Mexican Digital Health Ecosystem in Dire Need of CPRBy Tomás Iglesias | Fri, 08/06/2021 - 09:05
The Mexican digital health ecosystem can be considered officially broken from what we’ve learned during the global pandemic. We’ve seen amazing worldwide growth in the digital health sector, yet no Mexican company or startup has been able to become a protagonist in the healthtech scene. Why is that? I’ll try to break it down in a simple way as someone who lives inside this ecosystem and started noticing the cracks.
Let's start by defining what constitutes an ecosystem. An ecosystem consists of many entities and organisms that interact with each other. The digital health ecosystem is mainly made of the following entities:
- Digital health providers
Some of you may be thinking right now, “Wait, there’s a lot of other pieces missing.” To this I simply answer, No. These are the main pieces of the ecosystem; they are fundamental for the ecosystem to exist. The investors may be considered optional, since theoretically, the ecosystem could work with just a client/provider relationship. But as we’ve seen in the last few years, many businesses and startups require capital injections every now and then to accelerate their operations and improve their value proposition to clients.
Some of you may now be thinking, “But those entities you’re mentioning actually already exist, so what’s the problem?” Well, for starters, if there wasn’t any problem, I probably wouldn’t be writing this piece and instead I would be writing something in praise of how Mexican healthtech startups are changing the healthcare sector in our country and other countries, but they’re not. So now, if we’re in agreement that there’s actually a problem with the Mexican digital health ecosystem, let's start figuring out why and how it can be repaired.
I’ll quickly explain what we’ve learned about the entities from our years coexisting in what we thought was a healthy ecosystem:
- They are defined as those who use digital health tools as a way to improve their processes, reduce costs, try to gain an edge over their competitors or as patients, have tools that will help us take care of our health in an easy and cost-effective way.
- They’re buying what digital health providers offer. No question about this. The “we need to teach the client about digital health first before they start using it” excuse is not valid anymore. If digital tools help them, they buy them, if not they don’t.
- They are well informed. Most clients are no longer falling for deceitful techniques used by some sneaky companies that try to offer them obsolete and impractical software at real high prices. Clients do know how to use technology, the constant accusation that the healthtech industry doesn’t thrive because healthcare professionals haven’t been able to learn how to use technology was completely proven wrong as the pandemic started and 80 percent of physicians effortlessly started using digital tools. The problem was that previously, the value proposition of the digital health providers just wasn’t good enough.
Digital health providers:
- Offer a variety of digital tools. Some are for very specific use in contrast to what happened before when one provider tried to satisfy all the needs of a customer.
- With the advances of cloud services and software development, their technology is really powerful, fast, constantly evolving and costs less.
- More and more investors are interested in digital industries and have placed capital in many startups
- They know their business. In Mexico, investors usually do a great job investigating every aspect of a startup before betting on them.
- Most of them are “hands on” investors. This is great for the ecosystem because startups need all the help they can get, not only financially, but many times the experience and network an investor brings to the startup is what really helps it grow and be successful.
With that being said, let’s start breaking down the main problems in the digital health ecosystem so we can start fixing it.
Every entity within the ecosystem mentioned before has its own problems but they are situations that are expected and we can usually work with them or work around them to make everything function correctly.
Clients usually face the situation where their hospitals and clinics already work without the need of digital tools, so the decision to acquire the service of a digital platform is based on that the digital platform actually making the client’s life easier, helping them save money and/or helping them make money. This makes the decision really tough on them, since they actually don’t need a digital tool. The digital tool may help them or it could actually affect them and make the workflow process complicated.
This causes the value proposition needed to convince the client to increase, which in consequence creates the need for the digital health provider to further improve its offer. For that, it may need outside capital to quickly deliver. But this is not the problem in Mexico’s digital health ecosystem. This is normal and expected.
What’s broken is the path a business or startup needs to take to actually sit at a table with someone willing to invest in digital health. Who’s to blame, the startups or the investors? None of them are at fault.
Startups and businesses are focused on operating their business, making the operation run smoothly while at the same time increasing their traction by attracting more and more clients. They are usually really good at that but may not know exactly how to approach an investor. For that, they need help. Here’s where the problem starts.
Many people in our country, enamored by the healthtech scene, have tried to force their way into the ecosystem. Many of them have never run a business, are not healthcare professionals and actually do not have real networks with investor groups, yet they are self-proclaimed “healthtech experts.” This doesn’t stop them from creating their healthtech specialized incubators, accelerator programs, webinars, associations and many other services that actually aren’t helpful for the ecosystem. They do not properly prepare businesses and startups to take that step toward having a successful investment round. So, basically, there’s no initial support for the providers and they usually get stuck here.
Investors, on the other hand, rely on experts in the industry to know if and when to invest in healthtech startups. They also fall on the belief that these self-proclaimed “healthtech experts” are the correct support they need, yet receive no clarity to reduce the risk they perceive when investing in a healthtech startup.
This is what needs to be changed. These support characters, whose objective should be to help and add something to the ecosystem, have single-handedly broken the Mexican digital health ecosystem.
We need to find a way to actually connect healthtech startups directly with investors, so they both learn what they need to learn and grow together. We must do this quickly if we want Mexico to be part of those mega deals we’ve seen in the healthtech industry, and to be proud to see Mexican healthtech startups dominating international markets.