Does Product-Led Growth Work in Healthcare?

-Sort of, Sometimes

https://betterproposals.io/blog/say-no-to-freemium/

By Sherri Douville, written by prompts and with ChatGPT

Background: HealthTech Co., a startup, developed a cutting-edge mobile app designed to help patients manage chronic conditions like diabetes. The app included features such as medication reminders, blood glucose tracking, and direct communication with healthcare providers. Despite having a well-designed product, HealthTech Co. faced significant challenges in scaling its adoption within the healthcare market.

Product-Led Growth (PLG) Approach:

1. User-Centric Design: HealthTech Co. focused on creating an intuitive user interface that required minimal onboarding. Patients could easily download the app, understand its functionality, and start using it immediately without extensive training.
2. Freemium Model: The company adopted a freemium model, offering basic functionalities for free while providing premium features like advanced analytics and personalized coaching through a subscription. This allowed users to experience the value of the app before committing financially.
3. Viral Growth Mechanisms: The app included features that encouraged users to invite friends and family members. For example, users could share their progress and data with their caregivers or fellow patients, promoting word-of-mouth growth.
4. Data-Driven Iterations: HealthTech Co. continuously collected and analyzed user data to understand how patients interacted with the app. This allowed them to make data-driven improvements, enhancing user experience and satisfaction.
5. Community Building: The app also included a community forum where patients could share their experiences, ask questions, and support each other. This fostered a sense of belonging and encouraged users to remain engaged with the app.

Success and Scaling:

By focusing on product-led growth, HealthTech Co. successfully grew its user base to millions of patients globally. The ease of use, combined with valuable features and community support, led to high user satisfaction and retention. This approach allowed HealthTech Co. to scale rapidly without relying heavily on traditional sales and marketing strategies.

Why Product-Led Growth Often Doesn’t Work for Healthcare Enterprises

1. Complex Buying Process:

• Healthcare enterprises, such as hospitals and large healthcare systems, have a complex and lengthy procurement process. Decisions are typically made by a committee and involve multiple stakeholders, including IT, clinical staff, and administrative personnel. This makes it challenging for a product-led growth strategy, which relies on individual users adopting and spreading the product organically.

2. Regulatory and Compliance Concerns:

• Enterprises in healthcare operate in a highly regulated environment. Compliance with regulations like HIPAA (Health Insurance Portability and Accountability Act) in the US and GDPR (General Data Protection Regulation) in the EU is critical. These organizations require rigorous security and compliance assessments, which are not typically addressed through a freemium or low-touch onboarding model.

3. Integration with Existing Systems:

• Healthcare enterprises often require new technologies to integrate seamlessly with existing systems, such as Electronic Health Records (EHRs). This integration requires significant technical support and customization, which goes beyond the capabilities of a standard product-led approach.

1. Scalability and Support:

• Large healthcare organizations need robust, scalable solutions with dedicated customer support. They require Service Level Agreements (SLAs), 24/7 support, and custom training, which are challenging to provide through a product-led model that focuses on self-service and minimal human intervention.

1. Cost and Budgeting:

• Enterprises have specific budgeting cycles and financial constraints. They often need to justify the return on investment (ROI) for new technologies through pilot programs and detailed cost-benefit analyses. This structured financial planning process doesn’t align well with the freemium or low-cost entry points typical of product-led growth strategies.

Types of Healthcare Products That Should Target Product-Led Growth (PLG)

1. Consumer Health Apps

• Examples: Fitness tracking apps, diet and nutrition apps, mental health apps (e.g., Headspace, MyFitnessPal).
• Reason: These products are designed for individual users who can easily download, try, and adopt the app on their own. They often feature intuitive user interfaces and low barriers to entry, making PLG a viable strategy.
• Success Factors:
• Ease of Use: User-friendly design that requires minimal onboarding.
• Freemium Model: Basic features available for free with premium upgrades.
• Viral Growth Potential: Social sharing and community features to drive organic growth.

