ANGELMD ACADEMY

Doctors are increasingly interested in medical innovation. They are intellectually curious and it meets their need to stay abreast of the most modern treatment options to help their patients. Increasingly, we encounter professionals looking for an outlet. Unfortunately, many physicians face burnout due to COVID-19 and professional frustrations. Unique outlets and opportunities like entrepreneurship, consulting work and investing can offer a lifeline and help physicians regain an internal locus of control. If you are one of those clinicians looking to take the next steps and get serious about entrepreneurship as a way to generate additional income or engineer a career transition, then you are well served by creating a defined framework for evaluating startups. I like to call mine the 7 P’s. I use them to identify a company’s strengths and areas of improvement, describe opportunities for improvement, and influence future company goals. This framework informs investment decisions. It can also be paired with your unique professional background to offer relevant insights as a company advisor or chief medical officer (CMO). Each of these topics deserves its own individual treatment. And I will be presenting them as an ongoing blog series with company case studies and other personal examples from my own experience. You can find the first two, ‘Product’ and ‘Physician Feedback,’ at angelmd.com.

The 7 P’s

1. Product Does the proposed solution address a medical practice pain point? The company may be in the idea phase, may have a minimum viable product (MVP),

Seven P’s to Evaluate Healthcare Companies

A framework for physicians to determine the strengths and weaknesses of startups

By John R. Dayton, MD, FACEP, FAAEM

or have a functioning prototype. We certainly want to know if their solution is better and cheaper than the available alternatives. But while improvement over the standard of care is necessary, it is not sufficient. We also need to know how big is the pain point they are addressing? Is it a known problem supported by and constructed with the experts in their space? What does that mean about the size of the capturable market? And that, my friends, is the beginning and end of “Product” (Don’t get me wrong we have A LOT to unpack there). But it is also why so many startups can fail even with a viable product and why it is so important that we travel much further. The other 6 P’s are where we find dragons.

2. Physician and patient feedback Successful startups are often led by physicians or have physician advisors. Getting feedback from medical experts helps a company at every stage of company growth: from ideation to product development to running a successful pilot. Two crucial questions to ask a startup team are when they spoke with physicians about their idea and what kind of feedback they received.

3. (Intellectual) Property (IP) Patents can be obtained for medical devices, pharmaceutical compounds and digital health assets. These provide protection from knockoff products and also provide companies with a valuable asset that is the core of many healthcare acquisitions. Without strong IP, a company may succeed in the short term yet fail to monetize in the long run.

4. Process for product clearance What kind of medical device needs a 501(k) clearance? How does the FDA’s Software as a Medical Device (SaMD) work for machine learning? When does an innovation need a De Novo request? The FDA has different approval processes for medical devices, digital health tools, pharmaceuticals and AI applications. Understanding how the product you’re evaluating is regulated is essential for assuring patient safety and