October 28, 2020
A starter’s guide to running a healthcare SaaS startup
Markets and Markets reports that, despite the pandemic, the global healthcare cloud computing market is predicted to grow steadily at a CAGR of 18.1% and hit $64bn by 2025. Amidst the global public health crisis, healthcare software development services deployed in the cloud are in a very high demand, and it’s no wonder. Cloud-based healthcare solutions are more economical, as they don’t require hefty one-time investments but incremental pay-per-use fees. What’s more, in-house innovations take much time to be implemented, that’s why providers prefer swifter solutions, such as SaaS and PaaS. This is what startups can provide, and the prospects for startuppers here are quite bright.
According to CB Insights, the year 2020 has seen 42 healthcare unicorns valued at over $101bn totally:
However, there’s a tiny fly in the ointment—it’s a common knowledge that 90% of new startups fail. So how to make sure your SaaS/PaaS startup doesn’t bite the dust? We’ve prepared a list of handy tips to keep in mind.
To create a healthcare SaaS that lives on, you have to clearly understand what key users look for in the software. In fact, SaaS can help clinicians resolve some burning issues in their industry.
First of all, it’s about interoperability in healthcare. SaaS and PaaS improve information sharing not only within a clinic but also with external parties—other clinics, research organizations, insurance providers, and more. SaaS platforms make a central hub for multi-source data, and they can help standardize the way it is stored and processed. Besides, the SaaS environment fosters a more cohesive stream of data, which facilitates clinical cooperation and—potentially—improves patient outcomes.
Vendors also take the responsibility of shielding their clients against data security issues, as ensuring the cloud environment security with advanced authorization protocols and cybersecurity measures is their task.
What’s more, with cloud technologies providers can embrace some desired functionality without stretching their tight budgets. This may allow providers to expand their offer and deliver improved care to vulnerable populations, such as patients with chronic conditions.
This is how the XRHealth platform works. Using a VR headset, patients can get into diverse digital environments that help them manage neurocognitive disorders, pain, and other conditions.
Moreover, using the platform, patients may provide access to their health data to selected clinicians who can monitor the patients’ vitals in real time via VR headsets and personalize treatments accordingly. This VR-powered service brings personalized care to patients’ homes, which in turn improves patient outcomes and experience.
To crown it all, SaaS/PaaS saves providers the trouble of deploying and maintaining complex in-house digital infrastructures while offering advanced accessibility. It’s very much like mobile healthcare—basically, clinicians and patients can connect from any place with an internet connection available.
The points above give the general idea of what users expect from SaaS or PaaS. However, ensuring a startup success calls for precise targeting of an industry bottleneck. To cover this gap, you’ll need to run detailed research. This covers not only market research but also looking into dominant health IT trends, potential users’ ideas, and competitors’ offers.
When it comes to the industry specifics, it’s almost impossible to study them unless you work in the field. For this matter, you may attract an established medical professional or key opinion leader (KOL) to offer consulting and advice when needed.
And here comes the problem that has drowned several startups—overreliance on expert opinion. Well-versed in technologies, startuppers might be less comfortable with more than one medical field. Therefore, they might entrust the choice of the field to a KOL. However, that’s not the best scenario. Here’s how Paul Grand, CEO at MedTech Innovator, a renowned startup aggregator, puts it:
We regularly see startups whose technology has multiple potential indications. They typically choose the initial indication based on the one the company founder knows the most about. But this isn’t always the right call; the wrong initial indication can drain resources before you have time to pivot.
CEO, MedTech Innovator
To choose the most suitable field, you need to make a careful analysis relying on three factors: market size, competitors, and the potential user adoption rate. You should also remember that clinicians are not the only prospective users of the system; often patients are also in. While doctors’ adoption can be clearly monitored, the patients’ one is less predictable. To have it covered, you’ll need to ensure your continuous awareness of the key users’ sentiment and expectations.
Analyzing these three components should help you select the most suitable initial field without prejudice, which is harmful even when coming from an industry expert.
Providing a PaaS or SaaS solution for healthcare, technical experts may be at a loss: say, the software provides clear routes for healthcare automation, but hospital personnel still clings to their obsolete inefficient processes. Why so?
Healthcare is a highly traditional industry. It’s not that the product is of low quality or unwanted—it’s just that clinicians feel uncomfortable disrupting their tried-and-true workflows and methods. However, the changes are needed, and they should start from the inside.
