Health Tech is increasingly an area that start-ups and entrepreneurs want to get into. Smaller businesses, similarly to much larger ones like Amazon, see how lucrative the health care market can be. However, where there’s reward there is also risk.
Whereas Amazon has a history of taking on major, major projects and succeeding, others may not be quite so sure of success.
CNBC gives the example of Jim Riley, who founded multiple software companies, and says that starting a heath tech company is “by far the hardest thing he’s ever done in his life”.
“What was supposed to be a fun one or two-year project turned into a personal odyssey with a good part of my net worth invested in it,” said Riley.
Why do so many end up in a “pit of despair”?
So many people are suffering a similar fate to Riley that hospital executives have a name for it: “the pit of despair”.
Aaron Martin is now chief digital officer at Providence Health and used to work for Amazon. He says that Amazon’s knowledge in logistics, machine learning and AI voice recognition would make it well placed to be successful in the area of health tech.
“Amazon could build the compliant infrastructure but let entrepreneurs come in and do the heavy lift,” Martin says.
However, the complexities involved in entering health tech for smaller businesses, not least in terms of regulation, mean that he fears for these companies much more than he does for Amazon.
“There’s this pit of despair when people realize that this stuff is really hard and complicated,” said Martin. “And the penalty for screwing up is high.”
As for Jim Riley, he is making some headway after many years of coming up against stubborn players and bureaucratic obstacles.
“Every time you’d overcome a roadblock, there would be two more down the road,” he said. “It was almost overwhelming.”
Health tech start-ups are increasing despite the hurdles
Despite the potential difficulties, many tech start-ups are looking toward health tech as an enticing venture.
This is not only the case in the United States. In fact, it may be the States’ mammoth and bloated healthcare system that causes problems for tech entrepreneurs trying to enter the arena.
The Straits Times recently reported that the industry is growing massively in Asia.
Areas like chronic disease management, digital diagnostics, and consumer health and wellness are areas of particular focus.
Associate Professor Sarah Cheah, from the Department of Management and Organisation at the National University of Singapore Business School, said:
“As financial risks in healthcare are being shifted from institutional payers to individual consumers in the form of higher insurance premiums, consumers face rising cost burdens and expect more personalised and convenient services from service providers in the healthcare sector.
“Tech-based healthcare start-ups that can fulfil this growing demand… at affordable prices are likely to do well.”
Four in ten people in Singapore now say they use an app or gadget related to health tech. These options help people to do anything from reduce the amount of visits to their doctor, manage their insurance, or monitor their eating and exercise.
With so many options literally at our fingertips on smartphones, it is inevitable that new players will be entering the health tech market.
The question is whether only the biggest players will have the fortitude for it, and, in the United States, the extent to which the intimidating force of the US health care market will see some potentially exciting entrepreneurs end up in that pit of despair.