- Why Do Digital Medical Startups Fail?
- 1. Non-compliance with industry standards
- 2. Poor connection with target audience and medical professionals
- 3. Development associated risks
- Important Factors To Consider Before Launching a Medical Startup
- 1. Conservative market
- 2. Interoperability of health data
- 3. Regulatory compliance
- 4. Innovative solutions
- 5. Trusted healthcare software development company
- Seven Steps to Build and Sustain Successful Medical Startup
- 1. Market research and analysis
- 2. Hire a medical advisory board/ consultancy
- 3. Development outline
- 4. Business plan, budget and MVP
- 4. Revenue model
- 5. Product promotion before release
- 6. Product development and release
- Best Market To Launch Your Healthcare Technology Startup
- How Can Appinventiv Help With Your Healthcare Startup?
The digital healthcare sector is among the most funded and rapidly growing industries expected to surpass $42.22 billion by 2027. In this total market revenue, experts estimate that the digital fitness and well being segment will be able to acquire a major percentage with a total revenue of about 17.71 billion by the end of 2022.
Being one of the initial adopters of digital transformation, the healthcare industry is also one of the toughest areas to build a medical startup in practice. Why?
Factors such as high security standards, strict legal rules and complexity of the healthcare relationships make market entry difficult for most businesses willing to launch new medical services.
Therefore, in order to succeed, businesses need to pre- analyze “how to start a medical startup” in the current market landscape. Moreover, how to avoid the dead ends that lead technology healthcare startups to failure.
So, if you are planning to start your own healthcare business or expand an existing business with additional medtech services or healthcare app development, this article is a must read for you.
In this article, we will guide you through the entire process of organizing and launching a medical technology startup while addressing all major success factors and risks.
Now, before we proceed with the process, it’s important to address why do medical startups fail? The answer to this question will eventually lead us to factors and risks one should avoid while launching a healthtech startup.
Why Do Digital Medical Startups Fail?
The demand for innovative healthcare technology and solutions is enormous. For instance, the pandemic has led to a significant increase in adoption of telehealth and telemedicine solutions among patients and medical institutions. In fact, over 70% of the US population is willing to use telemedicine and about 76% of the healthcare businesses are ready to include telemedicine coverage in their insurance plans.
[You may also want to read: How much does Telemedicine app development cost]
Hence, if emerging healthcare startup companies are offering the right solutions, why are they not able to succeed? Let’s identify the major reasons for their failure:
1. Non-compliance with industry standards
To build a healthcare startup, it takes serious preparation and legal consulting before you even start. Most medical startup companies fail because their owners are not able to clear all rounds of accreditation, licensing, industry bureaucracy, regulatory compliance and testing.
On the contrary, medical business owners who do their research have greater odds of success. Before you begin, keep a few points under your belt:
- Not all healthcare technology startups ask for the same set of legal precautions and permissions. Hence, choose your service compliance wisely.
- A few healthcare startup ideas can be introduced to market faster, such as “software-only medical products”. Thanks to the shorter preparation cycle.
- On the other hand, some medical startups require tedious legal procedures. For instance, projects covered by FDA policies including professional grade clinical products.
2. Poor connection with target audience and medical professionals
Another reason why over 32% of the medtech startups fail is lack of solid relationship with potential users, stakeholders and sponsors. Due to this, they are not able to obtain significant feedback to finalize and refine their products. Thus, make sure you cover at least three aspects mentioned below, before you start a healthcare startup:
- Contact and pitch your medical business startup ideas to established healthcare professionals and institutions to determine potential risks.
- Take specific feedback from medical practitioners or potential users to make sure you are on the right track to create an efficient solution to real-life problems.
- Maintain direct contact with your target audience, healthcare professionals for a long term continued support.
3. Development associated risks
Medical startups also fail due to other potential medical development challenges like:
- Low usability- unbalanced functionality of product, intricate interfaces etc.
- Tech skill barrier or technology complexity
- Availability of cheaper development alternatives
- Poor marketing and lack of communication
- Unreliable healthcare development partner
Now that we are familiar with the potential challenges to avoid, let’s quickly get to factors you must consider before entering the healthcare sector.
