Experience matters: Why it is a good idea to partner with an seasoned entrepreneur when it is time to take your healthcare concept to market.
We have previously discussed the often-overlooked challenges that large corporations face in monetizing innovation, and especially innovation outside of the core of the business.
Healthcare organizations face additional industry-specific concerns above and beyond more traditional enterprises that can inhibit or slow innovation. Some of these are non-negotiable: for example, the industry’s laser focus on patient safety and the regulatory rubric that arises as a result.
Likewise, systemic challenges such as the highly localized, specialized, and fragmented nature of care delivery are not subject to rapid adjustment and for all practical purposes must be accepted as the environment in which the innovator operates.
These are well known and well covered aspects of the healthcare industry. I’d like to focus on early-phase business expertise, a lesser-covered challenge to healthcare innovation, but one that has very real effects on the ability of an innovator to convert their concept to market.
First, an observation: the delivery of patient care is the core business of practicing medical professionals and care delivery organizations.
This may seem uncontroversial at first, but it has significant ramifications for a healthcare organization attempting to support innovation. For example, it means that innovation not directly related to improving the delivery of care to a patient is outside of the core of a practicing medical professional or organization.
The Issue of Expertise
This assertion is not a critique, but rather an attempt to grapple with the very real consequences of attempting to innovate in new areas. The issue here is one of expertise. Designing a new care delivery protocol or inventing a new surgical technique is solidly within the core expertise of a care provider. Selling a new insulin pump or building a new patient engagement portal is not.
This is not to suggest that care delivery organizations cannot innovate in the latter categories, and in fact there are plenty of examples of medical professionals and organizations that have successfully done so.
What it does mean is that there are additional hurdles facing care providers and enterprises that seek to engage in non-core innovation. Any executive that seeks to foster wide-ranging healthcare innovation should be aware of those challenges.
Know Your Strengths
It would be hard to argue that there is a profession better trained to diagnose the root cause of an issue than that of a physician. In fact, this is the most common form of healthcare innovation we see. Doctors by training seem incapable of ignoring poor solutions, and by far the bulk of new ideas we see and evaluate in the industry are attempts by medical professionals to fix the challenges they face on a daily basis.
Medical professionals in general receive quality training on the scientific method and how to use it to structure a response to a problem. This is the basis of quality risk-mitigated research, and it is often a step that I have to teach aspiring entrepreneurs in other industries to adopt as best practice.
However, the ability to craft a strong hypothesis about a problem, and even to develop and test a specific solution to a problem, is adamantly not the same thing as launching a commercial product capable of serving an entire market. This difference is often poorly understood, to the frustration of aspiring healthcare innovators.
The Difference Between Research and Development
This experience gap is hardly unique to the healthcare industry. We tend to lump R&D into the same bucket, as if ‘research’ and ‘development’ required the same set of skills. Nothing could be further from the truth.
Companies that launch successful product lines from their R&D departments recognize this problem and build entire org structures around ensuring the scientific and technical talent has access to the experienced business talent required to profitably commercialize the products.
In the startup arena, we have a concept called “smart money”, where entrepreneurs preferentially seek investment from individuals or equity funds that have some experience or expertise in the market they have targeted, much for the same reason.
By contrast, there is no escaping the fact that most healthcare institutions are either directly controlled or heavily influenced by those with medical training. This is reflective of their core business: namely, providing medical care.
In practical terms, the result is that there is very little experience at decision-making levels of healthcare organizations around the business of innovation, the ability to finance and successfully commercialize a product, and how to make cash-efficient tradeoffs (and there are always tradeoffs) on the path to bringing new products and technology to market.
On top of this, practicing medical professionals are doing exactly that: practicing. I have not met many physicians who happen to have a spare hundred hours or so a week to dedicate toward product commercialization, even assuming they did have the expertise.
The frustrating paradox that results is that health systems, doctors, and individuals on the front lines of care delivery, possessing an unrivaled perch to see all the opportunities across the industry for improvement, are simultaneously singularly challenged in translating that visibility into commercially viable solutions.
The Partnership Approach
One approach common in the industry to addressing the R&D skills gap is for medical institutions to partner with academic ones, especially where the medical institution may be part of a larger academic center.
Medical and academic partnerships tend to work well when the R&D engagement is on what I call Big-R and Little-d: meaning there are still basic questions of science to be solved behind a hypothesized solution, and there are perhaps years of focused work required to collect the data to support a particular approach as safe, effective, and potentially superior.
However, when the work shifts to Little-r and Big-D, generally once the solution needs to be commercialized and brought to market, we often see the relationship flounder. Academic institutions generally suffer from the same gaps in early-phase business expertise as medical institutions.
Worse, in some cases: it is hard to overstate the bureaucratic overhead imposed by an academic institution, and in particular a public one. The cash-efficiency, nimbleness, and singular focus required to launch a new startup are generally untenable under the thumb of a public university.
It may be tempting to point out that academic institutions often have business programs and even specialized student offerings around entrepreneurship. I caution against overselling this point. The business theories of a degree program are no replacement for the actual, in-the-trenches experience of building a successful business from scratch. Entrepreneurship is fundamentally an apprenticeship business, and it is best learned by doing.
This last fact is the reason so many universities partner with external startup incubators, often in conjunction with investors and experienced entrepreneurs. The most effective universities in the startup world have a light touch, providing access and resources but not a stifling level of control. Where universities do exert high levels of control, I would encourage the innovating healthcare executive to closely examine the university’s actual, not marketed, track record of success.
This is all to say: an innovating healthcare provider often does not have sustained exposure to the business experience or skills necessary to repeatedly commercialize front-line innovation. Partnerships with academic institutions can solve early phase research limitations but are no replacement for entrepreneurial experience when it is time to go to market.
For these reasons, we suggest that the innovating executive seek experienced entrepreneurial partnerships to forge a program for innovation. At The Combine, it is our mission to help you unlock the value of the visibility you have across the industry.