Notes from Your MedTech Co-Founder

Don’t Make the “Field of Dreams” Mistake

Author: Ryan Nolan, Senior Director of RHEMA

If you’re a MedTech entrepreneur, odds are that you’re an engineer, clinician, and/or scientist. And you have a vision for developing the next groundbreaking medical device based on your technical background experiences or knowledge. However, an all-too-common pitfall that unfortunately many promising technologies fall into is the MedTech “Field of Dreams” fallacy, as I like to call it.

What is the MedTech “Field of Dreams” fallacy?

Adapted from the famous line from the 1989 movie, this fallacy is the misconception that “if I build it, they will come”. In other words, aspirational entrepreneurs believe that if they build a superior product, customers will come. And assume that their product will naturally find its place in the market based on end user demand. While this mindset may work in other industries, it’s an all too lethal risk in U.S. MedTech. All because this mindset leads to overlooking a crucial element: the financial stakeholder.

Why Financial Stakeholders Matter

When developing a medical technology, it’s easy to become fixated on the patients and the clinician users of your product. While their needs and experiences are undeniably important, more often than not, they aren’t the financial stakeholder in the U.S. healthcare system, which poses a critical problem: If you’ve designed your product to only address unmet needs of the patient and/or clinician, but the implementation of your product doesn’t address a need (or more importantly a pain point) for the financial stakeholder, adoption of your product will be limited.

In the U.S. healthcare system, the financial stakeholders primarily include the following, all of whom have specific and distinct motivations that influence their decisions.
• Clinic or Hospital Department Administrators in charge of a discretionary budget
• Hospital Value Analysis Committee (VAC) in charge of evaluating technologies with a cost that exceeds the discretionary budget threshold and require a higher level of approval
• Commercial Payers providing commercial and/or managed Medicare/Medicaid plans
• Medicare providing health insurance for individuals aged 65 or older, or individuals with certain specific health conditions
• Medicaid providing state-level health insurance for low-income individuals/families

How Early should I Invest in Understanding these Financial Stakeholders?

Understanding what drives these stakeholders is essential for achieving meaningful market penetration and ensuring that your innovative device is adopted. To avoid the MedTech “Field of Dreams” fallacy, I would recommend that entrepreneurs take a strategic approach as early in their product development as possible, funding resources permitting. Here are three practical tips to help successfully navigate this complex landscape, from my time as an entrepreneur, as well as working as a consultant for numerous MedTech clients:

1. Identify Your Financial Stakeholders Early

In parallel to your pre-market product development, you should conduct market research to identify who your financial stakeholders are. Doing this accurately is critical, so I would strongly recommend working with a MedTech reimbursement and market access consulting firm to identify who the relevant decision-makers are, and to understand their new technology evaluation processes, budget constraints, current reimbursement mechanisms, and possible pain points for which they’re looking for solutions. As an entrepreneur, there’s a time to roll up your sleeves and achieve milestones as leanly as possible — this is not one of them. Identifying your financial stakeholders early is critical to establishing a foundation for your success.

2. Understand Your Financial Stakeholders Needs and Motivations

While improved patient outcomes are valued, financial stakeholders are primarily concerned with the return on investment and overall value that your medical device brings to their organization. The importance of your ability to effectively communicate this value cannot be overstated.

What I’ve seen work best is to start by clearly and accurately painting the typical patient’s healthcare journey under the standard of care. How many visits, procedures, resources, etc. are utilized? How long is the timeline? What are the short-term (<1 year) vs. long-term costs to the financial stakeholder(s)?

Then compare/contrast that typical patient’s healthcare journey to your proposed “future of care”. Specifically, how does utilization of your product change the clinician and/or patient behavior in a way that results in a net financial benefit to the financial stakeholder? E.g. are you reducing the number of expensive events, such as Emergency Department visits, surgeries, revision procedures, hospitalizations, etc.? And how quicky are those reductions realized on the patient timeline? Is your product less expensive than the current options? Does use of your product reduce total resource expenditure per patient? Do you improve clinical workflow efficiency?

But most importantly, as talked about in my first article, do you have proven clinical evidence to back up these Value Propositions with Value Proof?

3. Develop an Evidence Generation Strategy to Produce Value Proof

In order for your comparison of the standard of care vs. your proposed “future of care” to be compelling to a financial stakeholder, you must back it up with evidence to elevate it from just a Value Proposition. Peer-reviewed clinical trial publications are required and expected by all healthcare stakeholders.

Too often MedTech entrepreneurs only focus on the clinical trial endpoints that are necessary for FDA and clinician users of their product. They forget to consider that financial stakeholders will want additional clinical trial endpoints, particularly those related to tracking healthcare costs. Additionally, financial stakeholders want to see studies with longer patient follow-up. Don’t just focus on the immediate clinical and economic outcomes. Back up your entire proposed “future of care” timeline, ideally. And lastly, to convince your financial stakeholders that they should pay for your product instead of what they’re currently paying for, you’ll need multiple published clinical trials with several hundred total patients.

My advice would be to partner with a reimbursement consulting firm to help you develop a comprehensive evidence generation strategy to ensure you’re considering all stakeholders’ evidence requirements. Also, get financial stakeholder input on your clinical trial designs early in their development. Finding out after a study is completed that you missed a critical endpoint and need to repeat the study will cost you both time and money. So, plan early and plan intelligently.

In conclusion, navigating the MedTech landscape requires more than just technical prowess – it demands a deep understanding of the financial ecosystem into which your technology would be implemented. By avoiding the MedTech “Field of Dreams” fallacy and addressing your financial stakeholders’ needs and motivations with clinical trial-backed value proof, entrepreneurs and their medical device companies can better position their innovations for broader market acceptance and long-term impact.

As a former entrepreneur and biomedical engineer, I hope my point resonates, that it’s not enough to build a great product; you must also understand who will buy it and why. Then convince those buyers to adopt with your Value Proof.

If you’re a medical device innovator, I’d love to hear from you. What reimbursement and market access challenges—or questions—keep you up at night?

To share, please email to businessdevelopment@priahealthcare.com, and we’ll be sure to pass along your questions and comments to Ryan.