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HIStalk Advisory Panel: Working with Startups

December 19, 2012 Advisory Panel 1 Comment

The HIStalk Advisory Panel is a group of hospital CIOs, hospital CMIOs, practicing physicians, and a few vendor executives who have volunteered to provide their thoughts on topical industry issues. I’ll seek their input every month or so on an important news developments and also ask the non-vendor members about their recent experience with vendors. E-mail me to suggest an issue for their consideration.

If you work for a hospital or practice, you are welcome to join the panel. I am grateful to the HIStalk Advisory Panel members for their help in making HIStalk better.

This question: Let’s say you are mentoring the founder of a startup that has developed a creative software application for hospitals. What advice would you give that founder about developing a working relationship with a hospital to validate and improve their product to make it marketable?

First, it is important to develop a beneficial relationship with a hospital to, ideally, test out the application in the trenches and provide feedback for improvement. There’s huge value of working with a hospital as a beta user to run the application through the day-to-day uses. It’s important to establish a relationship with the key managers and staff in the area to provide the best feedback. It’s valuable to determine the right relationship scope so that the hospital staff are motivated and willing to provide feedback, in addition to their usual daily tasks.

[from a vendor employee] The main thing is the solution needs to provide enough value for hospital that they would even want to use and collaborate with the vendor.  Assuming it’s a great concept and the founder has gained access to hospital decision-makers who are interested in the solution (I think we’ve touched base on this before on the Advisory Panel), the next step is positioning the partnership in a way that’s mutually beneficial for both organizations. 

In our early stages, we honed our solution by offering discounted “beta” prices to multiple key sites in exchange for collaborative feedback and a tolerance for a beta product in development. This really was an invaluable process for us to hone both the solution as well as the company for widespread market expansion later. These need to be win-win partnerships to really work. The beta site got a groundbreaking solution that improved their organizations and a vendor relationship that allowed them to play a significant role in its development to fit their own needs. We obviously got early clients, market traction, and an awesome cauldron for rapid improvement of the solution. One drawback is that once a site thinks it’s a beta site and a beta product with beta prices, you’ll have a much harder time moving things to non-beta mentality and normal retail pricing. It was worth it to us, however.

I’ve seen other startups invite early clients to be part of their boards or to actively participate as advisors. Many startups get offered funding by potential hospital clients – I’m torn on whether that’s a good or bad thing. We never did it. It really depends on the hospital client, the deal, and where the startup is financially. 

All vendors started somewhere. I like what Voalte did. They consulted with several CIO/CTOs in the industry. They found a local hospital that needed that product and worked with them until they got their product fully tested and implemented. Since then, they have gone on to be successful.

To create a strong working relationship with a hospital like this, the startup should expect to shoulder all associated costs unless they are offering an equity stake (and obviously, shouldering the costs by the startup is the better financial option for the startup). Subsequent to getting that relationship off the ground, the quality of support provided, and responsiveness to hospital feedback on the part of the startup will dictate the quality of the relationship they build and maintain.

We have done this a couple of times. There needs to be a symbiotic relationship. The hospital cannot just take the free or reduced cost software or services. They need to give back in terms of recognition that what is developed must be flexible enough for the marketplace and not driven strictly by the way the individual organization would like it to work. The CIO, clinical leadership, and others need to be ready to be partners through reference calls, site visits, demonstrations etc. The vendor needs to recognize that the hospital is looking for a return on their investment (of time and resources) and also recognize that the relationship needs some form of "cost recovery" be it free or reduced price software and support, site visit credits to use with other products, or other.

[from a vendor employee] GET EVERYTHING IN WRITING!!! Finding a hospital champion is already difficult, much less finding one that wants to partner. Find a facility close to your companies office that you think would be willing to work with you. Look at the background of the person you are trying to work with. Did they work for a vendor in the past or have they done consulting? Are they a consultant on the side? Are they a programmer by trade? Is the facility outsourced and your contact works for the vendor? You need to find someone that understands the entrepreneurial spirit and wants to be a part of building something from the beginning.

