by Dan D’Orazio, CEO, Sage Growth Partners
We recently returned from the J.P. Morgan Healthcare Conference, and as usual, our time in San Francisco did not disappoint. Our conversations with attendees (including many of you) revealed industry challenges, opportunities, and trends that will affect health IT companies and their investors in 2019. Here are some of my biggest takeaways:
1 – Multi-sided markets present real opportunities—if done right.
Many health IT companies are recognizing the value of evolving their position/offerings to be more attractive to more types of customers. For example, due to the historically slow buying cycle in the provider space and pricing pressures, many vendors are looking to translate their offerings to the payer and pharma industries, under the belief that their buying cycles are faster, pricing levels are higher, and so on. Case in point: Remote glucose monitoring devices. Many health IT companies primarily targeted the provider audience in marketing these devices, but now they are broadening their initiatives to include payers and pharma.
Still, it’s not easy to enter a new space—the value prop will be different and understanding who to target and how can be a challenge. Companies should only enter new markets if they are confident their technology presents a unique and effective solution to a problem those markets are facing.
2 – Data monetization is raising serious questions with unclear answers.
Many health IT companies are exploring data monetization as a complementary revenue source and as a way to expand market share. It’s a natural step, particularly for those who are already capturing patient data on a daily basis. But is it a smart move? How can it really be done?
Throughout the conference, we kept hearing the same questions: Who owns the data, and do companies have the right to sell it? It’s unclear how these questions will be answered and when, but in the meantime, we urge caution and due diligence. There is also often a strong presumption that data is an easy sell is to pharma or health plans, but this must be qualified.
3 – It’s time to play “small ball.”
Don’t overlook real opportunities. In healthcare, a little bit of market success can go a long way toward long-term viability. Health IT companies that are constantly looking for grand slams might be missing out on meaningful opportunities.
Don’t underestimate the value of a smaller win, or the value of a solution that’s not as “sexy” or hype-grabbing as something else. There can be massive ROI in more straightforward, “mundane” wins and solutions that address clear use cases today.
4 – Do what you say: It all boils down to execution.
In San Francisco, it became even more clear that payers and providers are jaded when it comes to health IT companies, many of which promise the moon and the stars, and blockchains, and smart machines. Health IT companies should stay focused on delivering on their promises quickly. In short, they need to do what they say.
5 – For early stage companies, relying too much on the CEO as the seller could have limitations.
Small companies tend to rely heavily on their CEOs to make sales, and this can be necessary and very successful—up to a point. Strong CEOs have passion, motivation, connections, and creativity.
The problem is that relying too heavily on one individual, and one individual’s expertise and connections, can hamper long-term growth. CEOs must put measures in place, the minute they start commercializing, to ensure they have the talent necessary to scale. It’s not easy, however, to find great sales people. Our recommendation? Hire individuals who are good listeners, teachers, and consultants. They must, above all, be willing to be students of the market.
6 – Communicating a unique value proposition is hard—and getting harder.
Positioning and messaging continue to be major struggles in the oversaturated health IT marketplace. In an age where many vendors look and feel the same to customers, health IT companies must learn to more effectively, and more succinctly, define and communicate their unique parcel of land. And this has to be tied to addressing pain points that matter—that the health IT company can get paid to address.
It sounds easy, but it’s common for companies to get caught up in the hype, trying to make sales through complicated messaging that bores and confuses customers. Speak clearly and plainly, and don’t get too fancy. A more straightforward approach will help companies stand out, capture attention, and grow.
Dan D’Orazio is CEO of Sage Growth Partners (SGP). He shapes and leads the vision for the firm—a vision focused on helping clients to accelerate their commercial growth. While also leading the firm’s business development efforts, Dan remains actively engaged with client delivery to ensure the quality of work and to deliver successful strategies for clients in an ever-changing and complex healthcare market.