In my four days at the January 8-11, 2018 J.P. Morgan Healthcare Conference in San Francisco, I met with leaders and investors from dozens of healthcare companies, ranging from startups to contenders to market leaders. Here is my translation and view of the energy and buzz that is JP.
THOSE WHO INVEST IN THE CHALLENGING, GROUND-LEVEL WORK WILL WIN:
Healthcare is a punishingly hard business. There are few shortcuts around the imperative to personally and effectively care for patients and to reward providers for successfully doing so. It’s not like the communications industry, where, even in the most challenged regions of the developing world, an innovator can conclude, “We don’t need to lay a messy land line infrastructure any more. We can go directly to satellite and wireless.” Healthcare is different. You can’t simply drop in a healthcare technology and think it will overcome the numerous dislocations of human work flow and the disparities in who benefits. The interests of insurers, patients, doctors, and hospitals are all in play, all the time. The healthcare innovators who best carry out the hard work of embracing these realities will be the winners.
PRODUCT INNOVATION IS GREAT, BUT SO TOO IS PROCESS INNOVATION:
Employers, payers, consumers and providers are being bombarded with point solutions, platforms, technologies…. blah blah blah. Even with the best technology, you have to use it in real-life, in the workflow. There are so many broken systems in the delivery of care that buyers are looking for people to just do the hard work for them. Instead of the employer or the health plan having to figure all of this out, entrepreneurs and investors need to find a way to do the hard, different work: driving uptake, billing, incentivizing subscribers and providers alike. We love the work of companies like Solera, doing just that.
SELL THE OUTCOME, NOT THE WIDGET:
As in the famous quote from Harvard professor Theodore Levitt: “People don’t want to buy a quarter-inch drill, they want a quarter-inch hole.” They want the outcome. So, you need to start with the business problem and then figure out how technology helps to solve it. Those who begin by solving the business problem and then add the needed technology will be the likeliest to succeed. Services, despite the wishes of many, are hard to separate from technology. Without a services wrapper, it is often hard to get lift and adoption. I heard – more than in the past – the recognition of the role that services must play.
FOLLOW THE MONEY, STUPID—GOOD IDEA DOESN’T EQUAL GOOD BUSINESS:
In 2006, the Health and Medicine Division said that we killed 7,000 people a year simply because of bad handwriting on prescriptions. It took another 10 years because of the federal government’s incentives and penalties for us to gain mass adoption of electronic prescribing. We knew we were hurting people, but the policy and the systemic habits and the money weren’t in place. How do you get the overwhelmed provider who writes a prescription to change that behavior? As with any deep industry dilemma, you must solve that problem AND find a way to get paid.
“NOTHING HASTENS THE DEMISE OF A BAD COMPANY MORE QUICKLY THAN GOOD ADVERTISING:”
Pushing a brand through the market noise is deceptively hard. I heard a relentless drive for market leadership and brand definition. The market noise today is tremendous, and it is accompanied by a lack of clarity. Companies want to create a clarion call, a new category, around their solution. They want to define a category. They want to be their own brand. Forget the obsession with fancy words, and unicorn status. Start with, “There is a problem here, and I understand the economics, and I can figure out who needs to benefit.”
Real credibility comes from a plain understanding that avoids hype and solves real problems. Value must be anchored in a fundamental knowledge of the needed process, product, and business model.
Here’s to a successful 2018!
As CEO of Sage Growth Partners, LLC (SGP), Dan D’Orazio 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.
