Health Innovators
Health Innovators

Episode · 2 years ago

Commercializing in a Noisy, Regulated Marketplace w/Lisa Suennen

ABOUT THIS EPISODE

The digital health movement has spawned so many solutions, which makes the process of innovating in the space more chaotic than ever before. How do we rise above the noise to create awareness and demand for our innovations? How do we make ourselves more appealing to venture capital? What are the biggest healthcare myths innovators should stop buying into?

On this episode, healthcare industry consultant, and venture capital partner, Lisa Suennen shares on how innovators can overcome or work around the challenges that come with commercialization. 

 

3 Things We Learned 

 

Regulation and information are a huge barrier to successful commercialization

There’s an imperfect marketplace and a disequilibrium in the sharing of information in healthcare. The patient has no information, the providers have less than they need, and the payers have the wrong kind. Additionally, healthcare is heavily regulated, and regulatory expertise, which many innovators don’t have, is critical. 

 

Focus on numbers to appeal to VCs 

Venture capitalists would be more willing to invest in people who really know their numbers. It’s less about telling them a story about the innovation, and more about showing its financial viability. But don’t jump into venture capital too quickly. If we get too far ahead with raising money but we haven’t done enough to validate our concept, we will waste money and give up ownership too early.  

 

Understand how compensation works in healthcare

One of the biggest mistakes innovators make is not appreciating how payment moves through the system, and how many hands an innovation passes before it gets to the patient. Going direct-to-consumer is almost impossible. It’s hard to get a patient to pay out-of-pocket for something they expect to be covered by insurance. 




There is a noise in healthcare right now, and while there are opportunities for big companies to work with, invest in and partner with innovators, there’s also more chaos. If innovators want to succeed, it’s important to understand how the system is set up. Financially, the incentives of the various players are not aligned in healthcare. Patients, providers and payers are financially at odds. On the regulatory side, innovators have to become knowledgeable about the rules that govern innovation, and buying cycles are long so we need to be patient. To succeed we have to be clear on who is going to pay for our innovation and why. We have to come into healthcare innovation with the mindset of a coalition builder, because it’s impossible to succeed going in it alone. 

Welcome to Coiq and first of its kindvideo program about health, innovators earlier doctors and influencers andtheyar stories about writing the roller coaster of health care and ovation. I'myour host Dor Roxey, founder of legacy, DNA marketing group and it's time toraise our COIQ welcome back to the show coyq listenerson today's episode. I have a fantastic guests with us, Lisa Sunin and she is awoman of many talents. Many titles many awards, and so I'm going to actuallyhurt her introduction would probably be the entire show. So I'm going toactually just hand this over to her and Om to tell us a little bit about herbockground and what she's doing these days, anshhes highlighs with US wel. Thank you, Hi wnted to be herday. So what I do now is. I lead the digitaltechnology group in the Venture Fund for Manat, selps and Phillips, which isa large inigrand professional services. Firm in the US cross country spend alot of time focusing on health care on financial services and digital entertainment, digital media asa firm, and although I personally am more of a health care person day today, really for the last twenty years, I'vebeen mostly ofventurcapitalist. I also T- and I teach fendor capital atBerthlay and before that anmountrepreneur I'vehad my aunfeneral activities along the way as well, but I helped build a large theharow healthcarecompany back in the s. So I em delighted to be here. I I have a podcast as well calledtectonic, so I love doing the payback at right right exactly so so just descryb, because you've beenin health care enovation for so long describe how you've seen it changedover the lastla decades, wow that just sounded like I'm so old. You know it' interesting. I think therewas a time when we just didn't call it that you know now, it's so popular tosay, Innovation, Innovation. You know as if it's some new thing well,obviously invovation itself is someew thing, but the concept of coming upwith new ideas and starting new companies and findines solutions is,you know its older time and now I think, there's a an emphasison it, as almost like a discipline and of that I's the natural and appropriatestate of any good leadership to find new ways to do things which is sometin makes blessing. To behonest, thereis also just a huge amount ofenergy at very large corporations, to figure out how to enovate. I think,ever since Clay Christenson published the innovators prescription, yeaeverybody's been worried that they will, you know, go the way ofblockbuster, and unfortunately I mean it. You know often go tus out to betrue, it's very hard to innovate from apand that Lorde organization there's alot of energy. Now that there didn't use to be, I think, on big companiesworking with investing in partering wath small companies fill that gap.That's also, I think, a big change Yep. So how would you describe it today? I describe it as like this crazy rollercoaster. How would you describe it if, by it you mean sort of theinnovation ecosystem? Yes, it's really the whole in it like trying tocommercialize an innovation, whether you are an entrepreneur in a startup orwhether you one of these big bahemic companies that are trying to innovatewithin...

