Advice for starting a health tech startup

Lindsey Christensen

Building a new digital product for the healthcare industry usually comes with one type of learning curve or another. Many founders come from the enterprise or pharma side and need to get up to speed on operating like an agile startup. Other founders are medical practitioners themselves learning about how product teams work and the kinds of early product decisions to be made. Or like Michael Sheeley, still others come from the consumer product world and have to learn how to navigate the differences in the healthcare market.

Michael is the former founder of RunKeeper and is now heading up Nurse-1-1, a HIPAA-compliant chat platform that connects patients directly with nurses. The Nurse-1-1 mission is to increase accessibility to healthcare services and help patients and providers alike avoid unnecessary visits.

The Nurse-1-1 team

Michael has been a generous recurring guest on our Giant Robots Smashing into Other Giant Robots Podcast Startup Series, sharing some true nuggets of wisdom garnered on his health tech startup journey. Here are some of my big takeaways so far.

Healthcare is a big space, get focused

When creating something new in healthcare, it’s not uncommon to be enticed down a product path that turns out to be a dead end. Your first priority should be honing in on the problem you’re solving and who you’re solving it for.

A recurring theme that Michael talks about when discussing the strategy and growth of Nurse-1-1 is how easy it is to be pulled in different directions. He spent the first few years almost exclusively on user research. The team started with the hypothesis that there is a gap between a patient getting info about their healthcare and where to actually turn to get that care.

“We identified a problem that happens when people are at a level of high anxiety and don’t know what to do… It was based on my own experience after my daughter had a procedure. I ended up texting a friend of ours who was a nurse practitioner, Kim. My drive became - how do we scale Kim?”

Organize a medical advisory board

Even if you’re from a medical background, healthcare is so vast and launching a health tech product is such a complicated process that you will need more experts to turn to. If you’re not coming from the healthcare space, this is doubly true.

The first order of business for Nurse-1-1’s Chief Medical Officer was putting together a medical board of advisors. The startup began with a team of 4. Two (including Michael) were not from a medical background and two were from the medical field. Besides Michael, everyone was working part time on the endeavor at first. They needed subject matter experts they could turn to regularly for guidance beyond the Chief Medical Officer and Chief Nurse Practitioner (remember Kim?!). They put together an all-star board with deep experience that accelerated their ability to make strategic decisions and have confidence in their direction.

Familiarizing yourself with the regulations in your space and acting with integrity can only get you so far. Securing a legal team with extensive experience in the healthcare industry isn’t cheap, but the alternative is more costly. You can end up going down a product path only to find it won’t comply with regulations in an unexpected way.

The biggest learning curve for Michael coming from the consumer product world was dealing with regulations.

“Even if you are following the essence of a regulation, it can be different than how the regulation is enforced… Even if the doctors believe it complies, even if ethically it makes sense, even if partners are onboard, it still needs legal review. There may be some case somewhere that matches what you’re doing and has precedence.”

In the idea stage it is helpful to run concepts past your legal team and identify if there is anything to be worried about, or things to avoid. You’ll reap the return on this investment and thank yourself later.

Stay out of the gray area

While we’re on the topic of regulations, a good rule of thumb for entrepreneurs who want to launch a product in the foreseeable future is to stay out of the regulations “gray area”. It is certainly attractive to totally disrupt healthcare and challenge interpretations of the law as it applies to how we use tech to advance healthcare. The catch is you’ll be looking at a much longer timeline with a bigger, more expensive legal component. Alternatively, there is plenty of room within the bounds of today’s regulations to drive tremendous innovation on a faster timeline.

Find a place in the healthcare market that aligns with your incentives

The healthcare field also has different operating models with different incentives to consider. Some products and services are financially incentivized to drive patient use or visits regardless of whether the patient has a real need. On the flipside, more companies are emerging that want to help patients get the most value and guide them away from unnecessary care. A new wave of digital health companies are focused on what is called value-based care.

“We saw newer companies, often digital health type of companies, who weren’t building products using the old models of the old way, but who were really incentivized for engaging patients and needed the scale that we can bring. Keeping them engaged, making sure that they’re taking the appropriate levels of care, really adding value to the patient, and have a large population they need to serve. Those are the companies that we are now moving faster with.“

In the shift to value-based care, ACOs or Accountable Care Organizations are a contrast to the typical model of fee-for-care services. ACOs are incentivized to help patients get the right care, not just revenue from care. It’s a way to make organizations take care of their patients and share the risk.

Disqualify partners who aren’t aligned on incentives or can’t move quickly

By identifying your incentives, you will narrow down who is a good fit for you to partner with as well. Partnerships are often the most significant go-to-market strategy for health tech companies. You aren’t operating on an island, you are finding your place in the greater ecosystem. But where?

“My advice for anyone thinking of going into healthcare: it’s easy to get fooled because the person you’re talking to (at an enterprise company) wants to move fast. That took us a while to learn. You hear ‘but this other department needs to okay this one thing’. Then that department says the same thing about another department, and before you know it your original contact has moved on from the company.”

Dig in to the deep dives

Check out all of our previous episodes with Michael below and don’t miss his next episode where we’ll talk about his approach to fundraising and how it’s different from his experiences founding consumer products. You can subscribe wherever you listen to podcasts.

The Nurse-1-1 approach to: