CIOs Confirm Healthcare Startups Have a Tough Road

A panel of healthcare CIOs at the CHIME Spring Forum confirmed what startups have known for a long time – the odds are stacked against them. The panel confirmed that health systems prefer to work with incumbents on new solutions rather than adopt ones from startups. However, startups with strong clinical champions, seamless integration with existing systems and that truly address an unmet need, will get a shot at earning their business.

The “How Providers and Health Tech Startups are Transforming Care” panel at the CHIME Spring featured 3 CIOs from US health systems:

The panel was moderated by Carina Edwards, CEO of Quil Health.

How do CIOs look for solutions?

During the panel, Gaboriault shared his decision tree (verbally) that his organization uses when looking for solutions:

It is clear there is a preference for existing vendors. Only when the pool of existing vendors is exhausted will a new vendor be considered. This makes it challenging for startups who may not have the brand presence or sales infrastructure to be top of mind when a system goes to market looking for a solution. Larger, more established vendors have the advantage here.

Gaboriault went further and explained how “vendor sprawl” was a real concern and that he was actively trying to reduce complexity by having fewer vendors rather than more. Vengco echoed these comments and said that he has a similar approach when looking for solutions.

Unmet needs

The panel did agree that there was one specific case where there was a preference for a healthcare startup – when they were looking for a solution for an unmet need and where flexibility and speed are critical.

To address immediate challenges that do not have ready solutions (ie: available in less than 6 months), Stump prefers to work with a nimble startup with “an energetic team that is smart, focused and who is willing to work with me to shape the roadmap of the solution to meet my needs”.

What is key here is “unmet needs”. Me-too startups with solutions that offer only incremental improvements over an incumbent solution are going to find it hard to get an audience with health systems. Addressing a need that incumbents do not is what CIOs favor.

What CIOs want from startups

When asked about what they look for when working with a startup, the CIOs has this to say:

  • Stump: “What I want to know is whether the solution is reliable, is it solid, is it secure, and does it integrate/interoperate with my existing systems”
  • Gaboriault: “What I look for is an innovation that will: (a) extend mortality; (b) improve the quality of life for patients; (c) be an economic value-add; and (d) provide agency for patients.”
  • Vengco: “I want a startup who will work with me to pilot a solution and who can scale quickly when that pilot is successful”

Vengco elaborated on this comment by explaining that startups often lack the skills and experience to be able to scale up quickly. Working well in a small pilot implementation is straightforward. Scaling to multiple organizations and thousands of users is a whole different challenge. Vengco’s advice: invest in making your solution truly scalable and robust.

Good news for startups

The panel did deliver good news for startups.

In the past, healthcare has been slow to embrace change. But according to Stump: “2020 proved that healthcare can scale and respond quickly when we need to”. Just look at the rapid adoption of telehealth, and to a lesser degree, remote patient monitoring. When faced with the need, health systems reacted quickly to adopt new solutions.

Another piece of good news shared by the panelists was the fact that health systems are much more willing to invest time and resources helping early-stage companies refine their solutions. Baystate Health, for example, has TechSpring – a “living lab” where clinicians, patients and startups come together to solve “passionate problems”.

So if you are a healthcare startup, take heart. It is challenging to land a new customer, but if you work at ensuring you are solving an unmet need while keeping yourself nimble and flexible, health systems are open to working with you.

About the author

Colin Hung

Colin Hung is the co-founder of the #hcldr (healthcare leadership) tweetchat one of the most popular and active healthcare social media communities on Twitter. Colin speaks, tweets and blogs regularly about healthcare, technology, marketing and leadership. He is currently an independent marketing consultant working with leading healthIT companies. Colin is a member of #TheWalkingGallery. His Twitter handle is: @Colin_Hung.

1 Comment

  • Amazing! 3 CIOs rooted firmly in the past supporting vendors who have not moved the needle. A major reason why healthcare is in such a chaos – and expensive. The incumbents are terrible; their solutions are so rooted in the past that they are simply unable to harness the power of current technologies, let alone what is coming down the pike.

    At best, the top 5 vendors are dinosaurs. And Gaboriault’s “decision tree” keeps them firmly in place. Incestuous is the only word that describes this thought process.

    Its high time healthcare leadership recognize how antiquated their HIM is and foster new blood

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