With the tremendous amount of innovation occurring in all aspects of the healthcare industry, the opportunity to transition innovations into successful, impactful products that improve patient care and member experience has never been greater. Here are six tips.
The last few years have seen an enormous increase in innovation in the healthcare industry. The Affordable Care Act’s new requirements, Medicaid expansion population challenges, and the rise of consumerism and digital health has spurred a perfect environment for creating new products and services.
Much of this innovation is coming from the healthcare systems and health plans on the front line of patient and member care as they address the challenges posed by all of these changes. A number of these innovations have led to the development of new products successfully taken to the market.
Unfortunately, many of the most opportune innovations were either not developed into new products or were half-baked and thus proved failures in the marketplace. Taking a potential new product and turning it into a successful new business opportunity can be, even in the best of times, difficult. When an organization is confronted with all of the changes facing healthcare today, it can be daunting.
Those organizations that have successfully transitioned their innovations into business opportunities generally adhere to these six steps:
1. Obtain an outside perspective.
Obtain an outside perspective on the potential product’s value proposition by clearly articulating the way the product will solve customers' problems and how it is a better solution than others already in the market. During this step, it’s also important to define the general market characteristics that will be targeted.
Using an outside consultant can eliminate the internal echo chambers that sometimes make it difficult to appropriately critique the uniqueness and worthiness of the product. This is perhaps the most critical step because it provides a chance to pressure test the potential product prior to large monetary or resource investments.
2. Conduct a rigorous and objective analysisof the market opportunity.
Pay attention to the competitive landscape, market characteristics and approaches to the market. Of particular importance is the price point for the product. Is the product pioneering a new way of doing something or is it an improvement on existing products in the market? The difference between these two will markedly impact the direction of your marketing and sales approach.
3. Evaluate the cost structure.
Evaluate both the direct and indirect costs of fully developing the product and taking it to the market. One of the biggest mistakes made is assuming that current management can handle the development of a new product without additional resources.
How much will the organization need to invest before the first sale can even be contemplated? There’s a huge difference between creating an efficient operation and an anemic one.
Next: Determine marketing strategies for the product
4. Determine marketing strategiesfor the product.
Strategies should cover messaging, advertising, proposal response and sales. What is the “elevator” speech that can spell out the key features of the product and lay out its value proposition?
Creating a story that relates the product’s impact on a specific health plan member or provider’s patient can oftentimes be much more compelling than a sales deck full of charts and graphs.
5. Develop an objective financial analysis.
In addition to the analysis, develop a three- to five-year pro forma with models for best and worst case outcomes, as well as a capital plan for start-up and reinvestment funds. Perhaps the biggest risk in this step is overestimating the value of the product or pricing it based on the organization’s costs.
6. Launch the product using targeted messaging, advertising, prospect databases, sales force and warm leads.
The focus at this step is on getting in front of prospects with a winning story, competitive price and as simple a purchasing process as possible.
While these six steps may seem elementary, it’s amazing how often organizations fail to follow them and are then bewildered by their lack of success. With the tremendous amount of innovation occurring in all aspects of the healthcare industry, the opportunity to transition innovations into successful, impactful products that improve patient care and member experience has never been greater.
Don Hall, a former health plan CEO, is principal, Delta Sigma LLC, in Littleton, Colorado. He is a member of the Managed Healthcare Executive editorial advisory board.