OMG, have you seen the wearable “Gizmos” coming at us in the Healthcare IT space? It’s a Giznado! “Auntie Em, Auntie Em! Toto, where are you?”
A little background
Wearable gizmos are showing up everywhere at an accelerating pace. There are devices that you can wear around your neck, on your face, in your bra, in your shoes and attached to your belt. You can hook them on your wrist, tie them on your leg and strap them to your back. Melissa Thompson, CEO of TalkSession, a company dedicated to behavioral health telesessions, has posted a compilation (http://q30blog.com/) of 30 unique wearable technologies pertinent to the healthcare market. Melissa actually WORE all 30 of these wearables for an extended period of time so she could accurately report on them from the user’s perspective. Her assessment of each device is compelling because it brings to light just how powerful some of these devices, or their altered-state twins could actually be.
According to Huffington Post, ” Wearable technology has started to revolutionize healthcare by assisting doctors in the operating room and providing real time access to electronic health records.” (Source: Wearable Technology: The Coming Revolution in Healthcare, May 4, 2014). Wearables have been targeted at a number of “in-need” populations. Consider a child with asthma, too young to effectively monitor their own symptoms, or manage their own medication. One Rochester startup is developing a wearable technology that can monitor a child’s breathing throughout the day and share that data with both the physician and the parents. Healthcare Originals licensed the technology, which was developed at the University of Rochester. The same type of wearable could be used to help people manage diabetes, assist caretakers in monitoring Alzheimer’s patients, or even to replace the traditional baby monitor — a one-way-radio — with a smart monitor that attaches gently around the baby’s ankle. (Source: Democrat & Chronicle, August 15, 2014).
OK, let’s play this out. You’re a 20-something tech developer itching to develop the next great wearable gizmo for healthcare. Your uncle “Bob” is a doctor and over beer one evening, Uncle Bob told you about the next great idea that will sell millions of copies to doctors and hospitals all over the planet. So you gather your tech team and start writing code for your new device. Anything wrong with this picture? Plenty. Taken alone and independently, each “wearable gizmo” would be considered to be pretty slick. However, once you enter the market with these gizmos, something strikes you almost immediately: They don’t interface to the core systems that doctors use.
Yeah, BIG oops, too. This is where today’s entrepreneur needs to be “on point” before she or he starts up their company and tries to raise money. Best Approach Entrepreneurs wishing to create a wearable gizmo need to first assess the key entry point to the market: Is the entrepreneur going to sell these gizmos to the consumer base? Or are they going to partner with one or more “vendor partners” that already have an entrenched base of customers and sell through THAT channel. This question, in my opinion, MUST be answered clearly before the first line of code is written for the wearable gizmo. After that is answered, the next best approach is to develop a working prototype using friends and family money and take your prototype to select, potential vendor partners that have a presence in your intended market. Have NDAs signed before the prototype demonstration is given. Then, do your research carefully on your target “partner” companies. Find out the answer to these basic questions:
• What comprises their customer base primarily (ex: hospitals, physicians, pharma)?
• How big is their customer base?
• Do they have a penchant for innovative offerings?
• What is their reputation for interfacing with their customers (talk to customers that use them to find this out)?
• Is your intended price point interesting to them, or would it be a pittance compared to their other “add-on” products?
• What market share is reasonable for their customer? Then play that out as a proforma for that company uniquely to see what the potential revenue could be for them and them alone.
Before you send out your letter or email to them or set foot in their office, get your advisory team to look at that number and see if it makes sense. As an example, a wearable gizmo that Epic (a multi-billion dollar company servicing primarily hospitals) might interface with for their hospital doctors that only brings in $2-$3 million a year would probably not be interesting to them. It would be interesting to YOU but that’s because you’re eating crackers and cheese-whiz every night!
Next Assuming you pass the tests above and conclude that there are indeed one or more companies that would re-market your wearable gizmo but BEFORE you develop your prototype, get into the interfacing structure. This is where a lot of companies fall flat on their faces, and it’s true in all aspects of product development for healthcare IT. The ability to seamlessly interface your wearable gizmo to your potential vendor partners is crucial. You must find out what their specs are for interfacing, and more importantly, how they charge their end user. As an example, if you target Company XYX as a partner and after researching their interface process find out that they would charge their customers (doctors) $20,000 for the interface – guess what? Your product will go nowhere because virtually no doctor will pay that kind of money to have their patients hooked up to their EHR system.
At our company, WellTrackONE, we simultaneously developed interfaces for all the common standards such as CCD, HL-7 and .CSV. We researched our market and concluded that all EHR vendors who are Meaningful Use certified must be able to import CCD files from an external source. It was logical to conclude that CCD was our best option. Then we consciously wrote the app that the end-user could operate on their own to download their OWN CCD files and import them into their EHR system. THEN we decided to give the app away for free.
The result: Easy interface to hundreds of EHR systems automatically, no barrier to entry for our customers and a great and simple answer to the question “How will WellTrackONE interface to our system?”
If everything to this point is in line and you have (1) distribution partners, (2) reasonable revenue streams for your vendor partners and (3) easy and painless interface processes identified, then you’re NOW ready to finish your prototype. Again, once you have your prototype finished, call up your prospective vendor partners. The best person to talk to is NOT their CEO; it’s their Business Development Director or Manager. Make THAT person your champion and she or he will walk you up to the corner office for sign off if everything is in line. Don’t put your eggs in the basket of a single vendor partner. Get several identified, both for leverage but also because the decision to engage could take a year or more. Remember, these are big, lumbering companies who get “hit on” by companies like yours all the time. They can only handle so much “new product bandwidth”, so be reasonable about your expectations and get ready for a slow ride because it won’t be fast. Protect your Intellectual Property. The NDA alone will NOT do that. You need to be able to keep your trade secrets OUT of their hands at all times. Don’t for a second get giddy and naive and think that these partners will protect your best interests. They won’t. Always have your defenses up and you’ll be fine.
Enjoy the ride
Hopefully you sell a million copies of your wearable gizmo and the people that wear it get healthier and the world is a better place. Just be realistic about your wearable gizmo among the flood of other companies developing the same thing(s). Position yourself so you’re unique and not a “me-too” lookalike company. If you follow these guidelines, you should be successful and attract serious capital to take your company into the Inc 500. Remember: Always have fun and enjoy the ride! Just watch out for the Giznado…!