The U.S. healthcare informatics and analytics market offers data-based solutions for providing better care more cost-effectively. Over the next five years, this $39.6 billion market is reliably projected to grow at nearly 26 percent compound annual growth rate (CAGR).

Until recently, the bulk of spending has gone to large companies for infrastructure – electronic health records, customer relationship management, systems interoperability enablers and the like. The future, however, is rapidly trending toward solutions that enable a broad cross section of clinical, business, research, consumer, and other constituencies to readily access data and accurately interpret it. 

The end result is producing better health outcomes more cost-effectively.

To achieve healthcare system objectives, a vast range of subject and user domains must be effectively served. This dictates, as the industry's largest corporations publicly acknowledge, that the great majority of  future innovations will come from those companies that can effectively and time-efficiently convert scientific innovation into verifiable vehicles for solving high-impact problems.

Companies that will be well-positioned to attract expansion capital from among the 500-plus venture capital firms actively targeting the industry will be those those that:

• Are able to quickly “productize” technology-based solutions around sound business model principles.
• Can demonstrate a baseline case for delivering outcomes as claimed.

Ultimately, these are the companies that will become targets for acquisition by the venture arms of Fortune 1000 healthcare technology corporations.

Despite a receptive marketplace, the challenges are great for young companies seeking to reach the winner’s circle. The following Best Practices can make the difference between failure and success:

Best Practice 1: Thoroughly and objectively validate your claims concerning the true scope and nature of the marketplace opportunity addressed – and how and why your solution is truly unique – before presenting it to investors, potential pilot partners and customers.

Best Practice 2: When building a business plan and accompanying financial projections, acknowledge that commercial “traction” almost invariably goes slower than you expect it to. So construct a three-track plan: expected, worst case, and stretch (or reasonable upside).

Best Practice 3: Make sure your business case contains a detailed explanation of how your innovation successfully addresses key value propositions as well as real and perceived risks of these three constituency groups:

1. Health care providers (both organizations and individual clinicians).
2. Payers: Understand and plan to address in detail the ROI story as applied to the cross section of private and government entities that will determine whether the use of your innovation will be deemed adequate to support their key internal financial metrics.
3. Patients: If your innovation focuses on populations with specific conditions, problems, etc., make sure that you fully reflect how the use of your innovation is experienced.

Best Practice 4: Fully explore non-dilutive grant opportunities, from the Small Business Innovation Research program and elsewhere, before trying to raise expansion capital. The National Institutes of Health, Robert Wood Johnson Foundation, the Centers for Disease Control and dozens of other foundations provide funding for worthy health care innovation companies corresponding to particular disease domains. This can also provide an important credibility foundation for your science or technology intellectual property.

Best Practice 5: Once you have secured a pilot commitment from a credible representative of your target market, pull out all the stops to ensure that it achieves the targeted results. Young companies need to be the drivers of a project plan that defines the objectives and measurement criteria for evaluating the efficacy of the solution, and then negotiate and ultimately obtain the agreement of the pilot partner principals.