Trading software for healthcare — a report from one year in the trenches

We are close to the end of 2019 and I’m wrapping up my first full year working knee-deep in US healthcare. In July, we opened the doors to Steady Health, a modern clinic tackling one of the most important health crises of our time, diabetes.

This past year has been challenging, rewarding, frustrating, eye-opening and exciting. Just like with any startup in the early days, the highs have been high and the lows have been low. As investments in digital health are continuing to see growth, entrepreneurs are realizing that they have the chance to impact people in a meaningful way, all while building businesses for a massive 3.5 trillion dollar industry. This means more founders are coming to healthcare from traditional software backgrounds like SaaS and social — just like me. This year, I’ve had the pleasure of chatting with fellow founders and sharing my view of what’s challenging in building tech for healthcare. This post is a write-up of some topics I’ve come back to time after time.

What does going “full-stack” (a.k.a. vertically integrated) in healthcare mean?

At Steady, we’re building a vertically integrated provider, also known as a full-stack clinic. This means we deliver real care to patients (we call them members) with an in-house, comprehensive team of doctors, nurses, and care coordinators. We hire, train and manage these roles ourselves, enabling us to have control over the patient experience and a direct impact on their lives. When we share that we’re full-stack, most people ask:

“Isn’t that really hard?”

Yes, it’s hard. But imagine the alternative: you have an idea for how to make care both better and cheaper, but instead of being able to test it yourself, you’re faced with convincing a bunch of clinics to adopt your tool or model. No thanks. Even though it’s harder, I think we can have a bigger impact if we control our own destiny.

Product & Go-to-Market, a low bar in a complex environment

Product development techniques from other industries translate well into healthcare, go-to-market tactics do not.

As a product person, it pains me to say that building a product hasn’t felt like the hard part of starting a healthcare business. The bar in healthcare is incredibly low — it doesn’t take much innovation to deliver an experience that surpasses the expectations of customers. Simple things like measuring (and improving) customer wait times or sending post-visit surveys are still not the standard, so if you do you’re immediately in an advantageous position. It still takes a lot of work to build a great holistic product in healthcare. You have to coordinate across several different teams and build software that enables them to operate safely with speed. But, customer-centric tactics from traditional software companies translate surprisingly well.

Simple things like measuring customer wait times or sending post-visit surveys are still not the standard

Instead, I’ve found go-to-market orders of magnitude more challenging. Insurance, regulatory frameworks, and reimbursement procedures result in a very complex environment to operate a business in. It’s simply not enough to create a product that people want and are ready to pay for, they also have to live in the right state and have the right insurance. This is why we’ve seen new channels for healthcare distribution, through employers, for example, rise in popularity over the last few years. They allow founders to better segment the market on eligible groups of potential customers. However, these new channels are nascent and still have some ways to go before they can operate efficiently. And, I’ve never been a fan of strategies that require an intermediary to reach the customer.

HIPAA & Hiring — Not as hard as they seem

The number one question I get from founders who are new to healthcare is:

“Don’t HIPAA regulations make everything really complicated?”

The truth is, over the last few years the infrastructure needed to run a HIPAA compliant organization has improved significantly. GSuite lets you sign a self-serve Business Associate Agreement (BAA) via their admin tool. Google Cloud comes with HIPAA right out of the box. There are some challenges, as you can’t use the gold standard of workplace tools like Slack, Airtable, Dropbox or Notion; at least not without paying them a hefty fee for an enterprise account. But, I consider the tools available good enough. And, if you structure your clinical data properly, you can still use the more modern tools to send links to HIPAA-restricted personal health data, just not the data itself.

And then:

“Isn’t it super hard to hire doctors and nurses?”

You bet. It’s really hard. But it’s actually not that much harder than finding a great designer, engineer or ops person. The fact is that digital health startups offer something that big healthcare organizations don’t have: speed, innovation, and impact. And if you lean into that, just like startups always have when competing with incumbents, you’ll see that there are real gems to be found.

What’s been hard? Getting distribution, bridging the clinical divide and building trust

When reflecting upon the past year there are three major challenges that stand out.

1. Using a different toolset for distribution

While at Dropbox I learned a lot of strategies to acquire customers. Everything from partnering with device manufacturers like Samsung, to trading kickback bonuses with email providers, to building a referral program. Unfortunately, few of these techniques are applicable in healthcare. As a provider, you’re subject to strict anti-kickback rules which prevent you from both sending and receiving money for things like referrals. These rules exist for a reason — I don’t think anyone wants to live in a world where your doctor starts selling you weird things you don’t need to make an extra buck. However, it does make things like distributing a completely new service to consumers much harder.

2. Bridging the notorious clinical divide

I started hearing the term “Clinical Divide” as soon as I started working in healthcare. Every time a founder told me how difficult it was to avoid or minimize this divide, I thought to myself:

“This won’t happen to us, Steady will be different”

I was wrong. Creating a strong culture that empowers doctors, nurses, engineers, designers and operations people has been a fascinating challenge. The differences between these functions are vast and the expectations of how things are organized and run in a team could not be more different. For example:

  • Standard working hours for startups
  • Giving and receiving feedback
  • Organizational structure: flat vs. hierarchical

But, out of all the differences, I found the relationship clinicians have with software to be one of the most interesting. The traditional EHR system, used in almost all hospitals and clinics, has an ingrained view that all the tools needed to do a task must be combined in a single UI. The last time I heard of a piece of software that did “everything” was in 1993 with Lotus Notes. Software engineers like myself have long since moved on to a “pick the right tool for the job and let them work together”-strategy. This difference has sparked a number of fascinating discussions around our lunch table.

To shine a light on our differences but align on our ambitions, we decided early on to spend time crafting our company values. We wanted to signal the aspiration to create a cross-functional team of amazing providers and technologists. The team came up with this Emoji-representation, which everyone quickly agreed captured it perfectly.

3. Thinking outside the box to build credibility

Lastly, I want to cover maybe one of the more important challenges for startups in the healthcare space, trust. Turns out that asking consumers to give up a doctor they’ve had for years and trust a 6-month-old startup with their most important health condition is a pretty big ask. This was definitely not something we spent enough time on when we designed our first landing page and wrote the initial marketing copy. After a few months and many user interviews, we found that if a potential member would read my back story and find out that I was also living with diabetes the chances of them trying Steady out increased dramatically.

You have to think outside the box to build initial credibility. Play to your strengths by using your own experience, and hold that trust carefully to cultivate a small group of engaged users. Once you have that group you can use the positive endorsements to grow further.

Wrapping up

The US healthcare industry remains a fascinating market riddled with complexity, misaligned incentives, and unnecessary middlemen. Or in other words, it’s totally ripe for change. If you’re following the news and like us, you are alarmed by how diabetes is affecting millions of Americans. Come join us in our mission to empower people with diabetes to live the life they want and bend the curve.

Read more about Steady at https://steady.health/

Thanks to Raylene Yung and David Kjelkerud

Product leader on a journey to change diabetes care

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