An Insight into the Technology world.
Analysis and Insight from Savvycom Team.

The year is 2017, and healthcare startups are expanding exponentially with funding in the billions of dollars. Combined with the advent of technology in this Information Age, the boom of healthcare startups is predictable in this decade.

However, many entrepreneurs are still reluctant to start their own healthcare business. For those who did, some succeeded, some went down in flames. The challenges for healthcare startups today are hindering many aspiring entrepreneurs to step into this competitive market.

The healthcare industry is a rather unique one, in that it deals directly with people’s well-being. Unlike other industries, healthcare means life and death of a person. Consequently, what are the challenges for healthcare startups that they must be wary of to succeed?

1. Building Trust: The Most Crucial of Challenges for Healthcare Startups

Credibility is definitely something not to screw around with when it comes to people’s well-being. Many healthcare firms opted to emphasize revenue instead of trust, and this leads to dire consequenses.

Startups must bear in mind that unlike other industries, clients are more cautious in healthcare. They are not only sensitive about money or profit, but also trust.

healthcare firms, startups, doctor, hold hand, patient
A healthcare firm is like a doctor itself.

Customer Trust

Today there are many healthcare scandals, most noteworthy the case of “Pharma Bro” Martin Shkreli. Unethical healthcare practices are still rampant in many countries. These scandals weaken clients’ faith in healthcare industry, and startups suffer the most from it.

For example, hot startup Theranos with $9 billion value was unable to prove the reliablity of its blood test technology. This alone caused considerable damage to the firm’s brand and customer loyalty.

Therefore, building trust is the first and most important of challenges for healthcare startups. Healthcare startups can find a way around this challenge with official recognitions. Examples include obtaining certifications and regulatories from government agencies such as FDA and FTC. If a healthcare startup has acquired legal assistance, clients will have every reason to believe in them.

Legal Recognition

Having legal and official credibility standards will keep startups against unethical business practices.

Getting legal approval can be a time consuming and costly process, but it is worth. Clients are always looking for reliable firms, hence this legal approval already secures at least 50% of their faith.

2. Growth: A Frustrating Process

You may have seen stories about the rapid rise of tech firms like Amazon or Dropbox. But in healthcare, things are drastically different.

Healthcare is an industry with notoriously slow growth, and ideas if untested are impossible. Since healthcare deals directly with a person’s well-being, it may take months or years with scientific proof that a solution might work. As a result, growth may sometimes be unforeseeable.

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With this in hindsight, some healthcare startups may not survive their first years. Their cost and budget may be too much that they direly need a fast growth to compensate the losses.

3. David vs Goliath

Healthcare is an established industry. Yes there are many startups, but many of them could barely survive the first one or two years in it. There are well known giants in different fields such as medicine and care that dominate the industry. In the face of such stiff competition, not only from giants but also from other startups, what do you do?

Of course it would not take a lunatic to understand that competing with these giants is suicidal at best. The key strategy is not to compete, but to cooperate.

Heathcare startups that work together with the big guys can have more opportunities to innovate the industry. Many startups shun the possibility of an acquisition by bigger firms, but such an act can be mutually beneficial. As a rookie on the scene, founders must assess the risks and merits of cooperation before making a decision.

healthcare startups work together, learn from each other,
Work together with the big guys to not only survive, but learn.

Corporate Intervention

The world tech industry also saw that tech giants, such as Google, IBM and Apple made huge investments in healthcare. Of course not all startups appear on their scope, but those who did are fortunate enough to be invested millions of dollars. Some even went public with the assistance of tech giants. Additionally, healthcare is becoming the future for investors. Alongside the tech industry, healthcare is a fertile ground for startups and entrepreneurs looking to make their dreams true.

Today, as healthcare being similar to an ecosystem, takeovers are always possible. Healthcare startup firms who struggle in the first few years may be taken over by bigger firms. In this case, it is beneficial since the challenges for healthcare startups may be counterweighed by the value of acquisition. Healthcare startups can also rely on joint healthcare projects to evaluate on their capabilities and learn from the key players.

