Credit: 401(K) 2012 via Flickr
Now's a good time to be a healthcare startup. Investors have poured between $3 billion and $5 billion into the digital health market so far in 2014, according to Rock Health and StartUp Health. (The two groups track funding differently, which is why there's such a discrepancy.) Meanwhile, Accenture expects the digital health market to reach $6.5 billion by 2017.
Actually, now's a good time to be a unique healthcare startup. At last week's FoleyTech Summit, an annual event organized by the law firm Foley & Lardner, representatives from venture capital firms said that only about one startup in 10 attracts their attention, let alone receives funding.
Some startups try to mimic existing technology that's successful. (Think FitBit.) Others enter a market segment that's already crowded. (Think syndromic surveillance.) Most of all, says Rick Blume, managing director of Excel Venture Management, they address a piece of a particular healthcare problem but don't offer a complete solution. (Think care for chronic conditions.)
Beyond simply being unique, startups can do a few other things to set themselves apart. Here are five ways to stand out.
Rising costs, high-profile data breaches and the bungled Ebola case all erode consumer confidence in the healthcare system. To rebuild that trust, companies must help consumers cut through the complexity.
John Morey, CEO and founder of MyRozi, a service that helps people figure out what their health plans do and don't cover, says parents are "delighted" when they find apps that save them time or money, especially when it comes to learning the ins and outs of a new diagnosis. Parents of children suddenly diagnosed with asthma, for example, seek advice (and deals) on everything from carpet cleaning to foam pillows.
Put Security 'First, Last and Always'
You very well may equate building trust with HIPAA. While not incorrect, that misses the point. People tend to be patients 2 percent of the time and consumers the other 98 percent of the time, Morey says. Yes, patient data must be protected, but a coupon for dust-trapping mattress covers doesn't need to be. (Recent federal regulation offers some clarity on what must be protected. More on that later.)
However, clinical apps need to be "HIPAA-plus" compliant in an era of evolving healthcare security threats, says Ron Remy, CEO of Mobile Heartbeat. "You need to go way beyond if you want a useful product."
John Summers, vice president of cloud security with Akamai, encourages firms to incorporate security into the software development lifecycle. Try to issue patches that don't affect the underlying software layer, he adds, as that's a common cause of vulnerabilities.
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