...you know, I'm not sure it's any harder.Now that it ever was. I think, there's just a lot more peopletrying to do it. You know, I think, particularly over the last ten years asdigital health has become more and more of a area of focus in its own right. Youknow, there's been something like forty billion dollars: aventure investmentand digital health. You know t the intersection of health care of one typeof another. An technology there's just been a lot of chaos. Ithink- and you know, unlike in biotach ortraditional medical deviceis, it's a lot easier to a certain extent to startthese companies, and so there's a lot more of them, and so there does, I think, and, and itespawns you know the whole digital health, Mu Benspawnd. All of theseaccelerators and incuvators and a whole world of other people around thismarketplace, and I think it does feel chaotic ao and I think, there's you know not just one type ofyou know solution for this or that or two but forty. You know so it's hard totell I think, what's going to work when you're talking about health tacklike by you know by and large biotecho forma are also becoming part of this chaos,because we're starting to apply technology like ai and the like todiscovery con of trous. So it's all you know, sort of going faster and fast. THEU have to be particularly discerningnow, not that you didn't always have to be diserting, but an even moreamplified. Level of scrutiny has to be put on. You know your efforts, yourstratotus, your companies to when you're trying to change things becausethere's so much noise, yeah yeah. Absolutely so. Why do you think that itis particularly complex or difficult to commercialize, an innovation inhealthcare, as opposed to other industries? Kayi just wrote an article about thisSOM, my my blag excoldentor Valgary. It's called. I don't remember the efact title, butit's about by thirteen rules for healthchare an entreprenors and the the reason that Hardin health careare a economics. The the incentive, thefinancial incentives of the various players are not at all alined andhealth care. You know, patients and providers and payers often times arefinancially at odds with each other. There's a there's, a a dis equalarbreaaround the sharing of information in Epatin offic Thas none and the providers often have less thanthey need the payers have the wrong kind. It's really terrible. So there's an imperfect,amarkat place of information, there's math of numbers of regulations. So I was talking with the companyyesterday and you know they sort of backed their way into a lot ofregulatory areas. They didn't even realize having expertese regulatory expertiseas essential for most companies, even software companie sometimes- and theyjust simply do not understand that and N. also the buying cycles are very,very long, very long, yeah yeah a lot of companies. You know that I comeacross end up in the Zo. What I call the Zombigraveyard before they actually start generatingany type of sales, because they are just often not funded and and notplanning, especially if they've not been in healthcare before and they'recoming for other Ende Industries- and you know they see this explosion ofgrowth and let me go in there and get my PA hi. Really quick and it's like Ohrud awakening nothing happens quickly, help Youno N.no, so as you've worked as a venturecapitalist or been an entrepreneur yourself, you know: why do you thinksome innovation succeed and some fail?...

