Health Innovators
Health Innovators

Episode · 2 years ago

How to Understand the Ecosystem Around Healthcare Innovation w/Paulo Machado

ABOUT THIS EPISODE

Healthcare innovations play within a multi-sided market which adds a layer of complexity and difficulty a lot of other industries don’t have. What are some of the unique features of healthcare that innovators have to navigate? How do entrepreneurs balance between enthusiastic optimism and the realism of how the market works? What strategies can you use to beat the odds and maximize your ROI?

On this episode, I’m joined by the founder and CEO Health Innovation Partners, Paulo Machado who shares on his multiple level experience with commercialization and how to decrease the 95% failure rate of healthcare innovation.

 

3 Things We Learned

  • Healthcare innovators often have tunnel vision on their creation which is a mistake
  • It’s so important to have the ability to pivot
  • The difference between decision making in consumer and healthcare products

A successful healthcare innovation has to work within the massive healthcare system that exists. Innovators tend to oversimplify the problems and facets of healthcare, and come up with specific point solutions as a result. But if you neglect the larger ecosystem, your innovation won’t be good enough, even if it’s really amazing. Remember, healthcare products aren’t a normal good and you don’t just sell to one consumer. You sell to multiple stakeholders, who aren’t always aligned in their goals. Always design your innovation with the whole system in mind.

Welcome to Coiq and first of itskind video program about health innovators, early adoptors and influencers and their stories aboutwriting the roller coaster of healthcare innovation. I'm your host, Dr Roxy,founder of Legacy DNA marketing group, and it's time to raise our COIQ.Welcome back to the show, coiq listeners. Today I have Paulo Machado with meand he is a twenty year veteran, tons of experience launching and commercializing healthcareinnovations, and we're going to get his take on what why some healthcannovations succeed and why some fail, and he's also going to share some strategiesof how you can overcome and beat the odds of success and maximize your Roi. So welcome to the show, Polo Roxy. Thank you very much forhaving looking forth that in the conversation with the absolutely so. For our listenerswho don't know you just yet, tell us a little bit about your backgroundand what you're doing these days. Sure started off my career in the financialworld and a couple of trained us with solemn brothers shift it into the healthcarespace, working pharmaceuticals for a number of years and then in two thousand andeight went ahead and decided to start up mount consulting practice, focusing in onour development and design. Is this model development and design and health organizations ofevery sort of the cross the spectrum, from payers and providers to retailers toemerging tech companies. On NBC's you're out how to basically develop innovasions are goingto have a positive impact on our healthcare delivery system and, more importantly,on the health and will view of individuals. It's great. One of the thingsthat I think is really interesting about having your perspective on the show isyou've not you've worked both in turtle in in the nuances of that and thenyou've also worked as an external consultant, and so I think that that kindof gives you a multilevel perspective to bring to our audience. Absolutely cut myteeth on the entrepreneurial side, excuse me. Starting off on the financial world.I was always a person who was very intrigued by large scale innovation projectsin the organization, even back in the financial services days when we were launchingnew business units and Asian Latin America, and follow that through IMS in thepharmaceutical world, launching new business models, new products, excuse me, inthe US and brought awesome. So the first question that I have for youis what how would you describe writing the roller coaster of healthcare innovation? Wow, the broad question. How would you describe it? I think it reallydepends on the individual. For some people absolutely terrify, other people's incredibly exhilarating. Yeah, everything in between. So it depends on where you are inthe right I'm getting ready for the moment of anticipation when there's the big drop. Yeah, just believe that you made it through the drop. It reallydepended on your framework, your experience set and the amount of dopamine rush thatyou enjoy. Yeah, and I think you know, entrepreneurism is not forthe faint of heart. So we probably have quite a few listeners that havehigh levels of dopamine that find, you know, the wild ride pretty exhilarating. So, but that's the case. Yea. So one of the setsI talked about often, and you and I have talked about as well,is this fail your rate, this alarming statistic that ninety five percent of innovationsthat are brought to market fail to reach any adequate level of acceptance or profitability. So so love to get your take on it. Why do you thinksome healthcare innovation succeed and why some fail? Why? Range of reasons. Sometimesit let's kind of start with the basics, understanding the market place andreally truly understanding the need. There's a quite a few people have been enteringinto the marketplace and health care, and I've been involved in health crinovation fortwenty years now across the spectrum of payers...