A good example here is EHR implementation. As we know, it requires reviewing the existing processes and discarding inefficient ones. You may offer progressive-thinking clinicians to do the same—to study the relevant established workflows in the target field and select those that only complicate care provision. Then you can review the ways your SaaS solution may improve those processes and present your ideas to the clinical personnel. Later on, you might want to run usability testing involving all the workflow participants. This may help you hit two goals: first of all, the medical professionals involved can learn how to work with your solution; secondly, they are likely to share their experience with colleagues, which can further facilitate adoption.
Last but not least: given the complex nature of this effort, you’d better start workflow review as soon as possible. This may help with introducing the changes to the product early in the development process.
As we remember, providers like SaaS/SaaP because these solutions alleviate at least two common industry pains—interoperability and data security. But what does the latter mean for startups? There are two key points to take care of—multi-layer security and HIPAA compliance.
Multi-layer SaaS security involves many parameters, the top ones being role-based access controls, incident response strategies, data encryption, and regular system patches and updates for protection from cyberattacks.
You should remember that role-based access is a fine tool, but it’s possible to improve security further with multi-factor authentication (MFA).
Microsoft reports that it helps prevent 99.9% of automated cyberattacks on cloud environments, so ensuring MFA is a worthy effort. To do so, you just need to ask for two or more “pieces of evidence” upon a login attempt. As a rule, it’s a combination of a user’s password and a single-time access code or sign-in verification request sent to their mobile phone number.
The current pandemic put the healthcare industry under a lot of stress, with providers’ resources stretched to the limit. To help medical organizations adapt care provision to the crisis, the US Department of Health and Human Services (HHS) even introduced HIPAA compliance waivers. Thanks to the relaxed HIPAA policy, providers can offer telemedicine services via popular messengers, provided that they are not public-facing. So going for a non-compliant teleconference SaaS/SaaP solution may work for the time being.
Nevertheless, in case telehealth solutions based off messengers is not what you plan to offer, ensuring HIPAA compliance is critical.
Even though you can deploy your SaaS solution in a HIPAA-compliant cloud environment, this compliance might not be complete. Each new app or feature added will need to be tested for its own compliance. The key point here is to remember that the so-called addressable HIPAA requirements are just as important as the required ones. They should be covered no matter what if you are up to ensuring your product’s market longevity.
According to the EY Global Information Security Survey 2018-19, about a third of providers see “careless or unaware employees” as a key exposure risk. This makes employee training a critical effort. Here, the ubiquitous availability of SaaS poses a threat, so in order to prevent sensitive data exposure, you should offer clinician training and promote at least basic security measures. These include avoiding connection via public Wi-Fi networks, logging out of the cloud solution when the work is complete, and not sharing credentials with anyone regardless of their position in the clinic.
In this regard, it’s vital to recall that impersonating a CEO or another executive at a user’s company is widely used in whaling. It’s a specific type of phishing attack aimed to gain access to a provider’s internal systems. For the record, in 2020, phishing attacks have become a top security threat that led to multi-million losses, according to the 2020 Data Security Incident Response Report by BakerHostetler.
In the heat of work, startuppers may forget that product success is not permanent. You should take some extra efforts to ensure customer retention, which is actually from five to 25 times less pricey than acquiring new customers. Besides, 80% of revenue typically comes from 20% of clients. To make it work, you should make customer retention metrics part of the data analytics strategy.
For SaaS projects, key retention metrics are monthly recurring revenue (MRR) churn, user churn (UC), lifetime value (LTV), and customer acquisition cost (CAC). Here are some points to focus on:
LTV-centered measures for improving retention are the most flexible and efficient. However, you can’t ignore the other parameters either, as each particular case is unique. Given the complexity of this task, expanding your project team with qualified analysts is a reasonable solution.
Managing a healthcare SaaS startup is a complicated task. There are many challenges on the way, and they tend to pile up as you go.
Running such a startup, you should strive to find the balance between the key stakeholders’ views and expectations from the product and their correlation with the strict security measures to be introduced, key indicators of the healthcare SaaS project success, and the potential for growth. As we can see, managing a health SaaS startup successfully is a multifaceted effort that requires not only top coding expertise but also advanced communication skills and sensing of your professional audience’s challenges. We’ve gathered some potential issues you may encounter, and we hope this guide will help you resolve them.
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