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The Digital Health Business Model Canvas

Depositphotos 67862943 m 2015

Have you ever wondered why it is so darn hard to find product market-fit?  You have this great idea for this problem that you want solved, but the rest of the world just isn’t seeing it…yet.  And even when there is a ray of light, where it looks like some market traction is forthcoming, BAM!  Something comes from out of the blue and just puts a wrinkle in the momentum.

So you keep at it and keep at it and for some of you, there will be a time when you hit that escape velocity button. Companies that achieve that breakout velocity of finding their target market that wants to buy their product or service succeed at two things.

  1. Luck: I’m not going to write about that here but I’m not minimizing its importance either.  Luck may be the right place, right time.  It may be throwing that dart and just happening to hit on the perfect customer segment.  Listen, luck is awesome.  Actually, it’s essential.
  2. Running Experiments: The more controllable variable is how quickly you run experiments and test and learn and test and learn until you find your role in the market with the right customer, value proposition, partners, revenue model, resources, and capabilities.  The best solution I have found to rapidly evaluate experiments is through the use of the Business Model Canvas (BMC) created by Alex Osterwalder.

My entrepreneurial background for 15 years before Stride was healthcare.  From clinical practices to venture backed digital health companies, I have ridden the ups and downs of pushing innovation into an industry that sometimes says one thing but the incentives of the industry portend another.  So instead of just adopting the Business Model Canvas, I adapted it to be more relevant for digital health.

I have struggled with the traditional Business Model Canvas, because I think it misses some fundamental considerations for digital health start-ups, specifically selling into the complexity of healthcare (selling to insurance companies, employers or health systems).  So I created the Digital Health Start-up Canvas (free worksheet download below) based on my experience.  The boxes shaded in blue I added to the BMC:

Here is some description of sections that I added:

Consumer Value Proposition:  I am making a distinction here between the customer and the consumer (the Business Model Canvas does not delineate).  While healthcare certainly wants to impact the health of the consumer, the customer (the one paying the bill) is more often the insurance companies, employers, or health systems.  But without consumer engagement, no one is going to be buying.  If they don’t use it, you aren’t going to successfully sell to a paying customer.

Prove It:  What is the market telling you that you need to prove to get credible traction?  Is it showing measurably lower cost, increased engagement, revenue for your customer, integrations into workflows, command of the regulatory environment?   Buyers in healthcare want to de-risk their decisions.  How will you help them do it?

Customer Population Served:  This is all about customer development, figuring out who is the target population that would most resonate with your service or solution.  Are they rich, poor, high risk, healthy, old, young, managing a chronic condition, dealing with end of life?  Too often we want to serve everyone which results in us serving no one.

Ideal Pilot Targets:  The early customers must be the “right customers”.  Who is that?  Have them in your sights at the outset.  Are they industry influencers?  Are they the ones with the budget or stated objective to innovate?  Are they in your city?  Do they need to play “catch-up” in their market?  By knowing the characteristics of the customers you want to pilot with will help you focus the value proposition.

Customer Measures of Success:  It is easy to get caught up in how you want to measure success but what is the metric or perception that your customer will evaluate?  Sometimes it is not what you think.  It may not have anything to do with saving healthcare costs in the early phases (even if the promise of doing so is core to your vision).  It might be ease of use, quality of reporting, ability to configure for multiple clients, positive feedback from consumers.  Figure out what your customer(s) really care about and spend time optimizing for that.

Building a business is just hard.  Building a digital health business with the intention of changing the world, navigating regulation, pushing up against legacy thinking, and…..running a business is doubly or triply hard.

This digital health canvas should help entrepreneurs run experiments to test their assumptions.  Experimentation sprinkled with a bit of luck can create the velocity to break out and truly make the game changing impact you set out to.

At Stride we can help you build this Canvas through our Strategic Services group.  We are also experts at taking over your back office bookkeeping, accounting and HR compliance so you can focus on achieving the objectives of your Canvas.

Download the free Digital Health Canvas Worksheet below.


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