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Scaling your healthtech business to the US: here’s how you can make it a success

Expanding to a new market tends to be a laborious process, especially when you operate in a highly regulated and a rather inflexible-to-change industry, such as Healthtech. As part of our Healthtech initiatives, Techleap.nl has recently launched the GoGlobal US Health programme, meant to provide healthtech founders with the ins and outs of what it takes to win the US market as well as connect them to relevant contacts to help them accelerate the scaleups’ expansion efforts.

  • Which geographical areas of the US should I target?
  • How do I get US VCs on board?
  • What commercial strategy should I adopt with my solution?

These were some of the questions addressed by founders during the GoGlobal US Health launch event. Did you miss the event? No worries! In this article, you’ll find our detailed summary of the core takeaways of the Q&A session with Jamie Heywood, moderated by Sarah van Hellenberg Hubar-Fisher, as well as of the in-depth breakout sessions with internationalisation experts such as Willem Houck, Hans Constandt, and Dan Clark. Those discussions were further grouped by topics such as: hiring, securing investment, outlining a market-entry strategy, overcoming regulatory hurdles.

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Keynote speaker: Jamie Heywood ( Founder of Alden Scientific)

“Common element in all serial entrepreneurs is they have no memory for pain - please come to the USA as we need a lot of help!”  

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What makes a healthtech founder successful?

Jamie Heywood - “There are essentially two classes of mistakes that I’ve made as an entrepreneur: strategic and execution mistakes. I think to be successful in healthcare, you really need to commit to what you believe is your strategic point of success. And a lot of companies tend to alter their core values as they try to generate revenue. So they start working on solutions they don’t really believe in, just to be profitable. 

One of my strategic mistakes involved shortening the product development cycle in the interest of meeting our revenue objective. And then you’re stuck in this process because your efforts are not in line with your core value proposition. So trust your core value proposition and stick to it.

On the execution side, my greatest mistake was to not benchmark what success is for the team. I made the mistake of telling the team what I want to do instead of what I want to achieve, i.e. the objective I want to hit with this project. 

In the marketplace, you really need to focus on what your customers’ problem is, and not what they tell you their problem is."

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Finding the most attractive geographical location for your product in the US market

Next, Jamie Heywood points out the difficulty of breaking down the US healthtech opportunities geographically, since some of the states are very similar. However, there are clearly different markets you can target. This way, companies should look at innovation in terms of the structure of systems. According to Heywood, “a lot of innovation comes from Keizer or other integrated care provider systems, and these are not necessarily coast-based institutions. I like to think of it, specifically when it comes to transformative change, as a ‘doughnut-hole’ model

The center of the doughnut hole encompasses the institutions that do a lot of innovation, and are reachable by other companies. If you manage to become part of that system, then they would capitalise on what you are providing. But if you cannot, you will be locked out.

Around that doughnut, there are those secondary healthcare institutions with very good talent, a lot of innovation, but with little investments and grants provided by the government. Those institutions tend to unify and form consortiums to solidify their positions and try to compete with those from the center of the donut hole. 

As for the rest, you will see fragmented health institutions in the US that have little structure, they scale slowly, and are hardly driven by innovation.

I think for Europeans it’s hard to understand just how fractured the US healthcare system really is. If you are not making someone money, you are not doing business. And to understand that, you need to get a clear idea of how people are making money in the US. 

It’s particularly important to know how the person you talk to makes money, how they make profits, in order to be able to build solutions that will be adopted at a large scale. Lots of people do innovation, but nobody is going to provide resources if your solution does not put a particular department in a favourable position compared to other systems.”

Some extra takeaways on this topic from the breakout discussions:

  • The US provides a massive single-language market potential. Boston, NYC, and Silicon Valley are big healthtech markets. Aim high when going there.  

East Coast vs West Coast: Time difference is a very important element to consider when choosing a place to settle your operations in. Houston might be a great choice since you have got hundreds of competing hospitals within a driving distance.

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Nailing your market-entry strategy

How to enter the US market in a different manner than direct?

Jamie Heywood: “Let’s take a solution space like disease management and you have a programme that demonstrates that a combination of clinician tools and technology improve the costs, or optimise production. There are market access points in the US that can be considered less obvious. For example, there are events where health benefit managers or top US health companies would meet and look for the latest innovations. And this is where I’ve seen instances of the most successful early adoption of companies’ solutions. It’s your chance to make the case why your solutions will change the current state of things.” 

Some extra takeaways on this topic from the breakout discussions:

  • America is a country of innovation. With your business proposition, you should not look at replacing a current solution but focus more on filling an existing gap within the market in which you want to play. The healthcare system is resistant to change. Partly because a few people earn an awful lot of money, and they are not going to want to change just like that. So look for opportunities.
  • Do your market research early, do some economic validation of your solution before bringing it to the US. You should adopt a relentless focus on showing positive financial outcomes for your business. So even before you go to the US, think - is my product suitable for the market or how do I adjust the proposition to meet the needs of the US market?
  • Adapt your product promotion to the specifics of each market you want to expand to;
  • Aim to establish connections early with local medical doctors, who are the ‘antenna’ of health insurance companies;
  • Do not start targeting the big clinics like Mayo or Stanford. Start collaborating with the smaller institutions and gradually move towards bigger players.
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How to efficiently leverage your patient groups to bring your product to the US market?

