5 tips for a successful partnership in HIT
Growth through strategic collaborations has fueled the expansion of many a company involved in the health care space such as Intermountain Healthcare System and McKesson;to add new technologies and markets relatively rapidly. The forms these partnerships take vary according to need and size. Although frequently between smaller and larger companies, it can also be a partnership of equals. It can be particularly useful for small; growing companies to validate their products and give them broader market exposure. On the other hand, if there’s a fundamental difference in goals by the companies in the partnership or the customers isn't happy with the agreement in practice, it could all go pear shaped, especially for the smaller companies.
Recently at the venture investment component of the annual HIMSS conference, a group of lawyers and venture capitalists who advise startups on developing strategic partnerships as well as serial entrepreneurs who have been through the process shared their insights on points varying from company’s track record, the motivations on each side of the deal to financial considerations. Here are five of them.
Compatible technology: Is it standing alone or is it a component of larger technology? Where does it fit in the spectrum? A growing trend in healthcare IT is technologies that can grow to be independent businesses through an exit strategy or distribution. How can you have a compatible technology that makes sense to sell with another company? Jason Epstein:
Trust: Although there is a certain amount of risk both companies have to assume, if you don’t trust the motivations of your strategic partner then it undermines everything else. both companies need to be fully committed to making the agreement work.
Do your customers want it? Knowing how the customers feel about the partnership is just as important as how the strategic partners feel. That observation comes from Jay Srini of SCS Ventures and seems particularly relevant in the health care sector where technology like clinical decision support and remote monitoring are being used to improve patient outcomes.
Work through technology transfer issues: When most think of technology transfer they envision it as a university’s IP going into the commercial space. The panelists referred to technology being transferred from a smaller to larger company. “You need to define the scope of license,” one panelist said. ” How much will you get paid and for how long?” There are also the geographic boundaries. Where can you use the technology? How often? Is it for internal use or resale? What’s the scope of the license? How much will you get paid and for how long? Does the larger company have a process in place for integrating new technology or are they building one?
Self-examination: Before you sign a deal with the company, cautioned panelist Howard Burde who runs a healthcare law practice, think about the underlying reasons for why you want a strategic partnership — what does it say about your own company? What will it help your business do? Where do you want the business to grow and how do you achieve that? Are you helping fix in a gap in your partner’s market?
[Photo by - Kylemac]