Healthcare is a tough industry for startups. In addition to being notoriously risk averse and regulated, the industry has complex players that demand perfection and dislike iterative approaches that can lead to chaos.
However, even in difficult circumstances, startups can thrive. For example, Arrive Health has created an increasingly popular way for doctors to find out how much patients pay out-of-pocket for different drugs, including out-of-pocket costs, coinsurance and other charges. This helps guide physicians’ prescribing behavior when the drug is essentially substitutable. The story of Arrive Health provides an example of how to deal with entrepreneurial challenges.
The core idea behind the company seems intuitively appealing. As Kyle Kiser, CEO of Arrive’s Health, said in an interview for this article: “This is the only part of our economy where someone is making a purchasing decision on your behalf unless someone asks you to make a purchasing decision. Otherwise y’all don’t know how much it’s going to cost.” Pay it. This is what we ultimately want to solve. “
But the complexity of health care makes even simple problems difficult to solve. In Arrive Health’s case, doctors wouldn’t use such a system if the data in the system wasn’t extensive and reliable. However, without using this system, the owners of the pricing data (usually health plans and their pharmacy benefit managers) do not share the data. Without good data or reliable use, the owners of the electronic medical records that doctors rely on have no interest in displaying this information. This is a three-sided problem of which comes first, the chicken or the egg.
Lesson One: Choose Stakeholders. Because healthcare is a fragmented, multi-stakeholder industry, startups often struggle to align the dominoes so that one’s success triggers others to follow. But the advantage of Arrive Health is that it was incubated within UC Health Denver. If UC Health’s doctors are passionate about it, it will have enough influence on the owners of pricing data and IT systems to drive change. Arrive Health works to make the system attractive to physicians, and then the needs of the health system enable other stakeholders to come on board.
The company takes a hard look at what specific challenges it can solve for doctors. It’s trying to reduce callbacks, in which pharmacies or patients call doctors to ask if a prescription can be changed to a less expensive drug. It hopes to minimize abandonment, in which patients never fill a prescription, possibly due to its high cost. It also hopes to tackle non-adherence to prescribed therapies because patients are saving money. At the same time, it also establishes design standards for successfully completing these tasks. “It needs to be fewer clicks, not more. It needs to be easier, not harder. And it needs to be right all the time,” Kiser said.
Lesson 2: Use regulation to your advantage. While regulation can inhibit change, it can also accelerate it. In the case of Arrive Health, Medicare changed the rules in 2021 to require Medicare Advantage plans to offer a “real-time drug benefit tool.” “It’s really helpful,” Kizer said. “We haven’t seen the full impact yet, but they’re extending real-time benefits capabilities not only to physicians at the point of care, but also to patients.” In health care, regulatory changes could bring disruption .
Lesson 3: Experiment. Healthcare stakeholders don’t like experiments—they value efficiency, reliability, and accuracy. But iteration is as important for healthcare startups as it is for other industries. “It was often difficult to access doctors’ systems and patient data,” Kiser recalls. “But in the early days, we could go to the Anschutz campus in Denver or Aurora and get feedback from users. We could sit down with them and understand what they wanted to do. Then we would drive back to the office, make changes that day, and do it again the next day. Even now, we still use many of these places as proving grounds and learning labs as we build new capabilities.”
Lesson 4: Draw a growth path. While initial success is valuable, startup growth often depends on solving adjacent markets. Arrive Health is actively considering these. For example, Keizer noted, “This is one of the few places where technology actually reduces consumer choice. When you have a note, you can go wherever you want. We have adopted electronic prescribing, Consumer choice is gone. There is an opportunity to leverage new technologies to reintroduce consumer choice at the point of care and throughout the patient experience. We can delegate power to the patient or their device, who can then send prescriptions further down the line in a competitive market To the pharmacy.”
The barriers facing innovative startups in healthcare may not have diminished, but companies are finding ways to get around them. Arrive Health’s story illustrates how customer focus, strategic choices, early testing grounds and a vision for the future can successfully bring about change, even when market forces conspire against it.
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