Be careful of your selection. Some hospitals will tell you they use mobile products, but I haven’t seen very many do it very well. Clinicians are not always as ready to commit their time as they say they are. They need to make the commitment time very definite up front.

Make an offer they can’t refuse. Most of the offers I hear are weak and not worth my time investment.

Risk-sharing. Don’t charge me an arm and a leg for a pilot. Put your system in for low or no cost if you are confident of its efficacy. The positive reference for a startup is more important than making money on the first sale.

[from a vendor employee] I would take a three-pronged approach. First, make sure my top-level executive/CEO/founder can create a connection with someone at CxO level of hospital. Their focus should not be on technology, but on business issues, pain points, what is getting in the way of the provider hitting their numbers, growing, delivering high quality care, attracting employees. Second, have developers/product management people sit shoulder to shoulder with end users inside the hospital to see the workflow with their own eyes. Roam the halls if possible, interact with employees. Third, have the sales/account manager develop a relationship so that when prospects call or visit, the salespeople have a relationship with key people inside the hospital.

One thing I appreciated about Voalte was the ability for all end users to send text messages to the company. These included use questions and, more importantly, suggestions for product improvement, which were actually implemented quickly. Their service model of putting a rep on site and roaming the halls every week has been a big hit as well. Other vendors haven’t reacted too well to these ideas when I suggested they do the same.

Work with the CIO, CMIO and Quality in combination so that you’ve got all the players you need to get started. Find a physician champion who is committed not overly “salesish.”

Find a physician champion, start small – pilot in one area, and then work on spreading it. Be prepared to answer the usual bureaucratic/legal questions about HIPAA, server info, etc. If it’s the first customer, consider making them a partner (e.g. give it for free/cheap, and give equity) rather than trying to extract a little money — will align both sides better to win long term.

it needs to be an inside job. The current buzzwords are "champion" and "executive sponsor." Someone in the organization, as opposed to someone knocking on the door, has to be so excited by your product that they push for adoption of your software solution. How to get that champion? Bribes with money or sex will probably backfire eventually; specialty society meetings (physicians) and introductions by a friend of a friend (CIO) would seem the best bet. E-mail, snail mail, cold calls probably aren’t worth the time. Professional publications would be good, but they would have to have actual scientific validity.

We are actually in the middle of that situation. The company made connections with our for-profit arm and we are an investor. We continue to work with them to help with the development. My advice would be to create a very strong value proposition and it has to be pitched to the right C-level person first. I would suggest into the CIO / CTO as the idea would have the best chance that route if it is a good idea. The first few are the hardest as many places won’t take the risk if they are first, even if it is free. But if there is real potential, I am happy to take some risk to get to something that is good.

[from a vendor employee] I’m fortunate to have been able to participate in a startup as well live in a startup mode for many years as we both developed the products, but also the market in which we serve. One of the most important lessons that I learned is that people buy from people. This, of course, can touch many aspects of how to be successful. One of the most important is clearly in how we listen to our customers, focus on developing the relationship with our customers, but don’t just blindly listen – challenge, make sure you understand why it is important then work together on how it will be delivered.

I’d also strongly contend that this relationship building isn’t just something a startup should focus on. This should be at the foundation or core values of any company that wants to be successful in delivering products, especially healthcare products. Develop relationships, listen to your customers, challenge each other with new ideas, and deliver great solutions!

In a hospital there are several constituencies and you have to go after one.  You have to sell it to the doc, the nurses, IT, or one of the other areas that would find it useful. If it is a timesaver for the physician or nursing, sell it to them and they will pull IT into it. If it is an IT sell, then you can try the senior folks if you have connections. If not, try to find at least a project manager or primary support person for the area that will benefit most from your product. The CIO is bombarded with the latest gadget sales and the latest sales brochures. If you can find a way to market it from inside the organization, you will be more likely to get CIO time.

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Currently there is "1 comment" on this Article:

  1. All of the above are good traditional advice.
    But things have changed dramatically for startups now. If you are touching PHI in any way better get that great new system Certified. CIOs can get real nervous about installing non-certified systems. Could cost them their MU $$.

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