It’s a sad story that plays out all too often. A healthcare tech startup is ready to bring an innovation to market. Before it can earn a reputation of trust and credibility — for investment or commercialization — it needs market or clinical validation and possibly some final product enhancements based on its performance in the real-world. Many companies partner with a prospective customer for a pilot to remedy this challenge, such as a local health system.
Healthcare innovation pilot programs are a common — and often effective — route for securing early adopters or capital. However, the costly and prolonged nature of a pilot and the innately cautious and risk-averse traits of the healthcare industry can turn them into death traps for innovators, especially for a radical innovation.
There is often tension between an innovator’s needs (validating their concept and getting a paying customer) and the health system’s need (making sure they don’t do something that’s going to hurt their patients).
Death by pilot can be a tragedy for health innovators, and for patients and the healthcare system as a whole that never had the chance to benefit from the innovation in the first place.
But there’s hope for startups and innovators to navigate the complex landscape of the validation relationship: a more strategic plan for who they partner with and what those partnerships look like.
A Fundamental Flaw in the Pilot and Cocreation System
It seems simple enough: run a pilot, prove your worth, gain investment capital or new customers, and make it into the mainstream.
Unfortunately, it’s just not that easy for radical innovations. Eddie Martucci is the CEO of Akili Interactive Labs, which is best known for its Project: EVO ADHD treatment, a novel pediatric therapy that takes the form of a mobile video game. Martucci commented on the field of digital therapeutics and the time it can take to obtain validation:
“You had a little burst of [these ideas] years ago which were consumer focused … and so that felt like it’s been happening for the past 10 years. But I think what was really happening underneath, sort of in the background, is that a small, select group of companies that were getting funding decided to deploy in a non-consumer, non-launch phase to do serious medical validation. That tends to take the kind of time that we’re talking about, a handful of years, … [and] what we’re seeing now is that first burst of validation.”
In addition to long, drawn out processes, the requirement for one pilot can easily turn into two… then three. Many healthcare organizations do not believe that just because your innovation proved successful in another, similar environment that it will work the same for their patient population.
Countless companies become trapped in a vortex, giving their all into pilots without seeing any real reward or acquiring any paying customers. In many cases, health innovators are bankrolling the pilot(s) or investing hefty amounts of money into product changes based on a single partner’s needs — all with the hope to reach market or clinical validation that would finally lead to commercialization.
Unfortunately, too many health innovators run out of resources before investors or the market see its value. Or, they often end up with a different product configuration from when they launched the pilot because they modified the innovation based on the pilot’s needs. Collecting real-world feedback is essential, but we caution clients about changing the features and functionality of their health innovation based on one or a few partner’s needs that may be less viable for the masses.
Regardless of how it plays out, the pilot system can be devastating for healthcare companies without a strong entrance strategy.
Innovative Tools Need Innovative Partners and Strategies
One of the main contributors to death by pilot is an innovator’s inability to break past healthcare’s red tape. This can be especially true when healthcare companies partner with health systems that may be willing to launch a pilot, but they are less willing to actually purchase the innovation once the results of the pilot prove valuable.
The “Diffusion of Innovation Curve” is a helpful tool for determining promising partners. Healthcare leaders should look to partner with innovators and early adopters. These are the market segments who are looking for new things that others do not have yet. We’re talking about innovative healthcare systems like Geisinger and Kaiser that embrace change and act as leaders in the space, which also lends needed credibility and clout to innovators.
The late majority and laggards are typically the most resistant to innovation. Generally speaking, the further along the curve a partner fits, the smaller the chances of a pilot’s success or the transition of a pilot to customer.
Image credit: Boston University School of Public Health
In addition to being selective and vigilant about choosing the right partners, innovators can also help to avoid death by pilot through establishing agreements before the pilot begins. Here are some recommendations:
- Ask the pilot participant to share in the costs of the pilot. This can be a good way to make sure they have a vested interest in moving the pilot to completion and there is some revenue coming in for working capital or to fund the next pilot.
- Set performance-based expectations upfront with an agreement that if the pilot is a success, and the innovation proves its worth, the pilot company will purchase the innovation and begin implementation at scale once the pilot has ended.
- Be sure to connect with the Chief Innovation Officer within the pilot company if they have one. Then, make friends with the chiefs of the departments and those who are going to use the product. Convert them into champions.
- Put money aside for clinical validation. It will be much harder to get adoption if you cannot demonstrate value, impact, and improved outcomes from your innovation.
- Beware of co-creation strategies with pilot partners. Innovators have to be very careful that the validation partner does not sway the product development team to change the features and functionality based on their specific needs or challenges. This can alter the innovation into something that is not representative of the industry as a whole.
Putting an End to Death by Pilot
In an era where technology is changing the face of society with each passing day, the healthcare industry has historically lagged behind its counterparts. Unfortunately, this can mean that hundreds—even thousands—of healthcare innovations will fail to find the success they deserve.
For innovators, this doesn’t have to be the case. Don’t get stuck in pilot purgatory. With some strategic partnerships and advance planning, it’s possible to find the right environment and circumstances to flourish in a seemingly resistant landscape.
To learn more about the intricacies of a winning commercialization strategy, click here to download our whitepaper, “10 Steps to Healthcare Technology Innovation Success: Commercialization Strategies to Reach Adoption, Diffusion, and Market Acceptance.”