5 ways healthtech companies use outsourcing to grow
The healthtech market is growing. Demand from consumers and institutional clients and advances in AI and automation are creating new opportunities for healthtech companies that want to grow.
But whether you’re a startup going out to seek capital to help you scale or a more established firm looking to strengthen operational performance, you need to do more than just offer a great product. You also have to develop a business infrastructure around it.
Outsourcing can make doing this faster and more successful while also providing you with a cost-effective way to access high-level talent and institutional knowledge. Keep reading for five reasons why you should consider using an outsourcing partner to take some of the work of building your business off your team’s plate.
1. Deliver cost-effective value
Outsourcing can be a cost-effective way to fill certain roles or skill sets that your team currently lacks. The right outsourcing partner can often allow you to access the value that high-level talent provides without needing to onboard the equivalent number of full-time employees.
For example, let’s say you’re healthtech startup leader looking to build out your bookkeeping team to meet the needs of your expanding business. You could hire in-house, but this is actually a perfect opportunity to work with an outsourced accounting firm.
Outsourcing would allow you to pay for only the services you actually need — without committing to the fixed costs of bringing on new full-time hires, such as salary, benefits and payroll taxes — plus scale up the level of support you receive as your needs change.
With outsourcing, you’d also be able to gain access to an accounting team with experience and institutional knowledge beyond what any one person can provide, even if you’re only getting support in a fractional capacity. However, this won’t impact your cap table, so you can add high-level expertise without diluting your ownership shares.
And if a team member at your outsourcing partner leaves, you don’t bear any of the expense of finding their replacement and typically won’t face any significant interruption to work on your account.
2. Mitigate talent acquisition issues
Talent acquisition is more of a challenge for startup-stage healthtech companies than established ones. Startups typically lack back-office core competency but need to begin building out business infrastructure to support their product development work.
Here, startup leaders face a choice. You can build your back-office team through trial and error or outsource to a service provider who already knows what to do.
Talent level is another important factor. Unless they’re swimming in venture capital dollars, early-stage companies often don’t have the resources to attract or retain top performers in all areas.
Working with an outsourcing provider allows you to access talent fractionally. You might not be able to recruit an elite COO, for example, or even have enough work to keep someone like that happy — but you could work with a fractional COO to dramatically improve your operational performance without joining your team full-time.
3. Keep your team focused on your core product
You’re trying to disrupt healthtech. How much energy do you really want to devote to your general ledger, email system and file storage protocols?
Outsourcing allows you to put all your attention toward your core product rather than ancillary business capabilities. This could help you get to market faster or focus on developing new product ideas rather than getting bogged down in support tasks.
Areas like accounting, IT, HR and even fractional COO duties are natural fits for outsourcing. These are necessary for your business to run, but typically outside the experience of teams built for product development.
If you’re an entrepreneur with a great idea who lacks coding or development skills, you can even find a tech outsourcing provider to do software engineering. In this scenario, you’d retain IP rights but rely on your outsourcing provider to build the product you envision.
4. Scale easier
Outsourcing can be especially valuable to companies ready to scale. The right outsourcing relationship gives you the bandwidth to focus your attention on growth.
As noted above, this can look like freeing up your team to focus on your core product. But outsourcing can also play a huge role in making your business more attractive to investors looking to deploy capital in the healthtech space.
Investors or potential clients considering a startup tend to care about two things: the feel they get from the founder and the quality of the data that the founder shares with them during a pitch process. An outsourcing partner can help you with both by advising you on how to prepare.
As an advisor, an outsourcer can guide you through the steps you need to take to appear professional to investors. They can also give you an outsider's perspective on the current state of your business to help you better prepare for investor questions or concerns you may need to address.
5. Improve compliance
In healthtech, compliance starts with HIPAA. And getting HIPAA right is essential to the future of your business.
Often, tech companies will leap into a sector without fully understanding regulatory requirements. While there may be some areas where you can get away with this approach, anything that involves protected health information (PHI) is not one of them.
PHI is essentially any personally identifiable health or medical data. HIPAA sets strong requirements that companies or healthcare providers must follow to protect PHI from exposure, along with strict penalties for those who fail to comply.
You probably don’t have the in-house experience to fully navigate HIPAA. An outsourcing provider can help you do that and guide your team through taking the necessary steps to help ensure HIPAA compliance.
Cybersecurity is another critical issue here. Just because you’re a tech company doesn’t mean you know how to defend your business against a cyberattack or keep your IT infrastructure up to date against possible incursions.
This is another area where outsourcing can quickly solve problems. Outsourcing to a partner with cybersecurity expertise gives you an ally with tested experience to know what works and what doesn’t and an entire security team to protect your infrastructure before, during and after an incident.
How Wipfli can help
Wipfli works with both startup and enterprise-level healthtech companies to provide outsourced services in areas like accounting, operations, technology management, cybersecurity and more. Our team will serve as an extension of your own to boost your business infrastructure so you can focus on your core product areas. Learn more here.
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