Healthcare doesn’t care how much money you have or who your CEO is. It cares about how you get solutions adopted

Sophie leads the strategic development and early-stage digital health investments through G4A as the chief strategist of G4A. Before joining Bayer in 2015, she has had various leadership roles within the digital health industry in the US and abroad.

SJ: What has changed in healthcare innovation and why has it changed?

SP: A lot of influencing factors have come out of the pandemic that accelerated growth and adoption. Most importantly, these have “consumer-ised” digital health. What happened last year was unprecedented: it made the general population become more aware of their health and wellbeing. Maybe the stay at home measures caused that or it’s because the concept of illness was so much more present. Anyway, the pandemic has created a completely new generation of more digitally savvy, health-conscious people.

And this has been incredibly helpful for tech in digital health. There are four aspects to health and healthcare and how people utilise them in their everyday lives: health empowerment, health literacy, health investment into self-care, and trust.

Previously you’d find one or two, but never really all four in one place. Now we see that people are much more likely to participate in “do it yourself” health. People appear to be much more aware of their daily wellbeing and health decisions. Increasingly, people want to improve their health as a response to the pandemic. And the discussions around trust in technology and healthcare have increased: people report higher levels of trust in virtual doctor visits and more are fine with sharing health data.

In addition to that, public health has become a huge area of interest, also because people realise the power of Social Determinants of Health — 70% of health outcomes depend on them. Investors are realising this and it has become more blatantly obvious in 2020, when access and equity were limited throughout the globe.

Regardless of where you are, Social Determinants affect all of us because our health systems are built on really unsustainable values. Social Determinants of Health will now drive innovation. I would be surprised if healthcare-specific investors don’t focus on these factors when they look into new investments.

The challenges we faced shined a pretty good light on innovation and digital health.

SJ: It seems to us here at FoundersLane that the way startups and corporates in healthcare collaborate is undergoing some fundamental shifts. What, in your view, are the drivers of this change?

SP: The key is that the industry has matured. Many companies are not long looking merely for growth equity anymore. They are no longer just satisfied with the happy, bright, and fuzzy things that used to make tech companies so appealing.

We have witnessed that, in healthcare, it doesn’t matter how much money you have or who you are. Look at the Haven deal – for example, Warren Buffet, Bezos, and JP Morgan got together. And in three years, nothing happened! We are working in an industry that is incredibly fragmented. This means that there’s a lot of opportunities to fix and to fill the gaps, so there will be more joint ventures and co-creations.

These will be true partnerships that are fully focused on outcomes and on robust health standards. Again, if the last year made one thing obvious, it’s that it doesn’t matter how much money a company has, if they are not integrated and cannot serve the population that they are meant to serve and if they don’t bring intrinsic value to the people who use their solution, they are not sustainable in the long term.

This is where collaborations come in. You have more and more big organisations and successful innovators that got successful elsewhere and are now setting out to ‘fix healthcare’ – they will struggle to succeed without insiders who truly understand the system. We’ll see more collaborations that are going to be at eye level. It’s no longer going to be “here’s an investment – good luck”. Instead, it will be about truly complementing each other with different skills and access.

SJ: I agree with the observation of outsiders coming in who underestimate the challenges. I find it arrogant when people come into a field thinking they know better. You have these mantras of “don’t listen to the customer, don’t listen to the insiders, they all have status quo bias anywhere.” We need those outsiders, but they need to come with the right mindset and find the right partners.

Exactly – even if you don’t have the right skillsets, that’s fine, but you need to understand that you don’t and figure out how to get it. It’s important to be aware of your limitations and know who to listen to, too.

All those mantras around “don’t listen to the customer” – such as the patient, nurse, doctor or relative – don’t work here. You can’t assume that it is the same in healthcare as it is elsewhere because healthcare, as an industry, is very different from others.

Of course, customers’ viewpoints matter because healthcare is personal.

You simply can’t treat people with a one-size-fits all approach like you can in many ecommerce settings. I don’t think that there should be all too many unknowns to anyone going into healthcare. The facts are there and they are not kept hidden.

Let’s take the Social Determinants of Health, again. There’s clear evidence that all these diverse factors influence health outcomes by 70%. You have to get precise and you have to take a person’s everyday life into account.

Too many people entering the space just rely on hoping for the best, but you can only talk about strategy for so long. You’ve got to execute on it at some point! It’s important to ensure that strategy and tactics are aligned to the very details.

The strategy is the why. Tactics are the what and the how. If these things aren’t aligned, you’ll end up with random features that nobody uses although you think it’s the best thing in the world.

Healthcare is different, because, even with technology, there’s still going to be a tremendous human aspect. This is why it’s important to understand in detail what health economic value you are going to bring. Plus, you need to understand not only how your solution fits into workflows but also how it might change them. This requires a deep understanding of clinical realities and above all: this is why iteration is really important and that’s what’s often missing in healthcare.

Traditionally, iteration in healthcare is slow. “Move fast and break things” simply doesn’t work in medical hardware, pharmaceuticals or biotech.

You can’t just go on the market with a half-baked, half-tested drug that might harm people. But herein also lies the beauty of healthcare. If it doesn’t work it doesn’t work.

But this is different now for digital health. Here, faster iterations can work and while healthcare as a vertical is so completely different from other industries, there are elements that are very similar, especially the convenience and logistics aspects. Who wants to stand in line for hours for a 10-minute doctor consultation? Why would you have to drive 30 minutes out to pick up medicine when someone could tell me that it is available in another pharmacy around the corner?

SJ: At G4A, you also have a lot of experience in collaborating at the intersection of the often disparate worlds of startups and corporates. What have you learned about making collaborations between corporates and startups work?

SP: A critical part is about finding good partners. The first success factor is that both parties are fully aligned not just on strategy, but also in terms of tactics and development. Secondly, both parties should bring expertise that the others don’t have. Thirdly, everyone should know what the others’ solutions do, what kind of outcomes they bring, and how they function. This sounds like basic project management and a little obvious, but people would be surprised how often corporations usually fail in part because of misalignment, or because they’re too big or they don’t really know what they or their partners are doing.

I’d like to highlight the importance of iteration again, which is particularly challenging in the context of collaborations. You guys at FoundersLane know this, you work with a lot of corporations. You know how important iterations are and a lot of collaborations don’t have these iterations.

You start out with a promise to build something. But over time you realise that it is not what people want and need to iterate. Then, there’s this constant tension between iterating, bringing in new ideas, and the need to stay focused. That’s, again, why the alignment that I mentioned earlier is so important. If expectations are different or budgets are misaligned, or people insist on staying stuck to pre-agreements, then an innovation is likely to fall short of its promise and will probably fail in the mid-term. Products hit the market that no one really wants.

Anyone who wants to play successfully in the healthcare field needs deep knowledge. There are still so many corporates who enter the market without actual experience. If you don’t know what market access – for example – really means, then you will probably encounter a lot of surprises once you aim to launch your product.

Dr Sven Jungmann is a partner at FoundersLane, a corporate venture builder for climate and health, and is an advisor to health startups and investors.