Why is it so hard to set up a successful startup within the healthcare profession? Despite the massive size of the healthcare sector, due to the ever-aging population and demand for improved care, startups within the sector seem to struggle breaking ground. It seems unclear as to why this is the case. It could be due to patients’ confidential data, the lack of healthcare professionals, or the sluggish growth of the industry. However, in recent years, startups have seen a glimmer of hope with more entrepreneurs breaking into the healthcare industry. That said, the industry is crammed with challenges for emerging startups.
Healthcare Insurance
Healthcare is not just about providing care for its patients, but also covering the costs for minor to life-saving treatments. The insurance companies are among the most powerful players within the game of healthcare; patients usually will want to go for the most well known and trustworthy insurance companies rather than a new startup company. However, the healthcare insurance sector may be easier to infiltrate. As this sector is currently going through its own digital transition, many big insurance companies are looking at the ways they collect and handle large amounts of data and how they can improve on their current situation.
The Healthcare Professionals
The slow growth of startups in the industry could be due to the healthcare professionals. As these people are irreplaceable, they hold a vast amount of knowledge that many powerful bosses will listen to. Don’t forget the lack of healthcare professionals as well; this is due to the demand for new doctors, as people are living longer within an ever growing population, the long time it takes to qualify as a healthcare professional, and the lack of government input into the issues healthcare is facing.
When entrepreneurs are trying to implement new products or start new healthcare companies, they may meet harsh resistance from doctors if they are not trained in healthcare themselves. Healthcare is one of the most regulated industries, so when trying to implement these new ideas it is difficult to get past these strong regulations. This is mainly due to patients’ private personal data, and the fact that patients’ health is on the line. However, startups, especially in healthcare, have to ask for permission before even reaching out to their first initial users. They must also comply with healthcare’s complex set of rules and possibly additional costs.
The Patients
Startups in the industry may be slower due to the sensitive matter of patient confidentiality. Companies already in the healthcare profession handle and collect large amounts of highly sensitive data, so new startup companies breaking into the industry are less likely to be trusted with this kind of information. Let’s face it, at the end of the day this industry is a matter of life and death, so it has very serious consequences should anything go wrong. You can’t experiment with patients’ lives or treatments too much, like you would with a new lipstick color; within the cosmetics industry.
Experimenting with things like new drugs can also have a very dangerous effect, not only for the patient, but for the company advertising the product as well. Even already existing drugs, that have been tried and tested such as nonsteroidal anti-inflammatory drugs, Z-Pak, and antidepressant drugs can cause heart failure and death, something that has led to many court cases in the last few years.
Financial Investors
One of the main obstacles, as to why it is so difficult for startups to enter the healthcare industry, is the lack of financial investment. Financial investors usually work within two sectors of the healthcare industry: ICT and biotech. These areas are usually where entrepreneurs look to build their startups. However, investors are usually wary of taking risks with new healthcare ideas, and are only willing to invest if there is small risk but the chance of a large reward.
Sluggish Growth
Another reason for the difficulty of launching a healthcare startup could be the sluggish growth of the industry. The sector is notorious for slow growth due to the fact that no project will find approval without rigorous testing and proven efficiency with reliable data. Even when it does pass these tests it can take time to sell to hospitals as it has to be approved by the top executives for that particular hospital.
Overall, there are three main difficulties for startups within the healthcare industry. First, the highly sensitive patient data, the little risk investors are willing to take on new projects and the sluggish growth of the sector due to the complex rules and testing.