Having a great idea is key for any company, but what sets you apart is a viable business model. With respect to product and business, pure tech companies and health tech, the sector in which we operate, are quite different. In health tech, validating business models is a protracted process because market access is determined by regulatory approval (CE marking in Europe and the Food and Drug Administration in the United States) and time-consuming clinical studies.
To survive the time it takes to get your product ready for market, you need people, believers and investors familiar with the sector and its challenges. Often, tech investors believe it is possible to expedite that process even in the heavily regulated healthcare industry. But the reality usually catches up with them. You need to be prepared to go slow, show patience and understand that it takes time to bridge this initial gap. Ultimately, the requisite clinical studies and the regulatory approval process raise the value of the product tremendously. These two components will enable partnerships with important stakeholders down the road. If you are considering cutting corners during this phase, you should think twice: Taking out a mortgage on your technology investment could mean having to redesign and rebuild everything at a later date. If you are building a digital health solution, you should definitely reach out to get some tips and tricks for how to make this process as efficient as possible.
A second major issue is the business model in health tech, which is crucial to surviving the so-called “valley of death,” the period of time before revenue streams stabilise. We are all willing to pay 10 euros a month to watch movies on Netflix, but most of us aren’t prepared to pay the same amount to manage our health. Viable business models rely primarily on reimbursement by insurance companies or governments for the device or service offered, but reimbursement takes a tremendous amount of time and is organised differently across all countries in Europe. National regulations that override international rules create an additional layer of complexity.
As a small startup, it is hard to rely on reimbursement from Day One, so you need to think creatively. Most of the time, it makes no sense to have an extensive sales force on the road selling your product to every healthcare provider out there on the assumption that this is the only way to scale it.
We believe policymakers should begin anticipating how healthcare can evolve, creating a vision, for example, of how prevention plays a role instead of just focusing on cure and care. We all know that a lot of healthcare systems are currently under pressure and that prevention might be part of the answer. But prevention requires upfront investment from the payers. To avoid falling into the chicken-and-egg trap, we need more than just talk – we need action.
Don’t get us wrong. We are not saying that payers should reimburse all certified digital health applications. It would be helpful, however, if policymakers would take a clear stance and set clear guidelines on what the requirements are for reimbursement when it comes to new innovative, preventive solutions. More outside-the-box thinking is needed here. In many cases, technology has developed beyond the scope of established regulations and guidelines. Why not help health tech startups grow by organising paid pilot projects on a decent scale, allowing them to prove the healthcare benefits of their tech solutions instead of requiring a costly, 10-year randomised clinical trial?
Bieke Van Gorp
Bieke Van Gorp is the co-founder and COO of Qompium. The health tech company’s award-winning FibriCheck app, which recently gained Food and Drug Administration approval in the United States, screens atrial fibrillation by having patients put their finger on the camera of their smartphone. Atrial fibrillation can lead to heart failure, kidney problems and heart disease. A stroke is often the first symptom (Photo: FibriCheck)