Exploring the pre-scaleup development of Healthtech startups: the case of Dutch healthtech startups

Abstract

Health systems globally, currently face many multi-faceted and dynamic challenges. There is a growing demand for quality healthcare, shifting expectations towards more responsibility for patients in their own health journey, an evolving role of technologies within society, and external pressures to decrease costs and improve sustainability in a directive towards more preventative healthcare. In response to these challenges, many innovative technologies have been developed and applied for example to improve medical devices, enable virtual health services, manage patient and health system data and for other applications throughout the value-chain of health systems. There is a continually growing need for such innovations to be developed and implemented, despite the uncertainty characterising the ever-evolving health system landscape.
In the attempt to address the need for innovative health technologies, there has been an explosion of firms, entrepreneurs, and innovation hubs shifting their focus to developing and implementing new health technologies. Healthtech innovation and start-ups are vital to improve the quality and capacity of available healthcare, relieve overburdened health systems, and match shifting needs and expectations within the health industry. However, it has been observed that many start-ups are failing to grow to a point where their innovations can make an impact and have sustainable success in the health system. The downfall of many startups focusing on developing health technologies (healthtech startups) occurs most frequently in the time before they manage to start selling their health technologies to customers, or what is termed "scaling-up". Although there are many aspects or factors that play a role in the failure of these healthtech startups, there is one palpable observation; the development journey experienced by healthtech startups before scaling-up is distinctly unique and misunderstood. This observation calls for research to create a better understanding of the complex and unique development required of healthtech startups - to facilitate their ability in scaling-up, selling and implementing their health technologies.
In line with addressing this need, this thesis begins by conducted a literature study focused on technology and health technology startup development, aiming to explore the existing knowledge concerning the pre-scaleup phase in healthtech startups. The literature study consisted of a two-stage review process, beginning with a scoping review of literature pertaining to the technology startups and their early development, and proceeding with a rapid review of literature related to specifically healthtech startups in their early development phases. This examination revealed a recurrent tendency in the literature to discuss this startup phase through several key themes. Drawing from this discovery, the subsequent step
involved characterising available literature information into nine defining themes: regulation, network, development processes, financing, capabilities, performance metrics, solution, system and market context, and social aspects; which collectively define the pre-scaleup development of healthtech startups.
The literature study emphasised the distinctiveness of healthtech startups in their pre-scaleup journey, underscoring the imperative to investigate how this distinctiveness could be effectively represented. Consequently, the thesis advanced to exploring models that could represent the unique nature of the early development of healthtech startups. Existing models geared towards representing and guiding early startup development were critically evaluated accruing to their limitations in comprehensively capturing the distinctive aspects specific to the pre-scaleup development phase within the healthtech sector. This evaluation culminated in a synthesis of insights derived from both the reviewed models and the themes identified from literature. This synthesis aimed to clarify the distinct attributes intrinsic to healthtech startups, ultimately culminating in the formulation of a bespoke theoretical model tailored to effectively represent the pre-scaleup progression of healthtech startups. The model incorporates elements from existing literature models to construct a developmental framework delineating stages and pivotal points that encapsulate the fundamental activities undertaken during healthtech startup evolution. It also spotlights the essential challenges that demand resolution to propel a startup to subsequent developmental phases. Built with adaptability and collaboration in mind, the model allows for iterative processes and the seamless exchange of feedback across successive stages. The theoretical model captures the pre-scaleup journey of a healthtech startup within five distinct developmental stages: (1) concept development, (2) opportunity framing, (3) clinical validation, (4) pre-organisation, and finally, (5) scale-up. These stages are demarcated by a set of critical barriers termed ’critical junctures’. Comprising four such junctures - (1) problem-solution fit, (2) commitment, (3) credibility, and (4) scale-readiness - these represent the essential obstacles that must be surmounted for a healthtech startup to forge ahead in its growth trajectory.