4. Security and Privacy: An Often Overlooked Challenge for Healthcare Startups

Hospitals, clinics and medical institutions are increasingly utilizing technology to store patient data. And as with everything else in technology, this storage system is not without risks. Since electronic data storage is much easier to manage, healthcare firms and clinics often ignore the possibility of a breach by those seeking personal gain. The exploitation of this data can lead to dire consequences such as blackmailing, loss of clients, financial damages, etc.

In any case, healthcare firms must safeguard the information of their patients/clients to maintain ethicality. If a patient’s data is secure from harm, they will have more faith in the firm that is keeping it. The American National Standards Institute reported in 2015 that security breaching has affected almost 18 million Americans’ health information privacy. As it becomes clear today that there is limited protection against data exploitations, there must be a solution.

Enhancing Security

There are tech security firms in place to help healthcare startups tackle security issues with electronic data storage. Software development has matured over the years to assist governments and hospitals in developing mechanisms against data breaching. Hence, it is worth to spend some of the budget on protecting information privacy of patients than to do nothing.

Lack of security contributes to the downfall of any brand, any service regardless of industry. This contributes to building credibility. If clients cannot trust your handling of their information, they will never trust you in the long run.

healthcare technology, healthcare startups, healthcare tech solutions
There are tech solutions to help healthcare startups improve data security of patients

5. Organization

Lack of Doctors

Another challenge for healthcare startups today is organization. For example, startups in some countries face a lack of doctors, hence they are unable to establish a professional team. If a healthcare startup does not have good doctors, they cannot have a firm base in such a competitive industry. Another issue is that many doctors are unfamiliar with healthcare software on mobile or computer devices. They tend to stick to traditional methods and reluctant to adapt to new technology.


Furthermore, healthcare startups may have issues with their own staff. At times, not everyone from interns to the CEO dutifully share the same vision and mission. They may have different agendas and core values, and most often low employee retention rates result from this. Healthcare startup founders should establish a stable working environment, a company culture, among other things to promote the attractiveness of the workplace. They also need to keep an eye on who to recruit for the firm to ensure a strong, committed workforce.

healthcare startups business model, business modeling
It is vital to build a sustainable business model.

Business Model

Another organizational-related problem is with the business model. Healthcare is different from other industries because clients are not always willing to pay for what the firm offers. Sometimes, the startup is blinded by early success and forget to build a sustainable business model. This results in an ineffective and costly business model, where supply surpasses demand and growth is based on luck. However, once healthcare startups found the hole in their strategies, they may be able to fill it in time.

healthcare startups business, Theranos, healthcare challenges
Over promising and myth making is suicidal at best, as with the case of Theranos.

6. Failing to Deliver as Expected

In perhaps one of the biggest controversies ever to land in the healthcare startup world, Theranos, a $9-billion-value startup, failed to prove the effectiveness of its blood test technology. The “over-the-top” promises are not uncommon among startups, but in healthcare, it is different. Healthcare is a more serious industry, so mistakes are almost unforgiveable in clients’ perspective.

This is a pitfall that all healthcare tech startup firms must avoid. If just one relatively unknown firm makes a similar mistake, the entire industry suffers. Consequently, other healthcare startups will be affected. Unreliable products, improper doctors, failing to meet deadlines and other similar issues are disastrous to everyone in the healthcare industry. So healthcare startups must bear all these in mind when conducting business and aiming for growth.


All in all, startups in every field or industry face challenges here and then. But in healthcare, the actions of a startup may intertwine with the fate of other startups. As of today, major corporations and investors are more willing than ever to spend more in healthcare. Therefore, the challenges for healthcare startups are significant enough to harm the entire industry as a whole.

The healthcare startup world is expanding at an exponential rate, with both risks and opportunities offered. Combined with the boom of technology, this can be considered a golden age for healthcare entrepreneurs. The challenges for healthcare startups may be there, but in time nothing is impossible for talented visionaries in healthcare.

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