5 Avoidable Mistakes by a Healthcare Delivery Startup

During my decade long experience of working in close association with healthcare firms, I got a chance to experience a variety of strategies they consider and its implications on their future business. I am attempting to pick some of the relevant “Mistakes” firms predominantly do at the inception stage, which many times leads to unexpected outcomes for the business.

Setting up a successful healthcare business is an outcome of well choreographed act between various activities right from planning to execution stage and each activity has its own importance as it directly impacts the business. There is an old saying which still holds true “A chain is as strong as its weakest link” and any step, even a minor may change the overall picture of your business .

My attempt is to share most common and the once which makes startup lose their direction, however I do accept the list of common mistakes may vary from company to company, situations to situations as there are many enablers for a successful business. I would be really grateful if readers can append the list to help others who are planning to venture in Healthcare delivery segment, thus enabling the sector to have more successful businesses thriving!

1. Out of their elements! - You are in the service business, not in Infrastructure

This is one of the most common and most predominant of all, and to most of us may not even appear as a consideration as a mistake, however in my view, activities which become so dominant that it eclipse the core value of the business and acts a reason for losing the direction shall also be considered as a mistake.

Any healthcare delivery venture by default is capital intensive and almost in all the instances, it drags the attention of entrepreneurs so much that by the time they are done with their first project, they become a competent “Contractors”. I do agree that infrastructure is a very important aspect of the business and it needs to be given its due importance, however neither it is the reason for your existence nor it has ability to act as a value differentiator to your business in today’s context.

All successful healthcare businesses are driven by one core value, that is “Outcome”, For example – if a patient walks into a hospital with a pain and at the end of treatment cycle, neither got relieved from pain nor got appropriately advised on the prevailing reasons behind it, he would remain unsatisfied and it does not matter whether he is attended in 120 or 150 Sq. feet OPD chamber with 7 star like interiors. The outcome of the healthcare service is the core value behind all the successful healthcare businesses today and other aspects become the enablers, which are meaningless in the absence of core value.

Most of the startups are dragged by the urge to create the infrastructure so much that they are not able to give due importance to “Service side of the business”, which eventually affects their utilization ramp-up, efficiency and quality. In my view, every entity is unique in its own way and a quality service delivery needs attention, time and efforts and to be planned well in advance to show their results.

To be realistic, there are limited opportunities where someone provides the contemporary healthcare infrastructure to people who are entering the services side of healthcare business, thus enabling them to focus their energies and resources on right aspects. I see a reasonable opportunity for “Real estate” players to bridge this gap, as creation of infrastructure is their core business. Internationally this is proven model, however in Indian context, this is still at a nascent stage, although there are few successful examples.

2. Patient safety – No room for mistakes

You would be entering into a business which revolves around “lives” of the people. There would be no provisions under which you can hedge the risk of calling “manufacturing defects” through guarantee or warranty plans. Every patient who walks in your system should be seen through a filter of “First and the Last”, first, so that you and your team can give him equal importance as if he is the first one to walk into to the hospital and “Last” so that you have enough reason to get paranoid, because if something happens undesirable there are chances that this would be the last patient who would visit you ever! When it comes to patient safety, it’s better to be paranoid than complacent.

Build your systems for patient safety from the very first day, more importantly build a sentinel system for reporting of adverse events. The idea should not be to use it as a tool for “witch hunt” but to learn even from the smallest mistake and improve further.

3. Absence of systems creates “Many Parallel Systems”

Businesses which have services at their center, maintaining uniformity in customer experience is the most critical and the most challenging part. This is true in case of healthcare where there are many points of interaction for a patient, for example, you may have two facilities at different locations or more than one doctor in a same specialty or different nursing staff on every shift, because of which experience of one patient may be very different from each other.

In most of the instances when people join the organization, they come with an open mind and are ready to adapt to system and process the organization has set, however in most of the occasions the organization leaders are not able to give due importance to internal systems at the beginning, which leads to people dependent system where people discover their own ways of executing the work.

This is related to the first pointer, where people were so much involved in the creation of infrastructure that they neither left with time or recourses for establishing an internal system, which is blood for a service based industry.

4. Medical Technology - It’s a functional need rather than just a budgeting exercise

This is one area which requires a lot of expertise and planning to hit the sweet spot. It’s very easy to be dragged by complication and either over do or under do depending on the financial muscle power client may have. There are also instances where clients fix the budget and people have to back calculate to arrive on final configurations in which functional need of Medical Equipments becomes the second priority.

To solve this puzzle one has to clearly draw their medical program, specialty mix and level and kind of function you set is planning to get in and more importantly, what is the phasing plan.

5. Avoid Making False Assumptions

“My cash break even would be in 8 months, project breakeven in 3 years and I would complete the project in 18 months”, these few of the common assumptions people have when they think of starting a business. They are so common that some time their business plans give a flavor for a book written on industry benchmarks rather than plan for a firm.

For a successful healthcare venture, understanding of market, firm’s execution style and the ecosystem in which they would be operating, shall be probed in much detail and the KPI’s of success should pass through these sets of criterion before you really start depending on them. There are many examples in the industry where people left a successful business to start a similar venture; they either created a much bigger business or not able to replicate the success story. It gives us an immense opportunity to develop our learning by deep diving in such instances, as this gives us a rare chance to peep into critical success factors of the business. They are very interesting for the fact that in such cases everything remained constant, the business, demand supply and people, but there were some enablers, which totally changed the course of the story. It is often said that, to understand the reason behind the high intensity of sun’s corona, they should be studied during “Eclipse”.

The planning phase of the business should be given required time and priority, so that the startups not only get an opportunity to simulate the business but also have the opportunity to clearly identify the risk barrier. You may not have a clear strategy for a few of the risk factors at the inception stage; however knowledge of these areas is important, to be given due attention when you start operations.

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