Furthermore, the thesis introduced and implemented an approach to gather supplementary data, thereby enriching the insights and comprehension of healthtech startups and their pre-scaleup development. This involved conducting a series of interviews with individuals possessing various perspectives, expertise and practical experiences in the pre-scaleup phase of healthtech startups in the Netherlands. The conducted interviews, coupled with their subsequent inductive coding analysis, yielded a range of valuable insights that were categorised into themes, providing a characterisation of the pre-scaleup progression of healthtech startups. Moreover, these interviews yielded information that resonated with the previously established theoretical model.
Upon recognising the emergence of consistent themes in both literature and the interview data, a subsequent comparison was conducted to compare these two research approaches. The culmination of this comparison led to the formulation of a definitive catalogue consisting of four key and four lesser "characteristics of the pre-scaleup development of healthtech startups" that effectively encapsulate the pre-scaleup journey of healthtech startups, enhancing the characterisation, definition, and comprehension of this development phase. The resulting four key characteristics are; (1) the network and people involved, (2) the development processes carried out, (3) the financing methods used to support the development journey, and (4) the applicable regulations of the health technology being developed and how the healthtech startup conforms to them. The four lesser characteristics capture (1) the social considerations to be accounted for, (2) the characteristics of the health solution that must be prioritised, (3) the capabilities that are essential within the development of a healthtech startups, and (4) the influence of the context of the health system and market on the development journey of healthtech startups.
Furthermore, the insights garnered from the interviews provided substantial input relevant to the theoretical model. These inputs subsequently generated several recommendations for prospective research endeavours, aimed at assessing the practical viability of a model akin to the theoretical construct developed in this thesis. It is recommended that the model be tested or applied in case studies to gauge the practical applicability of the model. Moreover, the interviews also revealed an unexplored linkage between deliverable, evidence levels, and critical junctures. Future research efforts should explore the incorporation of measurable outcomes that correlate to the relevant development stage or critical juncture in the model. Additionally, it was found that processes, evidence requirements, and activities may significantly differ based on the type of health technology being developed. While the theoretical model’s overall structure might suit diverse healthtech startups, it may fail to represent the specific activities and barriers for medical devices, biotechnology, and electronic health technologies. The model holds potential as a guiding tool for comprehending and directing healthtech startup pre-scaleup development. However, it requires refinement to address gaps, ideally through extensive case studies, broader expert input, and collaboration with process modelling experts. Ultimately, the model lays a foundation for future research aimed at producing a more accurate representation of the unique challenges posed by healthtech startup pre-scaleup development.
Finally, some key observations are discussed and several recommendations are made for future related research. There is a major emphasis placed on ’user-centred’ development of health technologies during the interviews and in literature. One of the most popular methods of user-centred development in literature, called Participatory Design, demonstrates that the active involvement of users from early in the development of a health technology facilitates trust, shared understanding, and ultimately helps develop a solution that satisfies the needs of all its stakeholders and encourages its successful adoption in the health system. Furthermore, there are several social and ethical considerations that healthtech startups should consider throughout their development. Both the analysis of existing literature and interviews with industry professionals highlighted the fragmented nature of information concerning the responsibility for upholding ethical and socially responsible practices in the pre-scaleup development of healthtech startups. Key stakeholders emerged from the literature search, including startups, regulatory bodies like the FDA and EMA, healthcare professionals, ethics committees, industry organisations, data protection agencies, patient advocacy groups, and academic institutions. These stakeholders collectively share the responsibility for ensuring patient safety, data privacy, and ethical considerations throughout the development and use of health technologies. Further research is necessary to explore the allocation and sharing of these ethical responsibilities among stakeholders in the healthtech sector.
Having explored the unique journey that healthtech startups experience in their aspiration to develop valuable and sustainable solutions for health systems, is it evident that there are in fact many misunderstood and overlooked aspects, challenges and factors that make their mission more difficult than expected.
This thesis presents a first attempt to better understand the unique experience that healthtech startups have in their pre-scaleup development, and the findings of this thesis should become a starting platform for future research into this unexplored matter.