What are some of those key ingredientsor key factors? Well, they'r related O, really to whatI just said, I mean Ha. You really have to have a deep understanding of WHO'sgoing to pay and why Rgoin to pay what their incentives are participate withyour product? Is it going to increase their revenue or TETRSOROVENU? Is itgoing to help them get a better financial, occome or not?Honestly, unfortunately, that is the number one driver I think of mosthealthcare adoption to. Obviously you have to have the clinicalside of that two. You certainly need to appreciate howpayment moves through the system, because a lot of people touch things,and you know like think about how a specialty drug gets to a person with ayou know, with a complex disease. You know, there's four o five, six tentouches on that before it gets to the patient. I think you have to have a a prettyremarkable ability to be flexible and think about regulatory issues anddesign your product to fit within what is a very complex, very complex worldof you willing to accept help to do that. If you're, not a lawyer whichmost contpuers are not or right, letery lawyer anyway- and Ithink you know Thenk- we've got no really depending on venture capital. Ithink people go too too quickly for that Io Yeah Xplor, that a little bit,because I don will be interested in that Yu know. I think you have to you knowone one of the things that drives me absolutely nut is when I see companieswho have things for that are ultimately going to touch a patient isus, a forinstance Yeh and theyhaven't gone out Ho to any patients. I mean they haven't done any userr centerdesign exploration, Adaull and they are just assuming because their grandmotherhad some particular problem and they observed it that they've got thesolution for the entire marketplace. Yep All the time startd to be crazy. So I think you knowpeople need to spend a bunch of time way up front on understanding whatpeople really want. The product market fit things that people call it now, butreally just you know, will the dogs beat your dog foot yeah unless you need a lot of money todesign that dog sood, because it's a drug, for instance EU need got to theFDA with it. Try O boos trap it for a little whileyou know billy tri to get a clarity of thought about. WHO WILLPAY? Why and what it is. You are exactly selling and how long it's going to take to salad,how long can they take Tou get paid and whether you need to Col all the thingsthat you can think about without raisiing twenty five million dollarsyeah- and I really you know- I think people have come to it too early a lotof times to large amounts of money to get caught up in this funny evaluationgame and when they find themselves in your Zonbegrager yeah yeah. I was going to ask you so like why. Why is that important?You know, what's the consequence of going to venture capital too early? Well, I mean here's the worst case scenario:Yep Yo. The word I mean. Sometimes you know it works out, but the consequences are you use up a lot of money early andthen you need a lot more, but you haven't got enough to show for yourselfthat allows you to raise that Yep. That May, first of all result you not beingable to raise it an. Secondly, may result you being able to raise it, butat a lower evaluation than laptime, because now you're not selling a dream,you're selling more reality and like measurable, against the Dream, Yep, andthat is always difficult to enter it kind of a downround situation and ithappens all the time. But it's not a pleasant experience for anybody Sholl,I you know, I think the other thing I iswhat I said earlier. Is You get too...

Fart Oud of yourself with money, a haven't enough work to validate your concept, its just a wastemoney, you just waste money and wasting that money. You've. Also given awayownership of your company early, you know, so you don't want to end uphaving to give away so much of your company, because you need to rat somuch more money that you have. You know effectively no real say or control andhow it operates. So I mean we vetucaplis are not wer up Super Fun tohang out with you know, and thnbmaaent eemsto ru their os not to run theircompanies, but Sur. You know it takes, takes a lot of patients. You know to watch these companies growwhen they go sideways really early. It's really tough yeah yeah. So youknow in your experience what is the optimal scenario right as a venturecapitalist? What is kind of like if you had your dream of the innovator walkingin the door? What would they look like? I'm not sure, there's an answer to thatquestion, because there's so much variation depending on what part ishealth care you're in and what problem you're trying to solve. I mean if it'san administrative product, it's totally different than if it's a clinicalproduct eice is totally different than it's a drug that is bit softwarethere's just, but what I can so I can give you acoupe of basic rules. If tot okay, when you walk in an entrepreneur, you shouldbe really savvy about your numbers andwhat you think they're going to be. You may not be told my right, but youshould have a sense of it. You should be savvy about your marketplace, knowthe numbers. You know the market opportunity, and just because you havea women's health product doesn't mean fifty one percent of the population isalongable to use it. You need tob clear on what you who your roal custumer base,Yeah Yep, if you good to have a diversemanagement, Toou, diverse management teams, Pake more money and while mostmanagement teams are not diverse, people are beginning to think aboutthat in a more realistic way, absolutely yeah more and more contentbeing produced and giving that message out M. I think Ophu. You need to bereally thoughtful about how to spend money know you have to be telling thestory of using the money in a very judicious way clear uses of capital.What it's going to cause to do things know how that's going to get spent andwhat you're going to get for it milestone wise, because that's whatinvestors really W, not understand! You know what is it that they're buying interms of progress? Many are welcome. You know many ivastors are happy indoing seed and early early sage, things there's a lot of investors that arefine with that, but they're going to want to see at the end of the eighteenmonths of money that you actually achieved. The Mile SOS you said: Toe Goto yeah, yeah and- and I think some of the things that Yo're talking about arenot necessarily rocket science, but but we still need to be. We still need totalk about them and remind folks of some of the basics, sometimes becausesometimes we get so enamored with it that we kind of forget the basics, yeah yeah. No, I see way too manyontramers that are very excited about their technology, but they reallyforgot to like look up and say who's going to buy it, which is such a shame. Yeah Yeah. I really Isso that kind ofties to this question that I wanted to ask you is you know in your experience,what are some of the myths or false beliefs that you think health?Innovators have hmmit'SA good question? I think there'sa calse belief that consumers will pay for things out of pocket that insurancenormally cover. I often hear companies saying that.Well, we don't want to go to insurance companies to pay for it, because ittakes too long to go direct consumer very tough. I mean unless you'reselling somethingit's more alined with...