...and providers. I'm helping consumers figureout what their needs are, so to speak. And healthful isn't a normalgood. It's frankly a but I think of as a negative good. It'snot something that most people want to seek and concern consume. It's a widerange who seems more a lot of people to have avoidance around and it isa system, so to speak. It's been designed for fee for service.Historically, when we're in the process of transforming from that to m be muchmore focus on value based care. And what's happens is with this massive healthcaresystem that exists in quotes, is there. Basically people come into it, look, look making, I guess, oversimplifying the problems and trying to comeup with its very specific point solutions. But that point solution sits within alarger ecosystem and addressing on a specific issue may not be enough and there's atremendous amount of behavioral change and needs to go. So software is not thesolution and every case, frankly, frequently it's not the solution. Is justan enabling if people come in and look at it though, that's a simpleproblem. We can make that happen. But the real challenges ends up beingon because it is not a normal good and you can't always go direct toconsumer effectively. With health and well being behavior modification. It's the system.It's very hard to have systemic level change with simple software point solutions. Soyou see a lot of organizations come in not understanding what is involved making significantchange. That's not to say that you can't make money solving a small problemin selling into another organization's going to make it partner broader offering. Frequently,I think what ends up happening is on my experience in being out there andworking with a startups for well over a decade now, is that you failto estimate truly the adoption rights and the inertia in the system that exists,the piloting and the testing, in the proof that needs to be developed beforebecoming the threadily adopted. We don't have a system, so to speak.It's not like you make decisions somewhere and everybody just adopted. If you wantto sell something the hospital, you have thousands of hospitals. You have togo a convinced. If you want to sell two ensures, you have hundredsof maturity weren't events. If you want to sell the doctors, forget it. Sales Force to go out there and convince one doctor the time. Ifyou want to sell consumers, even more challenging because you have to sell consumersin the context of how their decision making fits in the context of all theother stakeholders. Of Well, I think there's a massive, most over USoverly optimistic estimates around how adoption will look and the effort it takes. It'snot just building the solution, it's then getting it to be adopted, evenif it's the best solution. I think some unbelievably amazing solutions with the doctrines. Takes too long. you run out of mine. So what kind ofconversations do you normally have with you, with those innovators, to kind ofhelp balance this optimistic enthusiasm that's really like fuel to keep on going with thisreality that we all live back? Yeah, I think that that the great questionfor that. I think the reality. You don't want to squash the optimismbecause you said you that that is the fuel is going to keep peoplegoing through the night, and I think what ends up happening is you needto really get people to focus on the system, what is involved and wingto try to understand what is the problem you're trying to solve, and notjust what's happening with that user, but every layer surrounding that user. Soover time, with the end of seeing if it's it's a direct to consumer, if it's a product I think Sumer has to use. How does thateffect the their doctors that are surrounding Nepos? If you're trying to get up frontof the weight management program out there were filing many companies that are doingthat. Diabetes Management. Yeah, there is actually in the ecosystem of allthe stakeholders are also trying to get that same consumer to do something similar.So typical bad that it has a wellness...