Important Factors To Consider Before Launching a Medical Startup
Before you start a healthcare startup, it’s crucial to checklist all fundamentals so that you end up with a successful startup business model. Below are the major areas to pay attention to, if you are looking to establish a healthy relationship with technology and healthcare.
1. Conservative market
Usually established medical enterprises do not always want to adjust their operating models with the latest technologies. As per Instamed’s 11th annual report, about 84% of the healthcare providers still prefer paper based manual processes for patient data collection and payments.
Despite the strain they add, established medical companies are highly conservative to work with new tools and technologies. This is probably why a physician analysis survey states that 64% of the medical professionals believe that technology is the main barrier to adopting remote care.
Therefore, to make a strong entry in a conservative market, make sure you have a powerful legal advisor and evidence based research product.
This will prove that your digital product may actually help them improve their services.
2. Interoperability of health data
Any business looking to innovate healthcare startups shouldn’t underestimate the complexity of medical data. Currently, over 36% of the medical record administrations have trouble exchanging patient information.
This means, your medical startup product should be compatible with other data solutions or devices used by healthcare professionals. How do you achieve this?
Make sure your healthcare startup product meets interoperability standards such as Electronic Data Interchange (EDI), Fast Healthcare Interoperability Resources (FHIR) etc.
One real -time instance of this could be Appinventiv developing “Soniphi ”, a vitality health product that assesses 94% of vocal information/data to offer users a complete well-being analysis report on your personal healthcare app.
3. Regulatory compliance
Medical startups have to navigate through thousands of municipal and federal regulatory compliances. Below are the top three healthcare regulations for businesses looking to build a medical startup in the US.
HIPAA stands for the Health Insurance Portability and Accountability Act that regulates the protection of personal medical information. The report outlines specific requirements for electronic medical data exchange, privacy and security.
Violation of HIPAA can result in a penalty of up to $50,000 to $1.5 million per incident.
PCI DSS is the Payment Card Industry Data Security Standard that protects patient’s financial data. Your medical startup must adhere to its policies to store, process and exchange your patient’s bank details.
The Federal Food Drug and Cosmetic Act regulates the use of clinical devices. If you are looking to build a medical startup based on a clinical product, make sure to get it certified for management and diagnosis of health and wellness.
4. Innovative solutions
Healthcare is not an industry you can expect to take up by storm. You need to have a relevant product or medical solution that contributes to patient care. 90% of your businesses’ success is based on the medical business startup idea. Hence, assure that your medical startup idea is innovative and facilitates better medical management and service.
For instance, Appinventiv developed a custom medical app solution “YouCOMM” to transform the in-hospital patient communication. YouCOMM is a multi-request format platform that resulted in 60% growth in nurses’ response time.
5. Trusted healthcare software development company
As per a study by Deloitte, over 40% of the companies believe in outsourcing their technical requirements for better results. From optimizing the present administrative process to improving the efficiency, make sure you outsource a trusted and experienced healthcare development company.
A skillful development team introduces innovation and new methods of disruptions for preventive, predictive, and protective healthcare.
For example, Appinventiv crafted a revolutionary solution Health-e People, a platform where users can store and monitor all their healthcare apps and devices’ data, find medical caregivers for their friends and family, and connect with people making the expansive healthcare world a community.
Besides the above mentioned factors, you must have a realistic financial expectation, no matter how brilliant your healthcare startup idea is. Know that a solid startup strategy and a right development team goes a long way in the healthcare business.
Now, without any further delay, let’s get to the core of our discussion. How to build a medical startup?
Seven Steps to Build and Sustain Successful Medical Startup
Launching a medical startup is a time consuming challenge, therefore, we have tried to make the process as specific as possible to offer the best industrial solutions. Here’s an approach you can take to build a successful medical technology startup:
1. Market research and analysis
Thorough market research is highly crucial in an industry as complicated as healthcare. You can start by dedicating all efforts to your target audience, technologies and current medical market standards.
With a target audience, your users are more likely to be more than just patients. Your users may include medical centers, labs, pharmacies or research institutions. Therefore, define an accurate demographic that may want to use your product once released.
Moreover, determine the fundamental requirements of your target audience and see if they are significant enough to warrant a solution. Apart from this, learn about the healthcare market and its limitations that could prevent your users from adopting your solution.
