Last week at #Techweek in Seattle, we discussed converting innovation into income in healthcare - Stead Burwell from Outbound AI, Leslie O'Brien, MHA from One Medical, and Patrick Mauro from Pearl Health shared revenue models they pursue while improving health outcomes, accessibility, and customer satisfaction. Revenue models in healthcare are nuanced. A couple of thoughts: 📈 PMF is still the goldilocks dilemma – if your problem isn’t 'hair-on-fire' and your solution doesn’t efficiently and precisely solve the problem, attempts at revenue generation, no matter how creative, are no more than rearranging deck chairs on the Titanic. Having worked with and invested in dozens of early-stage companies and vetted 100s more, I’ve personally seen the slow cycle of ‘lack of PMF’ death play out innumerable times. 🏥 Walking into health-tech innovation with a consumer-only mindset can be limiting. Most healthcare solutions (85% of the market) generate revenue on a B2B model. For companies where the end-user is also the paying customer, this alignment advances product/service development. For those solutions that rely on patient adoption but on B2B revenue, companies now have the challenge of ‘servicing’ multiple ‘clients’. In the best-case scenario, this manifests as a slow #sales cycle in which the company must demonstrate adequate adoption and both clinical and financial benchmarks in the target customer BEFORE attracting revenue-generating contracts. This can mean increased cash burn, higher initial cap ex, and a higher investment risk profile due to more potential points of failure. In healthcare and the life sciences, KNOW your revenue generator AND your user (given the US health system's complex stakeholder landscape, some degree of #B2B interface is more than likely). #Product development and #GTM should keep both in mind.
This is a huge opportunity for many entrepreneurs in healthcare. The questions and the work towards “what is our revenue generator” could be focused on more Jen D.
Thanks for sharing, Doc 👍
Healthcare | Growth Strategist | Partnerships| Community Builder | AI |Educator
4moCouldn't have said it better! I also think because of it, more health tech startups need to have a good clarity on PMF or at least the revenue journey, very early on. This is also another reason more VCs should invest earlier in healthtech because the sales cycle is so long and labor intensive.