Jamie Heywood: “It’s a great question since patient groups in the US work differently. Your job is to promote the value of your organisation in advocating for the interests of your patients. When you try to sell a new idea into medicine, you need four ingredients: the budget holder needs to know the companies’ goals and objectives; a person from the executive committee needs to operationalise the budget; the executive committee member would always need a validator - so you need to bring in another executive committee member who would cover them in case the project doesn’t succeed. The last part is really important - you need an external validator with no economic interest who would approve or disapprove of the project. Getting an industry expert as an advisor would help you solidify your position in the healthcare market too. Everyone says they want to help patients, but everyone does what it takes to increase their profit margins.“

Hiring the best talent

As a Dutch company looking to hire local talent in the US, how do you find bright minds without spending huge sums of capital? 

Jamie Heywood: “It’s interesting, I’ve just launched a new company a few weeks ago and hired the first eight employees. The average salary of these eight people is $220.000. So it’s a very competitive field. One of the perceptions I have with European companies, and I’ll be a bit critical here, is that you have this insecurity complex - that you cannot get the right capital, the right valuation, or hire the right people. ‘How can we compete?’ is one of the questions I hear. Maybe to a certain extent, those worries are truthful, but I think those kinds of thoughts are self-destructive.

There is proof of innovation and quality work that particularly comes from Northern Europe. Leadership and local ability to optimise are everything. If you want to win the US and you think that you, as a company leader, can fly in once every five months, and otherwise operate from abroad - I don’t think this is going to work.

You just have to build a strong local team and dedicate yourself to being present or choose someone experienced who would be responsible for the US market growth. Plus you need to be prepared to spend capital, otherwise, you will not be able to succeed. But yes, you need to operationalise locally, get on board people who are agile and responsive, since the market is so dynamic and fast-moving.

I’ve run my companies more like European companies - businesses are marathons, not sprints. And in marathons, you need to invest in your employees, their wellbeing, and their own personal lives. If you align those, I think you can become so much better than the US companies. 

Most of our workers are knowledge workers. And what they want in their lives is to have meaningful work, fair reimbursement, colleagues they trust and care about, and bring their best selves as well as develop themselves in the best way possible. You give someone such an environment, and working for you will become a natural choice for them.” 

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How many references do you ask for before you can hire a candidate?

Jamie Heywood: “I have not found resume-hiring or recruiter-based hiring particularly successful. There are two things that we do - first we use personal networks. So if one of our hires says that they’ve worked with a particular person and they were amazing, we’ll pay more just to get that person on board. Again, I shoot for better quality and therefore pay more."

Hiring in the US is a lot less of a permanent decision compared to Europe. If you hire somebody and it doesn't work, fire them quickly. Don’t waste each other’s time. The last point I want to make - I am very deliberate. If someone resonates with me, I take immediate notes. There are a lot of skilled people, interacting in the world. You can meet a potential hire at a dinner, conference, etc. If you listen to their interests and align them with yours, they might join you.”

 

Raising investment in the US

Is there a significant benefit to having a US investor on board?

Jamie Heywood: "Money has several characteristics that I think are important for companies to pay attention to. So money has: 

  • Timelines (when is it that you’re expected to pay back); 
  • Mission alignment (so if you say that you want to expand to the US, your capital allocation should be aligned with this mission).

If a quality US healthtech investor is investing in your company, it is really valuable for you in the long run. Try to get advisors that can help you get the right people on board, prepare the perfect investor pitch, etc. And lastly, be a bit more ‘American’ - bolder, somewhat more arrogant, and confident." 

Some extra takeaways on this topic from the breakout discussions:

  • Have a very strong vision and strategy, and really think through your proposition. The end is an exit or an IPO, so don’t stop before that. Try to get at least one introduction to a US VC, otherwise, it’s quite the battle to get into that environment. 
  • If you are still at the seed stage, personal connections are enough. At a later growth stage, you will need someone who lives and works in the US and understands the local ways of operating, the (local) customer, and investment landscape. 
  • To get a good opinion leader on board - you should be ready to spend good money on this.

Seek for investors that have established connections in strategic markets you want to win. Do a client-focused investor pitch. In the next decade(s) Apple Health, Microsoft, Amazon Health, and Google Health will dominate the global market starting in the US, so it is very relevant to be there early. 

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Overcoming regulatory challenges

How do you survive regulatory hurdles? What is needed to break the market?

Jamie Heywood: “Make sure to get your business a good insurance policy. I don’t think you’d be involved in lawsuits for disrupting the market with your solutions. I think if you can make a good case for your solution, implying that you address a market need that is not yet addressed, then you have the potential of breaking into the US market.”  

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Learn more about GoGlobal programmes!

What does each programme entail? and who would GoGlobal programmes be useful for? 


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