to break into the industry should start small. They should look for common problems across the board that need solutions. Think about your own experience with care and how it could be made better, but don’t get overwhelmed looking at the entire big picture. The three most funded areas in 2014 were Big Data and Analytics, Population Health, and Navigating the Care System. Start there.
Next, startups should look to partner. As we said, healthcare is its own unique industry. Finding an insider to help navigate can make the process easier. Additionally, many big companies—healthcare providers and insurers alike—want to partner with startups. Once a startup can demonstrate its ability to gain and keep customers, the company suddenly looks very valuable. Courting bigger healthcare companies can take time, but the resources they can provide make it well worth the trouble. Since healthcare has so many laws regarding patient safety and privacy, having a legal department from a larger company will be a huge benefit in the long run.
The good news is that many health systems and hospitals are starting to realize the benefits of working with startups. Smaller companies own one issue and can devote more time to developing great solutions to that issue. Usually startups can move faster than larger organizations because of fewer internal processes or politics.
Startups also have the advantage of starting fresh. Healthcare reform means moving away from fee-for-service and towards value-based care, which means the focus in healthcare has shifted to new ground. Care is now about keeping people healthy to avoid treatment, and there is plenty of available space for new companies to join the healthcare industry with this new focus. Healthcare is essentially saying to startups, “Come on in, the water’s fine.”
Because of this need for new methods of providing care, existing health systems should also think of themselves as mini-incubators for great ideas. After all, the people on the ground know the system’s issues and frustrations better than anyone. Working with the employees at all levels, encouraging them to think outside the box for solutions, and then helping those solutions grow will help an organization work like a startup.
Wherever the ideas come from, one thing is clear: startups are helping to transform healthcare.