In a market moving towards value, the question of why provider organizations need to invest in technology is clear. To make the new health care value equation sustainable, provider organizations need to invest in technology to support performance management and optimize the value of consumer care (see Why Your Tech IQ Will Determine Your Success In A Value-Based World). It is the questions of how to go about making the right tech investments that is more complicated.
What technology should your organization invest in? What tech vendors are the best fit to partner with? For many provider organization executives, there are many options to consider when entering this new world of technology. The first is to identify what tech-enabled functionality is needed for your strategy and then identify what technology is needed. Making those choices starts with your strategic plan (see The Strategy Of Tech Investment and Leveraging Technology For Strategic Advantage: Why Technology Will Be The Key To Future Competitive Advantage).
After that decision comes the question: who should you select as your tech partner? (I use the word “partner” deliberately because the relationship of health and human service organizations is extending far beyond a simple “vendor” relationship.) As we look to the future, there is a seemingly endless stream of new technologies to explore—digital apps, telehealth, virtual reality, wearables, medication monitoring systems, analytics, and more. The expansion of current tech vendors’ capabilities, and the emergence of new tech start-ups, was very apparent earlier this month at The 2017 OPEN MINDS Technology & Informatics Institute (see Connecting The Dots-Sustainability & Tech Leverage and #OMTechnology).
While the electronic health record-keeping space has a number of organizations with established products that have been around a while, vendors of technology in the other categories are relatively new. Should your organization move ahead with an established technology firm? Should you create a relationship with a start-up? I reached out to OPEN MINDS senior associates Chris Cooney, Matt Chamberlain, and Jim Gargiulo for their perspective on that question—and those perspectives are quite varied.
Ms. Cooney explained the “large picture” issues at stake, writing:
As you move ahead with your tech strategy, there are several issues to consider concerning whether a start-up or an established player is the right tech partner for your organization—each brings with it a unique set of challenges and benefits.
Why choose a new start-up as your tech partner? They often are more flexible with costs and technology – and give your organization the opportunity to test the latest innovations:
- A start-up will most likely be more flexible with timing, integration, and budget. They are looking for a partnership to prove their product and may be willing to make a short-term commitment that will enable both parties to walk away once the pilot is completed, without any hindrances. It provides a good opportunity to test a product or program, without making major, long-term financial commitments.
- A start-up may be able to customize the technology for your organizational and consumer needs. Because they don’t have a long-established product, many start-ups are willing to make changes to their tech to better suit your organization’s needs. The size and parameters of a pilot program can be developed with your organization in mind, and will allow your technology team to work with the start-up vendor to create a smooth implementation.
- A start-up may negotiate fees and service costs at a lower rate. Start-ups are actively seeking new partners, and this may work to your advantage when it comes to cost. But keep in mind that with lower fees, your organization might be used as a case study for proof-of-concept.
The big downside to working with a start-up is that they may not have the size, the financing, or the organizational bandwidth to support your organizational needs. Defining expectations and the resulting contract, like every other business relationship, is critical to a successful relationship. Why look at an established player?
- They have the experience to know what works and what doesn’t. The established start-up actually has grown into a technology company ready to sell, integrate, and service the product they’ve built. They know what works and what doesn’t in the field and have processes and procedures based on evidence and experience.
- They can respond faster because they understand how their technology is going to function. It’s been through rigorous testing, and support service measures are in place (that’s why it’s ready to go out in the market).
- They have credibility and a clear track record. With an established organization, you know what you’re getting into. You can check references, review their past clients and partners, and see evidence of their product’s success/failure. With a start-up, you can’t be sure about their sustainability and/or past performance.
Mr. Chamberlain was also positive about the potential for working with start-ups, stressing the importance of concentrating on two critical questions when evaluating a new tech organization entering the market: what is the unique competitive positioning and how deep are their resources? He explained:
First, consider the start-up’s market position. If a new company is bringing technology to the market and they are the first to do so, this provides more confidence than if they are coming into a market with established companies as competition. Basically, you want to consider what makes a start-up different from their competitors. The more things that make a start-up unique, the more confidence you can have that they won’t be pushed out by competition or established companies in their market space.
Second, consider the resources that the start-up has on hand – this includes both financial backing and human resources. When assessing the start-up’s finances, ask two questions:
- Are they looking at partners as a critical path to funding? If so, and they don’t get traction in the market, you can easily find yourself with the decision to fund what you need from them. Or you have to abandon and look elsewhere.
- Do they have outside funding sources? If so, what is the priority of the start-up for the financial backers and what is their overall commitment to the market? It’s easy for private equity firms to take a chance on start-ups, but if they are not committed to the business and market, it’s likely they will pull funding if they don’t see returns coming their way in the time-frame they’ve set.
Human resources is also critical. How many people work, and what is their growth plan for continued development of the product offering? How will they grow their resources to effectively support their growing client base? While the financial backing of the company certainly plays a part in this, leadership of the start-up is also critical for getting the right people in to support their growing company.
Mr. Gargiulo advised that provider organizations “seek the best of both worlds,” focusing on the need for both innovative offerings and the long-term stability of a successful tech company. He explained:
When working with a start-up, the upside is speed and innovation – but organizations need to be prepared for both success or failure. This means that executive teams need to take all steps to maximize the probability of success and be ready to take over the project, or discard it completely in the event it fails.
For start-ups, the challenge is capital. They have limited financial resources and their value is in their intellectual property. Partnerships with start-ups should look carefully at what happens to the intellectual property—and the data—if the initiative fails.
On the other hand, working with established companies is like investing in U.S. Treasury Bonds, meaning you are guaranteed a two percent return over a long period of time—they are safe, secure, predictable, and boring. You will get the core features and functions you want, but the legacy foundation has no bells and whistles; it works as advertised but grows at a snail’s pace. Organizations need technology that is agile, and customization can be expensive and slow.
The best choice is likely something in between—a financially sound partner with a solid, documented record using the most advanced technology in a way that is meaningful to your business, with a foundation that gives you flexibility and control for a price you can afford.
For more on the rapidly evolving world of health care tech and the place for provider organizations in that world, check out these resources from the OPEN MINDS Industry Library:
- What Is ‘Blockchain’ & What Will It Mean For Your Tech Strategy?
- Does A Digital World = Digital Addiction Treatment?
- Digital Medicine From The Payer Perspective
- The Wild West Of Digital Medicine
- CEOs & Digital Strategy – How Do You Stack Up?
- Don’t Implement Tech In A Bubble: Consider Your Strategy
- 3 Steps To Leading A Digital Transformation In Your Organization
- More Tools For Tech ROI
- EHRs & Satisfaction-Of Both Consumers & Clinical Professionals
- Going ‘Over The Rainbow’ To Tech Oz
For more on planning ahead for tech, join Mr. Chamberlain on February 16, 2018 for the executive workshop, Leveraging Technology For Competitive Advantage: An OPEN MINDS Seminar On Best Practice Technology Implementation, at the Sheraton Sand Key Resort in Clearwater Beach, Florida.