...the beauty market or spelf help, but not really medicalin nature. It's almost impossible to do yeah. I think consumers just expect itto be covered. They don't expect to pay out of pocket. I mean, what's your takeon that? If I something that would normally becovered by Ninsurance, I think that's correct. You know I think you might beable to find a few people who are willing to pay for something onceyou've gotten out of you know: New York City, Boston, San Francisco, you knowit's gets harder and harder yeah. I think you know another myth is thatyou know. If you build it, they will cop right if you build something thatactually improves surgery- or you know- produces a better clinical outcome thateverybody will want it. Well, that's not always true. Unfortunately, yeah, if it improve that sombut reducessomebody's income by considerable amount, they may not want it, they maynot pay for it and ACA. You know worth understanding again back to theeconomic dynamics, how what you have to deliver and exchange for the reduction,an revenue that makes it worth it Ayou know, follow the money is sort ofthe most important Montra a d. You know I got averaport, but it is true, yeah other myts, oh my personal favoritecech people could come in and change health care o the way we all thaseHelpe yeur people screwet up so bad troe. That people coming from the techworld can do things and think about things differently and freshly in a waythat we do not from healthcare side. No doubt about it, but not understandinghow the healthcer system works, how Bundy Flows, how regulations were Co.All of that is your downfall. So you really need bote. You need yeah. Youneed to bring smart people from both sides, O thou world, along with you or you- will not probably be successfulm yeah any other myth. ORCASS pelice before wemove on I'm thefeel, like I feel like you havethis soapbox of stuff. I do yeah yeah all these pet peevesthat you encounter and you're like atrue yeah. You know, I think otherthing is when you, when you meet with venture capitalist. I think a lot ofpeople feel like they have to tell the most fantastical story in the world M and I don't think that's correct. Imean if you get so fantastical that it's hard to believe yeah, you'vecropsed the line you know and putting financial projections on a piece ofpaper that look like they're, going to go from zero to a hundred million andfive years, which is the standard thing. I think people must print off theInternet. It's very rare, almost impossible forthat tow happen, and so you know be realistic. I mean optimistic butrealistic about what you have what you know what you can do, what you coalchoose. Yes, you have to tell a great story and build a vision of Wiees canbe a great company and prettys great returns, absolutely true yeah. But ifyou get so far ahead of yourself- and you know to the point where You'e bostcredibility- you're not going to help yourself youare sure, so as you kind ofindicat this beginning of the conversation there's this explosion ofhealth carnovation right, more players in the mix and the ecosystem than itseems like ever before- how how did the health innovator riseabove the noise right? So you think about these buyers of healthcare andevotion bless you, especially in the you know the BTB world. You know thathave people knocking on their doors all day every day, so how do yo rise abovethe noise to create that awareness, ind that demand yeah, it's getting harder and harder. Ithink I mean I think again, you have to come in with a clear understanding ofthe problem. The person you're meeting with is likely facing yeah a clearunderstanding and ability to describe...

