SMB Health-Tech is Finally Having Its Moment

 Healthtech for small practices and the provider is finally the focus

For years the dominant names in healthcare technology have focused on enterprise healthcare organizations. By revenue, companies like Epic are earning billions of dollars per year by focusing on the health system market. Epic, a private company, has never acquired another company. Led by Judy Faulkner and based in Verona, Wisconsin the company launched an app store in 2017. Epic refers to its app store as the "App Orchard."

Since then, getting accepted into the app orchard has been like a right of passage for health tech companies to feel like they've earned their place in the enterprise market. With digital health deals ranging from tens of thousands to several million dollars per year, it's no wonder the focus has been selling to health systems. 

Many leading health systems have venture funds that invest in these solutions and help the startups earn commercial agreements with the health system. Some of these health systems with venture funds include, Providence Health, Unity Point, Kaiser Permanente, University Hospitals, Jefferson Hospitals, Orlando Health, UPMC, Northwell, Intermountain, and the list goes on. 

Get an investment from a health system or two, win contracts with a few health systems and you've now crossed millions in annual recurring revenue. Yet, the path to winning small practices has been extremely fragmented. With most small practices running without extensive IT resources, sales teams have found it difficult to break into practices under 10 providers. Companies like PatientPop which helps practices with their website and marketing hired dozens of sales development representatives and account executives to win deals with these practices. For a long time, PatientPop's sales team was run by Justin Welsh, an extremely well-respected sales leader. However, the SDR-AE sales model isn't without its high acquisition costs. The cost to acquire and implement new customers is frequently a deterrent for tech companies to go into small practices. Many times it can take the better part of a full year or more to finally get into the green on a customer.

With COVID, health tech switched in an instant. At the start of COVID, I (Nick) was working in telehealth. I remember being on the phone with a mental health practice CEO who said in February he was beginning to prepare if the virus shut down the United States. He was the first person I spoke to on the phone that was actively prepping his organization for a full shutdown. A month later, I was getting calls to my cell phone as early as 630 am from CEOs around the country who needed to implement telehealth within the next 24 hours. 

Whether it was a solo practitioner who needed to be able to see patients or a health system who had to stay in touch with the millions in their patient population, telehealth was seeing wide-scale adoption for the first time. Yet, health systems were intrigued by what they heard from their providers. At many organizations, providers were using a mix of Doximity, Zoom, and regardless of what was implemented at the enterprise level. 

When telehealth means the provider and patient are in different places, the technology becomes one of the most pressing factors in the experience. Neither the provider nor patient are trying to be tech support so if the technology isn't up to par, they ditch it. Wide-scale adoption of telehealth also meant people were more willing to see anyone licensed in their state. For therapists, this opens up your potential client base not just within an hour's drive but within a 3, 4, or even 5 hours drive.

At the same time individual providers were able to take notice of this change, and so did startups. Over the past 3 years we've seen virtual care startups explode into billion dollar valuations. With "success" stories like Ginger and OneMedical getting acquired to the scary stories of Cerebral. The rise of 1099 opportunities for clinicians has inspired many to go into private practice and use 1099 work to compliment or even fulfill most of their caseload. 

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As we wrote in our startup guide, we've seen a number of startups focus on helping clinicians in private practice navigate insurance, billing, and clinical operations. Now, we're even seeing EHR companies focusing on small practices and encouraging collaboration. As we shared earlier, the Epic app orchard has helped digital health companies integrate into Epic at major health systems. Historically these integrations have been cost-prohibitive for small practices. Working in telehealth, we were often told EHRs focusing on small practices wouldn't permit integration or they made it so hard it was nearly impossible. Now we're seeing telehealth platforms like Coviu launch apps or EHR platforms like Speakbox focus on working with other companies. 

To hear more about how Speakbox is thinking about EHR innovation, listen to our podcast with Speakbox's CEO Aidan Scott at: