Health Care Startups Struggle to Woo UK's National Health Service

Health Care Startups Struggle to Woo UK's National Health Service

Why you should care

The U.K. has a vibrant ecosystem of health industry startups. The problem? Their biggest customer. 

On a bright Monday morning in May, the Health Foundry in south London is buzzing with activity. A clutch of members at the digital health business incubator demonstrate their products. Katerina Spranger, the founder of Oxford Heartbeat, shows imaging technology that helps surgeons insert stents and Tom Whicher, the founder of DrDoctor, explains how his platform helps patients view, schedule and change outpatient appointments by smartphone.

The Health Foundry is just one element of a thriving U.K. ecosystem serving entrepreneurs and startups in the health sector. It has 170 members across 120 companies and is the U.K.’s only co-working space dedicated to digital health, says Sinead Mac Manus, its startup and innovation manager.

It also helps guide startups through the labyrinthine processes of NHS purchasing decisions.

“Health tech entrepreneurs are not short of great ideas in the U.K. and in fact there is a lot of support for innovation from government funding to incubators like Health Foundry. Where we are lagging behind other countries is having clear routes to adopting innovations,” says Mac Manus, adding that the NHS is effectively thousands of organizations, each of which needs a bespoke approach.

The NHS stamp of approval opens doors all over the world, but it’s very difficult and time-consuming.

Shabir Chowdhary, RYSE Asset Management

Business education is one of Health Foundry’s main functions. “We do a pitch event called 5x5x5. We pick five companies who do five minutes pitching and then five minutes of feedback, and it’s one of our most popular events,” says Mac Manus.

Even more prized by its members are the introductions it can provide to the local health system — the Foundry is funded by a charity connected to Guy’s and St Thomas’ hospitals. Whicher says bodies such as NHS England have a real appetite to engage, “but you need to understand how it works and some of its nuances.”

Arms-length bodies link the NHS with the startup community including Digital Health London, Med City and the NHS Innovation Accelerator.

Yinka Makinde, program director at Digital Health London, describes her organization as “a bridge between the NHS and industry.” It runs an accelerator program with a cohort of 30 companies a year and teaches them how to use the NHS and produce the evidence needed to get their ideas taken seriously. It also has partnerships with countries such as Israel and advises foreign companies how to approach the U.K. market.

Claudio D’Angelo, managing partner at RYSE Asset Management, an investment boutique that runs the Early Stage Opportunity Fund in partnership with DHL, enthuses about the collaboration. “Through the network of the NHS, we managed to reach an incredible amount of companies … The penetration the NHS has through social networks is incredible.”

At the “blue-skies” end of the spectrum are accelerators such as HS, founded by James Somauroo, formerly of NHS England’s innovation team and Digital Heath London. Its speciality is helping early-stage teams “at the frontier of health tech.”

“Through a network of accelerators and incubators, government support schemes, as well as simpler decision-making structures in their health care systems, other countries like Israel and the U.S. find that they can build companies and sell to customers in ways the U.K. finds more difficult,” Somauroo says, adding that HS’s mission is partly to smooth that access to market.

He encourages his companies to gain international experience. Feebris, one of his most promising startups, connects wearables and devices such as digital stethoscopes to its diagnostics system, and is being used to detect early signs of pneumonia in children in rural India.

He sees no point in trying to sell the cash-strapped U.K. health service a half-ready product. “We need to get you customers, get you selling, get you investment, build out your company so it’s sustainable, then come back to the NHS.”

Shabir Chowdhary, another managing partner at RYSE, says this reliance on the NHS is a common pitfall.

“The NHS stamp of approval opens doors all over the world, but it’s very difficult and time-consuming. The ‘valley of death’ [the period of time companies suffer after initial capital has run out but revenues have yet to flow] is well before the NHS can approve new services or technologies so many of these companies will never make it to seriously pitch.”

This NHS approval process takes three to five years and so “creates a funding gap for the company, which it needs to fill privately, unless they can commercialize the pilot, which is very difficult,” he says.

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By Darren Dodd

OZY partners with the U.K.'s Financial Times to bring you premium analysis and features. © The Financial Times Limited 2018.

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