2. Hire a medical advisory board/ consultancy
You will need to understand the concept of medical science and peculiarities of the niche. A medical board or consultancy team can help you with a weighted perspective, possible roadblocks, and ideas to secure your business model. On top of that, the medical board members are also familiar with emerging healthcare technology trends that may prove useful for your medical startup.
3. Development outline
Your development team must create an outline for your business product. It starts with a documentation that explains functional and non-functional requirements, goals, expectations, deliverables etc.
Start with a documentation that covers the below aspects:
- Software product development (tech stack, frameworks, APIs and open-source tools)
- Software/app design (user interface, key features and functionalities, application logic etc,)
- Architecture (strategies, dependencies layers, components etc.)
- Security (internal and external risks, mitigation strategies, security protocols etc,)
4. Business plan, budget and MVP
Your primary aim must be to build and support your medical startup for at least five years if you don’t want to run out of resources before launch. This means you should craft a budget estimate with a strategic business plan based on inventory, assets, security deposits, and associated costs.
[you may want to read: how much does it cost to build hospital management system]
Map out the costs of development as per the estimate given your outsourced healthcare development company. Before commuting to a full-fledged development, you can also test your idea, core features, and model with MVP development.
[Check out the MVP development guide for businesses to gain more details.]
4. Revenue model
You can either choose a one-time license fee or a subscription based model. One-time payment models are suitable for remote patient monitoring tools, wearables and patient assessment tools.
Meanwhile, cloud based medical solutions usually stick to subscription based models to convert more users. You may also look for various other business monetization models to gain a detailed insight.
5. Product promotion before release
To get hold of maximum users, start showcasing your medical startup product to primary target audiences before release. Make sure your startup product also resonates with the industry gatekeepers- government and insurance companies.
Besides, innovative technology products are harder to promote in the healthcare community so be ready to back up your product with scientific research. What can make your product promotion more credible? Random control trials and peer reviews.
6. Product development and release
Analyze the feedback you get after launching the MVP, have your development team modify the required technical specifications before full fledged development.
An experienced medical app development company will suggest you to build your medical startup with scale in mind. For instance, using cloud infrastructure to adjust computing and storage resources.
You may also adopt a microservice or monolith architecture to divide your product modules into coupled modules. Further, you can also upgrade these modules to enhance your product with intuitive APIs.
You definitely have a long hard journey ahead of you to build a medical startup the right way, however, the above mentioned steps can help you with every stage of your startup development process.
Now, we are almost done with our discussion on “how to start a digital health startup company”. But there’s a bonus read for you. Make sure you don’t miss it out to start on a right note.
Best Market To Launch Your Healthcare Technology Startup
The report of Healthcare Investments and Exits says that the capital fundraising reached around $21.8 billion in the last quarter of 2021. Further, as per the 2022 annual figure , the investments are about to reach $47 billion, which makes healthcare the most popular sector for investors.
Among all other markets, the healthcare devices, software and app market is expected to make more revenue. Besides, over 60% of the US companies offer digitized insurance to their employees that significantly benefited the medical insurance market by $550 million in the past two years. This makes the healthcare insurance market a probable sector to invest in.
In addition, you may also surround your medical startup business ideas around healthcare infrastructure, clinical tools and devices, and innovative digital solutions.
[For more insights on ideas, check out 15 types of software solutions to transform your medical business growth]
How Can Appinventiv Help With Your Healthcare Startup?
Appinventiv is the most trusted healthcare software development company popular for digitizing healthcare with innovative digital solutions. Appinventiv’s skilled team of over 800+ healthcare experts delivers the best healthcare management software that enables customers to win the market, enhance healthcare quality, boost patient satisfaction, and optimize internal workflows.
Appinventiv has worked on over 50+ digitization projects that solve three of the biggest challenges to completing healthcare digitization: governance, organizational structure, and mindset. Our rich suite of services include:
- Telemedicine and telehealth apps
- EHRs (Electronic Health Records)
- Process management
- Medical insurance
- Software integration
- Lifestyle tracking and much more.
To get started, discuss your startup goals with top medical experts and attain customized insights on your project.