HealthTech FAIL: lessons for entrepreneurs from startups health gone awry

Editor's Note: this is a guest post written by Dave Chase, CEO of Avado.com patient relationship management company, which was a finalist in the TechCrunch Disrupt. He was formerly a management consultant to medical practice, Accenture consulting for 25 hospitals and founder of Microsoft health business. You can follow him on Twitter @ chasedave.

Healthtech represents the sector is constantly growing, but from a pool of $ 1 billion that VCs poured into startups in the past year, medical companies only got about 3 per cent of the total. Not so many startups healthtech were able to provide these large enterprises cartridges; However, last week, I drew the attention of one company healthtech seem to be doing it right: Zocdoc, which raised $ 50 million round from summer time earlier this month and suggested some points to consider for startups looking to draw lessons from experiences in Zocdoc (check out the post here.

As the above company numbers from Rip in the post, a lot of startups have not yet really demonstrated the wisdom shown by Zocdoc, resulting in an increasing number of failures healthtech over the past few years. A recent study, inter alia, underlined the phenomenon. After interviewing 110 digital business health RockHealth has recently released the findings of the study, showing the gap between companies that actually receive funding and the many people who have come up empty.

This trip sheds light on why so many companies could not blow healthtech or had to undergo significant changes in order to survive. Below you will find some of the best reasons for startup failure healthtech:

The lack of specific attention or acceptance of terms

Is well known that insufficient attention kills startups in healthcare or not but it is especially common in health care. Healthcare industry suffers from an abundance of pain points and is in serious need of shocks, so it's tempting for new startups to try to resolve them to make the greatest impact. However, these startups ignores the old saying about how to eat an elephant is one bite at a time. Too many startups biting off more than they can chew. It is better to choose one major pain to deal with and go with him.

Expected consumers to pay

With the exception of weight loss programs there are not many examples of consumers pay directly for health services. Over time, this may change, the greater burden of healthcare costs gets switched to consumers, as outlined in part II of a series of health disorders (see references below). Nevertheless, I would be very cautious of any business, expecting that consumers pay in the near-term.

Expected users to enter much information

Although I believe there are more reasons why Google Health is not expecting consumers to enter information is one of the major factors in why personal health records (PHR) failed to gain significant traction. Most of the PHR rely on individual data entry, and few are willing to do so.

Requires an enormous amount of money

This tends to occur during periods of bubble where there is a grand vision and frothy financial markets threw huge amounts of money. Eventually, they were not sustainable franchise.

Require multiple and complex partnership

These runs depends on too many partnerships are likely to run into problems, these partnerships often involve the established players. Unfortunately established players have significantly different sense of urgency. Many good ideas die on the vine, waiting for business development and legal departments on established players who do not share launch a sense of urgency.

There is no understanding of the dynamics of recovery

This is definitely the number one reason why healthtech startups failed. The results of the study RockHealth highlight an important aspect of this. On a positive note 77 per cent of the VCs think health IT investments will increase in the United States by the year 2011. Already 35 digital health care companies with $ 2 m + in year 2011. It is important to note that 80% of them receive funding are B2B (i.e. sale of health professionals in business, etc.), but most entrepreneurs digital health surveyed think consumers will pay for your product or service. Despite this most entrepreneurs digital health early build B2c companies.

Before it's too late, I hope these companies will find a way for anyone except consumers pay. This can be through advertising model or technology licensing for organizations. In this case, the consumer is a product, not the client. The client is an organization.

You can find a complete study of RockHealth in embedded below for your viewing pleasure:

The following is a series of health violations listed above:

Health violations: Pharma 3.0 will encourage the transition from life science investing HealthTech
Health violations: providers will use the HealthTech differentiate and produce better results (part II)
Health violations: providers do newspaper industry mistakes (part III)

Fragment image courtesy of Wikipedia Commons

Avado is a patient relationship management platform that enables health initiative, a partnership between the individual and their health & wellness vendors and gives individual health related records.

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Dave is CEO and co-founder of Avado. Avado is a patient relationship management platform that empowers a health partnership between individuals and their & health wellness providers during ...

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