...company reaching out to them, theyhave their insurance in church and over them, that an employer program of some sort, that insurance company reaching out, that the doctor reaching out, theycan be doing something on their own. So they're just a barrage of solutionbeing thrown with them. As a consumer. That creates confusion. It's a nota great experience. So having people think about and design solutions that arenot just product focus without man sign work, but business model development, design workand understanding how it fits into how those two interact, I think reallyup so from likely that they're to be successful because they're going to understand thebusiness model on the context for which the specific point solutions are in existent and, of course, the last pieces financially. Who Pays for this stuff? That'squite frequently what happens is there's this lack of understanding around the basic issueof most products and normal world, that nonhealthcare world. If I'm going tobuy a phone, I'm the person who decides what that phone is, I'mpaying for that phone and I'm as also the user of that phone. Soall three of those primary functions sit in one person and frequently in healthcare goesthree decision points, those three roles exist in different stakeholders, with misaligned financialsentence, to understand who's going to pay for WHO's in the sidebook gets usedand who's actually going to use it or to be very different issues that needto be addressed, and you have to think about that red product design andfiguring out how the cash flows through the system. So it's not just theuser experience, but it's a financial flows, it's the operational flows, and hasto touch it, and it's the information flows, who has to beaware of what's happened. Yeah, I mean you touched on it. Youknow, it's a it's a multisided market that I think adds a layer ofcomplexibility, complexity and difficulty, you know, to commercialization. And I find,like you, that this is something that healthcare innovators really struggle with.Is, you know, even just looking at a business model canvas and andreally mapping that success late with all market sides of the equation, you know, taken into consideration. Yeah, I think it's important to keep in mind. It's being aware of all these sides and tacking the one that you cantackle success to them say okay, I can now go raise some capital,or I can go from a you go from a pilot to a a scaledprogram for a phase one kind of launch with an organization and just iterate andlearn and continue and fail. And failing, by the way, isn't necessarily abad thing. There's a trance not to be learned from failm sure,more from from success in many ways shifting form, but it kind of keepthat continuously evolving, iterating and keeping your eye bigger picture of what am Idoing, how is it affecting other stakeholders and who's going to be blocking me? So, for if I'm done launching whatever diabetes management program of some sortof am I fighting that patience if I'm going to direct the consumer in throughhis employer or whatever channel, or sure is that something that's at odds withthe program that his doctor has him trying to do? How does it?How do you overcome that challenge? Hmmm, so when you're what you know,when you're working with a healthcare innovator, where do you normally start in thatthat sequence of decision making a VAT? Of course it's going to vary toa certain degree of where they are in that commercialization or launch process.But you know what, if you found to be best practices around that decisiontree that has to be made. Yeah, I think it's a great question andtypically refer back to the is model cameras and value procamists and they havekind of walk them through what is their understanding what they're actually trying to sellfor, and they understand what's happening at the market level. They understand thevalue proposition that's involved that at the various stakehold levels and see where they maybe missing something and not considering that there's some maybe you're not pick considering wherethe money's coming from. WHO's how difficult...

...it will be to get somebody whopays for something to buy in, not just a consumer to use. Theconsumer wants to use and the player doesn't want to pay. We see thosehappen frequently in the marketplace. That all being said, what's fascinating now thatI've been doing this for very long time, it's the markets involved tremendously. Ithas become much more mature about it self. Awareness and yeah, offto these organizations that are have these various roles of providing care or paying forcare and the conversions of those who, because seeing a lot more pay buyersout in the marketplace and going much more vertical stack on driving and the limitationthey were trying to get rid of, the friction from the system at theprovider, player and consumer level, and you're seeing much more maturity in termsof how these organizations are thinking about the problems more holistically, but don't ourprocesses because of issues of safety and security of data and really being focused ona quality product. It's behind their brand, but they remas are large organizations andthey have brands and they just can't necessarily shoot from the HIP and notworry about failing because they have to worry about failing effects the bans. Theircautious and they'll tell you it'll take three, six months, nine months, ayear and a half before a program can get to a point of skillthrough all of the hurdles they put there for good reasons, but typically youneed a large worchest. This is where you know and the maturation, bythe way, also I'm thinking about the investor community. If you think backten, fifteen years agoing to start getting involved in this marketplace, the investorswe spot, we're not aware of what's going on and there was just alot of money throwing just ideas, and then they realize, wait a minute, this is like you taking two years until we getting kind of rever outof this. What happened? It's a tech play. Right, I'll come. It's not flipping me at you know, twenty months and in eighteen months,right, in eighteen months hot. I think that that is changed theback. The majority of investors are, I engaged by their very aware what'shappening in the market. They understanding the holes. That being said, andthey having lost your shirts on quite a few of those ninety five percent gold. Yeah, there's quite a bit more black called risk intolerance and much moreevidence the things and the things are working for they throw money behind it.There's less true risk capital in the market place. So it's interesting the largethat they found in the revolution. And sure, you know, depending onwhat type of innovation you're bringing to market, you know, you could be talkingabout a clinical trial, you could be talking about, you know,some pilot studies. You know, we've talked about this before, this wholeidea of death by pilot and kind of getting stuck in pilot purgatory. Whenyou're working with innovators, you know, kind of share some insights with ouraudience of you know, what do they need to look for or to bemindful of when they are first negotiating that pilot agreement to make sure that theyget the success or the results that they're looking for at the end? Yeah, so that's an unbelievably important series of the city. Is that needing tomake in Franklin? Choosing the wrong pilots depends on how des Pretty are,what your word chest the moment looks like. Of course. Yeah, we havesome time. Picking the right first pilot or qu or absolutely essential andfrequently you'll find people just don't think through what it's going to take and whattheir hurdles will be those first couple of piles stuff and running these do anypilot and the first part more question. They won't be able to do anythingelse and know go under try and get one pilot on. So having thepilot partners and the first is absolutely critical. And just asking my questions, I'mon alignment of expectations, timing, resources, roles, communications, cashwith involved. Frequently US multi billion dollar orgivations going to do a pilot oftiny company and they're basically something I don't...