...how you're going to solve it within thecontext of their environment, but evidenciary based results, you're goingto provide to them. You know what are yougoing to save them? What e you going to create new for them? Businesswisesolving a WORKFOR, a problem, whatever really thet clear benefits and away toprove it. If you haven't done enough to prove it yet a way to prove it withthem in a willingness to be open about it and strike deals with people that allowthat evidence to be created, so I think, there's a much you know. I think that ' ise of companies has resulted appropriately in a rise ofskepticism. That is abated only by truth. You know value based proof and coming with proof or coming with a planto get. It is really really important and being open to that soabout that alittle bit you know, there's a lot of talk in the industry about pilots. Youknow- and I think you and I talked Raly on about you- know, pilot purgatory anddeath by pilot, and you know proof of concept engagements and then you know,we've had some conversations around pureeviewed studies. You know how fardoes an innovator need to go in order to actually build that value? baceproof. Do I need one pilot. Do what do I meen a specific size of pilot? Do Ineed it to be a you know, more rigorous, peer reviewed study because there'sless credibility around pilot, you know data and structure. What do you think I geit? I don't know F, there's a hardavasced answer and I think it depends on the industry and yeah ar the part ofthis, but you know- and I laugh whetever- I I've gotten in my head now.Whenever people talk about pilots, I think about how you want to be CharlesLinberd, not Amelia, Airhart, but yeah. I think I think the important thingwith tilots is the a that the custumer believes is worth paying for the pilot.They believe there's something of you know enough value potential here thatthey pay for some of it. I think you have to be willing to publish whatcomes out of it, no matter how good bad it is. I think you have to do some early pilots that arejust tests with friendly folk. Without you know pretending that's revenue,yeah yeah, I think you have to when you're in areal pay pilot have a contract that says. If I meet these particularmilestones, I actually get there the contract for how you're going to turnthis into a commercial agreement is already written. Yeap agree, so I mean those are those are pieces ofe puzzle, but I mean you and you have to commit as an organization, Justudying and Testing, I mean you have to do the clinical trial or the youknow the financial study or whatever it might be. You have to do it, it's youcan't short cut around it or you will ultimately recret. That decision haveyou encountered you know so. Sometimes I hear this conversation of you know MaHealth innovator. I went to this health system. They were interested in my pilot. Youknow they they didn't want to pay for it or that if they were going to have tocommit to something in the more long term than there almost becomes likesome skin in the game, because the the health system is saying like I'm notgoing to, you know, invest all this time. An effort into helping youactually like, build and grow your product in Your Business for free,otherwise I'll J O that myself. Do you see that as well? I do I do. I see often times that thatcompanies who are the pilot site you know, would like sobequity Tis. Youknow the pilot goes well. I think in the earliest days. That's fineinappropriate to a certain extent, but if you're doing a couple of those thatshould be it right right right, we o be like...

...commercial. You know, if you're atnumber ten pilot, where you giving away equity you're, doing somethingincorract most likely right. Yeah, you don't want to find yourself. You get apiece of my company, you get a piece in my company, you get a piece of mycompany, you get ta be to my company, otherwise something wine. You should have creatn enough valuethat people rilly pay, pay you for it right right, Yeph, exactly one hundredpercent. So what what would be some advice that youwould have to our listeners that are in the trenches right now, so we've got amix. So, there's folks that are innovators that are immer, you knowemergent startups and then we've cone folks that are innovating internally aswell with o Art Organization. So what are some of the advice and guidancethat you have for them? Well, I would look you know I actuallywould go. Look at the article I wrote about this a couple weeks ago. Yeah. Ithink those are good guidelines for companies, tat, I've seen so manythousands of companies. I feel like those are pretty good rules. I think you have to be patient,especially in large organizations. You have to be a coalition builder, it'svery hard to change practices and larged organizations its very hard. Youhave to spend more time getting the Byan than you do. Building the productSu Yeah. You have to be willing to fight that fight and you probably alsoneed to be separated out from the main organization. To a certain extent, youhave the freedom to break the rules for young innovators. You know n ouryoung company eldrepreneurs. You know also that be pacent withyourself. It takes a long long time. This is not an industry where youstarted company insult three years. o I mean occasionally it happens, butextraordinarily rare, more, but more guntour back companies and help hertake ten or twelve years to exit them. You know, then, less than five, so myalongshot and I think you have to be in it. Youknow for the long game and not start your company thinking about exit. Thatis a mistake, need to start your company thinking about solving problemsand proving that you selve problems and really nurturing that opportunity until you've got it downawesome. Well, thank you so much for sharing your wisdom today so where howcan people best get a hold of you and where can they find that article thatyou referred to the article is on my blog adventurevalkarycom. It is just a couple weeks old, so it'spretty easily found and if you go there and just to a search for thirteen rules,you'll find it. That's also how you reach me. You canfind me through the block or Yo linkd in okay, all right excellent. So thankyou so much for being on the show. Today, thank you so much. I really appreciatethe opportunity. What's the difference between watchingand commercializing a health care Novation, many people will watch a newproduct. Few will commercialize it to learn the difference between launchand commercialization and to watch past episodes of the show head to our videoshow page at Dr Roxycom. Thank so much for watching and listening to the showyou can subscribe to the latest episodes on your favorite podcast, APPlike apple podcast and spotify, or subscribe to the video episodes on ourYoutube Channel, no matter the platform just search Coyq with Dr Roktin untilnext time. LET'S RAISE OUR COIQ.

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