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Navigating Business With Hospitals: A Ready Reckoner For Healthcare Entrepreneurs

Founders need to have a strong sales strategy to be able to tap into the opportunity.

The hospital industry in India accounts for 80% of the total healthcare market and is expected to reach $132 Bn by 2023 growing at a CAGR of 16-17%. This presents a huge opportunity for several startups to sell their services or products to this segment. However, the healthcare industry is complex and does not have a simple decision-making hierarchy. Inherent risk-averse behavior and established processes that have worked for millions of patients are some reasons for this. So, even with expert endorsements, regulatory approvals, founders need to have a strong sales strategy to be able to tap into the opportunity.

Many startups consider presenting to the CEO (private sector) or to the health ministry (government sector) but seldom does this approach work. One must think of the many moving parts involved, with each one acting as potential gatekeepers and having different incentives, pain points, goals, etc. This article details out some of those aspects to minimize sales friction.

  1. Map out stakeholders

This is the first step in the entire exercise where the stakeholders need to be classified into decision making, decision influencing, and the end-user categories. The decision making is typically done at the corporate level. Clinicians are the influencers, and end-users could be nurses, pharmacists, lab technicians, and so on. In this complex ecosystem, when a new solution must be incorporated, the ownership of the project is taken up by either the medical director or operations director (depending on where the solution would fit in the hospital), who considers feedback of every single stakeholder in the hospital (end-users, clinical team, procurements and, accounts team). Companies need to build clear SOPs for the stakeholder mapping exercise at every level in the sales team.

  1. Engagement to drive uptake

Once the stakeholders are mapped, it is important to engage and understand what drives them. As a rule of thumb, if ~60% of the stakeholders endorse the solution (one-minute feedback surveys help to identify this), the corporate team invites the startup for negotiation on pricing.

Stakeholders could either be neutral, opposed to the idea, or interested in the product. But the key for a startup is to identify a champion within the system-- preferably the head of the relevant clinical department who understands the subject and is senior enough to make a recommendation. The purpose of the engagement is to get genuine feedback and to subtly establish brand recall. 

Engagement with the clinical team

The clinical team is usually the simplest—they genuinely want to help and be a part of something innovative. End-users feel the most burdened, so they will be more than willing to support a solution that relieves them of their pain. Startups could also plan to participate in monthly scientific discussions or conduct webinars for doctors, and nurses’ training sessions (something that is mandated by every hospital to ensure their clinical force is abreast with the latest developments) to introduce their product. This way, one would get “on the ground” feedback, innovative and practical fixes, and, most importantly, the much talked about “brand recall”.

Engagement with the procurement team

A relationship with the procurement team will give an insight into the hospital formulary which would list predicate products, hence helping to predict the chance of adoption. If the startup is in strong contention, then this information will help in the negotiation phase.

Engagement with the corporate team

Lastly, to engage with the corporate team, a big-picture financial pitch would be useful with inputs from the clinical team on technical aspects and cost-benefit analysis (potential revenues to be earned, depreciation of existing device, a quantitative increment of efficiency, cap-ex involved, a quantified measure of comfort to the patient, demand for the product, utilization of similar kind of devices/existing products, and costs in integration including billing/taxation). Timelines vary anywhere between 2 to 8 months depending on various factors. But as a rule of thumb, final discussions with the corporate team should be aimed for December, before budgets for the next financial year are decided.

Fundamentally, any new solution should ideally seamlessly integrate with the existing systems in the hospital and add value to their offerings. At the top of the pecking order are solutions that earn revenue for the hospital followed by ones that save costs and improve the efficiency of the processes. Everything else is just a “nice to have”.

Tips for COVID times:

  • Weekly strategy sessions with the sales team to motivate them and adapt to rapidly changing ground realities

  • Sessions and tasks to build peripheral competencies of the sales team which are very essential to keep morale up and operate with lean teams

  • Convey vision and create brand recall at all stakeholder levels by periodic engagement, typically once a week, until the relationship is established. Use of digital modes such as short WhatsApp videos or collaterals for end-users and Zoom for corporate teams have worked well

  • Measures to convert fixed costs to monthly variable costs since hospitals operate on far narrower budgets

  • Tie up with foundations and registration on GEM portal to access government orders for COVID related solutions


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