...want to pay anything. That's reallypainful for an organization that has very many capital to not at least have theirfast card. Yeah, and it's also a proofpoint to investors, and theseguys aren't even want to pay for a pilot, much less a scale.So it just becomes challenging. So most the checklist of questions and having veryopen communications. I'm also very into creating up significant onlinements around the fact thatwhere you are in your life, semple with the product, are you inco creation mode and you're looking for the high stakes gamblers and people who driveand want to do that co creation with you, and that's part of what? Part of their ethos? Yeah, or the organization that only does pilotsand later adoptors. They're not really running a pilot. They're running a firststage of something that's are improven. So really feel good program and that's okay, you want to it's a different kind of pilot. It's not a COcreation pilot. That case is just picking the tires between that organization's missed theverse and the specifics that I may need to Manu show within my program mayit may need to find tune to fit your organization. That's more of acustomization, of of onboarding a program versus a pilot. A true pilot,in my mind, is when you you're not sure what to results are youhave a hypothesis. Who want to test you found somebody who wants to testit with you and literally going to learn from this with you and they're infor that. You know, understanding what it is that we're actually doing together. True pilot is critical. If you're just basically saying hey, my,my, I've now proven as I've got white papers and everything else is withI want to do a pilot, I don't think of that as the pilotright. In that case, all you're doing is customizing the program before yougo full latch. Yep, Yep, absolutely. You know, one ofthe things kind of, you know, taping off of what you're said,was that you know, a lot of times health innovators think that, oh, I'll just use Cleveland Clinic, for example. Cleveland Clinic said Yes tomy pilot like that's like the Holy Grail, and I think that sometimes, youknow, it seems as though that that might be the right pilot becauseof the brand recognition it kind of gives you some Kudos that you might beable to put on your website and you know your pitch deck and and whatnot, but you know it in the conversations that I've had and in my experience, that can actually be a death sentence. And it's not Cleveland clinics per se, but it's more of you know, some of the more prominent, biggerorganizations that can be just a real resource string kind of like you described, and I might have more success with some of the smaller, no nameentities. What are your thoughts about that? Yeah, I clearly branding matters.If you're going to go out into some of the big brands that areout there in the healthcare system, in the healthcare world and say we dida pilot with X, Y Z and somehow you survive the gauntlet of gettingit come all right, everybody knows what that means. That doesn't mean youcan't hit a lot of signals and doubles that have a higher risk tongues andappetiting, frankly, can move a lot faster and they're more focused on cocreation with you. Not that the large organizations can't have that CO creation mindset. It just takes a lot longer, typically in my experience, to gofrom Oh, we had the first conversation, so we get a result. It'sbeen marketable somewhere else. I'm working with those organizations. Frankly, theyalso are very savvy as it relates to a well, do I really wantto launch this and get this to put be in my competitors hands and itit brings up more complexity and the design of the pilots, exclusivity and thingsof that sort of start to get kicked into the conversations, which it canbe very enticing for somebody's coming out of the gate when they hear a bigbrand say, Hey, would you consider to be exclusive, with me notthinking okay, well that, what does that really meet from a fine mess. And, by way, a lot of this is just not really relevantif you're talking about people who've been around the block and built organizations and experiencesthemselves. We can have for a second or third tour of duty in thatcase. You know, basically, you start start up in healthcare is likemainline and crap. For these people.

You're addicted to it and they can'tstop even though it's incredibly painful process because there are a lot of rewards.You're right. Help well, right in that makes a big difference and that'swhat I find is concredibly rewarding for innovation and healthcare, using a much largerinflux of people and to healthcare and some times twelve years ago, into theinnovative side and building organizations up from scratch that we're not in healthcare before.And they say they didn't have purpose behind innovation. They had before. See, what you find in healthcare is people come in and they're they talk tome about this is so different than my own job, my owd job.I was doing X Y Z and I went home and as it didn't reallymatter. And here people feel like they're on a mission and you notice quitea few organizations innovating is because I had a personal thing that occurred in situationin your life and they're driven in fuel by wow. That shouldn't be thatway. Is there's something I could do? M Doesn't happen in most other industries. Yeah, I think you're so right. So kind of speak tolet's say you had three, three recommendations or suggestions around strategies or tactic,you know, best practices or lessons that you've learned along the way. Numberone is find the right people to go on this adventure with. So ateam is absolutely critical. People have to trust your has been work time withthese people than anybody else in those early years of getting this up and running. So alignment of values, got alignment of vision, alignment of everything thatmatters. It really is the working with somebody. Can You have fun together? Can Seri or can you? Can you work to what's common goals andobjectives? Because if that happens, if this is happening internally, there's conflictinternally, it just dramatically recursion reduces the like ahold of successfully. So that'sone bnch of cofounders and initial small pot of people who are on on amission. Yep. The second is really be really clear and Aligne on what'syour initial mission out of the block and make sure the whole team jetson.You understand the problem, the scope of it. How large is the marketpotential? What are the issues you're trying to address and marketplace understanding? WHO'saddressing those issues now? who were the blockers? Who's the direct competition tryingto solve it now, versus those are going to just block it by theirinertia and being the market place in what you're doing affects them. Between clearon that, on that compelling bat and, Frankfully, not being stuck to it, because the reality is, once you get in you're going to learnthat, hey, that's not really exactly what we thought it was going tobe. How do I pivot? So being willing to have that curiosity andbeing mindful of the fact that we may not have the right hypothesis, wefor testing in the marketplace and pivoting and getting up there. I just wantto pause for a second because I think that that is a huge point andyou know, we just cannot share that message frequently enough the you know thatwe kind of really have to let go of our static point of view andposition around who, what, how, when and why if we want tobe able to have a successful business. You know, a lot of timespeople ask me, you know, why do you think that failure rate isso high, and I think what you just described is one of those topreasons. Interesting I was think of we're so okay with minimal Bible products andin already around the product level, but at their company, team and otherlevels, individual level, we struggle with that as a concept. M It's, I'm a cognitive bids and what we know is true. But if it'snot working, then how do you put it and still still remain true toyour value? It's right, yeah, arm with your iterations. You haveto kind of make that trade off. So ideally, you have a positiveimpact on the health care, the delivery system, everything else that's needs tobe addressed, and nothing to justital crisis. Not all right, right, yeah, some of the things that I...

