No one can deny that the healthtech market has exploded in recent years. As of 2021, health innovation companies raised a record-setting $44 billion for investment. Yet even a hot market can be cool, especially when it’s as crowded as healthcare technology has become.
It’s begun to feel as if just about everyone is trying to bring disruptive technology into healthcare by designing and deploying new devices and systems. Even big players — most notably Amazon — are getting into the mix to get a competitive advantage in healthcare. But how are smaller startups going to get noticed? Which entities will rise to the top of the red ocean, and which will remain below the surface?
These are big questions that have complex answers. Right now, the competition is very fierce. However, it’s also widely undifferentiated and siloed. Take the concept of interoperability in healthcare technology, for example. There’s a mountain of inefficiency and technical debt in healthcare technology because many of the latest medical and healthcare solutions don’t integrate. This causes significant issues that make adopting patient-empowering options like wearable devices, AI-powered patient portals, and voice recognition products problematic.
Imagine you’re waiting for lab results to be sent to you through your patient portal. The portal offers a new beta function that helps you interpret the data, but when the results come in, the AI function can’t read the results. The formatting of the results doesn’t match how the AI was designed because the machine that generated the results was built by a company that didn’t make the AI. That leaves you trying to figure out what the results mean through Google.
This is just one of countless possible scenarios in which crucial health data is available to you and your doctors, but it can’t move freely between platforms and help you be a more informed patient.
Nevertheless, healthcare providers, systems, and hospitals do know there’s value in technology. The majority welcome the ability to serve more patients seamlessly and have access to urgent information in real-time (or as close to near-time as is feasible). They can’t waste time on products that aren’t interoperable.
Hospitals are going to look for companies that can process data without creating extra hassle for doctors, nurses, and patients. And the healthtech entrepreneurs that understand, accept, and overcome these issues are destined to win out.
Gaining Traction and Notice in a Crowded Innovation Space
It’s not impossible for emerging healthcare companies to break through the noise. One method is by forming strategic alliances. Another is to seek out private equity to drive visibility and growth.
In terms of partnerships, companies must be very discerning about their relationships. Ideally, their affiliations should be with other businesses interested in providing interoperability. That way, the parties can bring already-integrated solutions to buyers within the healthcare ecosystem. This can help serve as a differentiator and make providers more open to investing in technology.
As far as private equity goes, more than 1,800 U.S. healthtech companies collectively have received $280 billion in funding support over the past 10 years. Even during the pandemic, private equity in support of medical devices and related companies stayed strong. This kind of backing can keep an innovative business from losing momentum too early against the competition in healthcare. It’s a survival tactic that may be an intelligent play. As other companies drop off, the ones buoyed by strong private equity investments can keep pushing ahead.
Healthcare Technologies Poised and Positioned to Succeed
This doesn’t mean there haven’t been any healthtech innovation success stories. A few types of businesses have carved out niche markets within the larger healthcare ecosystem. One such market is the electronic health records (EHR) subdivision.
The emergence and adoption of EHR have been nothing short of phenomenal. To date, three major players control more than two-thirds of the U.S. marketplace: Epic (32.9%), Cerner (24.4%), and Meditech (16.7%). Why have they been able to stand out and dominate? It’s not necessarily that those three vendors offer anything different from one another. Instead, they entered the fray early and kept tweaking their solutions. Now, healthtech consumers see them as having robust options.
While breaking into the EHR space would be incredibly challenging, organizations willing to look at how the top EHR vendors overcame resistance and grew their presence systematically can learn quite a bit. Ironically, even with all the hospital system mergers and acquisitions, migrating data from one EHR to another hasn’t been easy. The company that can unlock the gateway to interoperability between disparate EHR systems should be able to win significant contracts.
Parting Thoughts on Winning the Healthtech Solutions Battle
The answer isn’t to throw more ideas into the marketplace and see which sticks if you’re looking to become a success in healthtech; it’s to figure out how to connect what seems to be working and what is seen as valuable. The company or companies that can bring all data together will have a serious competitive advantage. Not only will they be able to help healthcare providers and systems make better use of their big data analytics, but they’ll be able to give patients what they desperately want — a better way to take care of themselves and navigate the systems that seem so overwhelming at times.
If this seems like it falls under the category of “building a better mousetrap,” that’s because it does. Right now, so many innovations are jockeying for space, but few players are looking at the bird’s eye view. It’ll take a forward-facing innovator and team to determine how to marry the best-of-the-best healthtech solutions and solve the problems that come with data fragmentation. And it may not be an easy sell at first until it’s proven to work. Nonetheless, it’s a target worth trying to hit.
The healthcare and medical community, by and large, know it needs to change. But change can be challenging, particularly if there are too many choices. Healthtech entrepreneurs whose interoperability-focused companies bubble to the surface and stay there long enough to be noticed will be in the right place at the right time to become tomorrow’s healthcare technology leaders.
Marc Helberg is the managing vice president at the Philadelphia office of Pariveda, a consulting firm driven to create innovative, growth-oriented, and people-first solutions. Read more about the work Pariveda does here.