2. Patient Management Tools

• Examples: Chronic disease management apps, telemedicine platforms for individual practitioners.
• Reason: These tools are used by patients to manage their health directly, often with minimal setup. Patients can easily understand the value and start using the basic features immediately.
• Success Factors:
• Self-Service Onboarding: Easy setup and user education through in-app tutorials.
• Direct Patient Benefit: Clear and immediate value to the user’s health and daily life.

3. Wellness Programs

• Examples: Corporate wellness apps, employee health engagement platforms.
• Reason: These programs target individuals within organizations and rely on broad adoption by end-users rather than enterprise-wide implementation.
• Success Factors:
• Engagement Features: Gamification and rewards to encourage regular use.
• Scalability: Ability to serve a large number of individual users with minimal incremental cost.

Types of Healthcare Products That Should Not Target Product-Led Growth (PLG)

1. Enterprise Health IT Systems

• Examples: Electronic Health Records (EHR) systems, Hospital Information Systems (HIS).
• Reason: These systems require extensive integration with existing IT infrastructure, compliance with stringent regulatory standards, and customization to meet the specific needs of healthcare providers.
• Challenges for PLG:
• Complex Integration: Significant technical support needed for system integration.
• Regulatory Compliance: High standards for data security and patient privacy.

2. Medical Device Software

• Examples: Software for medical imaging devices, surgical robots, diagnostic tools.
• Reason: These products need to be integrated with specific medical devices and comply with rigorous clinical and regulatory standards, necessitating extensive testing, validation, and support.
• Challenges for PLG:
• Technical Complexity: Requires specialized training and support.
• Clinical Validation: Needs thorough clinical trials and regulatory approval.
• High Stakes: Errors can have serious health implications.

3. Healthcare Data Analytics Platforms

• Examples: Population health management systems, predictive analytics for hospital operations.
• Reason: These platforms typically need to integrate with multiple data sources and provide insights that impact strategic decision-making at an organizational level.
• Challenges for PLG:
• Data Integration: Requires robust integration with various data systems.
• High-Level Buy-In: Decisions to adopt are made at the executive level with lengthy sales cycles.
• Scalability Concerns: Tailored to specific organizational needs, making a one-size-fits-all approach impractical.

Conclusion

While product-led growth can work remarkably well in consumer-focused healthcare applications like the HealthTech Co. example, it often falls short for healthcare enterprises due to the complexity of the buying process, regulatory and compliance concerns, integration needs, and the demand for high-level support and scalability. For these larger organizations, a more traditional, high-touch sales and marketing approach is usually necessary to meet their stringent requirements and ensure successful adoption and integration of new technologies.

Product-Led Growth (PLG) strategies are well-suited for healthcare products that target individual consumers or small practices, such as consumer health apps, patient management tools, and wellness programs. These products benefit from easy onboarding, direct user engagement, and the potential for viral growth. Conversely, PLG is not suitable for complex enterprise health IT systems, medical device software, and healthcare data analytics platforms, which require regulatory compliance, and integration support. These products necessitate a more traditional sales approach with high-touch engagement to ensure successful implementation and adoption.

Sherri Douville BIO

Sherri Douville leads at the intersection of mobile, AI, cybersecurity, healthcare and technology. As the CEO and board member of Medigram, the company is advancing secure, real-time mobile communication solutions for healthcare teams.

Beyond Medigram, Sherri co-chairs the IEEE/UL 2933 standards SG for trust in clinical IoT systems, and she founded and chairs the Trustworthy Technology and Innovation Consortium (TTIC), promoting security and trustworthiness in technology. She is also a Taylor & Francis series editor and the author and editor of “Mobile Medicine,” a book on integrating mobile technologies in healthcare and “Advanced Health Technology” about leveraging advanced technologies to reduce risks and foster better patient outcomes, improved patient and clinician experience, and reduce costs.

Sherri’s career includes contributions and awards at Johnson & Johnson and serving on the board of NorCal HIMSS. She is an advisor in corporate board education for SCU.