...think you're describing really to me,kind of bleed outside of what might think of as like commercialization strategy and goto market strategy and really kind of bleed into more like the leadership realm anddiscipline. And you know, I think that's something too that sometimes I comeacross innovators that think about, like oh well, that's like a stage two, stage phase three thing, you know, like I'm really I can't focus onbuilding in my culture and, you know, communicating values and mission rightnow, like I really just need to get this off the ground and Ineeded, you know, get those first customers and in really not understanding thatthe culture is being created, whether they do it intentionally or not. Right, culture is created, yeah, by design are not body lie by thefault and along the issue of culture, it's also not just your internal team. But how do you pick the right external partners and customers? BECA isthat there's quite a few organizations which you can get wrapped up and that aren'taligne necessary with where your values are, and that's really important. Not,ever, all customers are not billions of difference. Yeah, you know,that kind of makes me think of, you know, that idea of arewe a fit? And, you know, again kind of like what you weretalking about before. I'm a I'm an innovator, I'm an early stagecompany. I'm so hungry. Every seems like everyone seems like it's a fitand instead of really having like that criteria of you know, kind of likethe first date scenarios, is this partner, is this comple you know, customer? Are they really a fit for our organization? And being willing tosay no and obviously easy to say the realities. It's totally depends on howlong resource you are. You're gonna lot more desperate if you haven't found thatthe right partner of customer the year and you got six months of burn rightback. Sure, sure, I just got a bunch. I just gota bunch of money I got two years ago, so you can be alittle bit more discerning. Sure, it's being keeping in the back of yourmind and just making sure you understand the tradeoff, because clients can take theproduct down a path you don't want it to go. Yep, absolutely.Also, very big risk is to making sure that their clients don't don't takethe product of place we don't you're not comfortable taking too. Yeah, absolutely, where it's just overdeveloped in that particular customer loves it, but but it'snot viable for anyone else. Yeah, and I think just having a clearstrategy where we had an understanding how the tactics build and building metrics to showthat these tactics are the right ones. But sometime we have a hyposit.These metrics are the way ones and show I'm heading the right direction strategically,and the realities they may not be. HMM. Again, not being stuckwith the metrics that you have in place, but some of them may not bethe right indicators and maybe car late success and it may not be causablywhen us to success of attempting sure, yeah, absolutely so. We were. We were talking about lessons learned and you shared two of them with us. What's the third one that you want to share with our audience? Yeah, the other is I'm just being really aware of selfaware yourself and the foundingteam. How long you want to be in the game, like, whatis your real objective? Are you looking to build a company and flip it? And knowing yourself well enough to not have the ego in place where Ihave to take this from the beginning to end, because it's understanding what's myrole in this, and my the idea person, and my Miss Guy whogets a team together, and my the guy gets a funding by the guy'sgoing to see it all the way through to IPO, and frequently what youfind these people hang on too long. HMM. Well, they shouldn't haveand ego gets in the way, so to speak, and just understanding whatis my role in all of this. What am I trying to accomplish?Am I trying to build a big company? Is this a lifestyle company? Isthis company? It's something I want to start and all the way throughIPO and just being very clear with yourself and checking your yourself as okay,am I limiting the success of this organization...

...and I see some founders are greatbut stepping into different roles as the other times. It's a real battle andit really truly in peace the progress of organizations. So called self reflection,self awareness and understanding that your role may need to evolve as organizational needs evolved. HMM, the all thing is having it three year, having a tenperson start up, is not the same as scaling to a thousand person company'sdifferent still sets, different experiences and things of that. Yeah, absolutely.You know, I think that's a real hard one. A group. There'svery few people of my experience have a self awareness of where they fit in, where they still sets are, and many, we believe you can takeit all the way through. Very few can have the skills that are blogenough to do all of it right. Right. Yep, absolutely well,thank you so much, Paulo, for sharing your wisdom with us today.For those of the our listeners that want to maybe get ahold of you,that have some additional questions for you, what's the best way that they canreach out to you? Yeah, Linkedin, follow James Shot Up is prob theeasiest place to find email addresses. People shadow sixty sets of Gmail.That the awesome. Well, thank you so much. Until next time.Thank you, rocky, for taking under well. You got it be well. What's the difference between launching and commercializing a healthcare in avation? Many peoplewill launch a new product, few will commercialize it. To learn the differencebetween launch and commercialization and to watch past episodes of the show, head toour video show page at Dr Roxycom. Thanks so much for watching and listeningto the show. You can subscribe to the latest episodes on your favorite podcastAPP like apple podcasts and spotify, or subscribe to the video episodes on ouryoutube channel. No matter the platform, just search coiq with Dr Roxy.Until next time. LET'S RAISE OUR COIQ.

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