Latest / The Clinical Realist / What an Acquirer Is Actually Buying: Exit-Readiness for Healthtech, with Dr. Roxie Mooney

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What an Acquirer Is Actually Buying: Exit-Readiness for Healthtech, with Dr. Roxie Mooney · The Clinical Realist

• 0:00
  SPEAKER_00: Most of the conversations I have on this show are about what happens inside the hospital.
• 0:03
  SPEAKER_00: And today I want to flip the camera around and point it at the companies trying to get in.
• 0:08
  SPEAKER_00: So here's the pattern that I constantly see.
• 0:11
  SPEAKER_00: I see healthcare founders solving a real clinical problem.
• 0:14
  SPEAKER_00: And it's great science, and a few systems will pilot it, and everyone will be very excited.
• 0:19
  SPEAKER_00: But then when it's time to scale or time to raise or time to sell, the company discovers that solving the clinical problem is never the same thing as building a company.
• 0:28
  SPEAKER_00: Someone would actually buy.
• 0:29
  SPEAKER_00: So my guest today has spent her career on that exact gap.
• 0:32
  SPEAKER_00: Today I have Dr.
• 0:33
  SPEAKER_00: Roxy Mooney.
• 0:34
  SPEAKER_00: She's the founder and CEO of Legacy DNA, where she works with mid-market health tech and pharmacy companies, often private equity backed, who are 12 to 36 months out from an acquisition or a capital event.
• 0:45
  SPEAKER_00: She holds a doctorate in business administration focused specifically on commercializing healthcare technology, which, as far as I can tell, makes her the only person who has this doctorate ever.
• 0:54
  SPEAKER_00: And she has the receipts.
• 0:57
  SPEAKER_00: So she not only helps scale BioPlus specialty pharmacy from 750 to 2 billion with back-to-back acquisitions after, but for successful exits.
• 1:08
  SPEAKER_00: She's also a best-selling author and she has a new book on the way.
• 1:11
  SPEAKER_00: So today we're going to talk about what an acquirer is actually buying, why health tech companies are commercially unready long before they think they are, and what the current deal climate means if you're 18 months from an exit.
• 1:22
  SPEAKER_00: So welcome, Roxy.
• 1:24
  SPEAKER_00: Thank you for having me on the show and for that wonderful introduction.
• 1:27
  SPEAKER_00: Appreciate it.
• 1:28
  SPEAKER_00: Absolutely.
• 1:29
  SPEAKER_00: So tell me a little bit more about what you're doing these days and how you're helping companies, both big and small.
• 1:35
  SPEAKER_01: Yeah, sure.
• 1:36
  SPEAKER_01: So I've been leading Legacy DNA for 16 years now.
• 1:42
  SPEAKER_01: And as you would imagine, that tenure gives you an opportunity to reflect back and see a myriad of patterns in the industry as well as with the clients that we've worked with over the years.
• 1:55
  SPEAKER_01: And this new book that I am getting ready to publish in just a few weeks is kind of a compilation of those patterns that's being told through 11 different stories.
• 2:07
  SPEAKER_01: And that really dovetails into the work that we're doing.
• 2:11
  SPEAKER_01: So we help mid-market companies grow, scale, and exit at a premium.
• 2:18
  SPEAKER_01: I love that.
• 2:19
  SPEAKER_00: Everyone wants to be at a premium.
• 2:20
  SPEAKER_00: So everybody wants to be excited.
• 2:24
  SPEAKER_00: So I want to talk about the story that I think frames everything because the numbers are huge.
• 2:30
  SPEAKER_00: So Bio Plus went from 750 million to 2 billion and they got acquired twice.
• 2:37
  SPEAKER_00: So when you look back, what was the single commercial change that did the most for the valuation story?
• 2:44
  SPEAKER_00: And again, not the thing that sounds good in a case study, like the actual thing that moved the number.
• 2:50
  SPEAKER_01: Yeah, so there's so many different things that they did right.
• 2:54
  SPEAKER_01: Um, you know, no person's perfect, so no company comprised of humans is going to be perfect, but they did a lot of things really well.
• 3:02
  SPEAKER_01: One of them that I think is probably often overlooked is the power of the narrative and the story that is being told.
• 3:11
  SPEAKER_01: And so the original founder and um the latest CEO of the company, um, Mark Montgomery, they both were very committed to um the story and building a brand promise.
• 3:27
  SPEAKER_01: And so um we they were actually a client of ours for actually they're still a client of ours.
• 3:33
  SPEAKER_01: Um we've been working with them for about eight years now, and we helped them build this brand promise called the power of two, uh, the two-hour, two-day, two-click, um, together story.
• 3:46
  SPEAKER_01: And so it really, you know, in healthcare, as you know, most of these sectors and subsectors are extremely commoditized and saturated.
• 3:56
  SPEAKER_01: So having a compelling story is extremely important for being able to differentiate in business.
• 4:03
  SPEAKER_01: But then it gives people, it gives the sales teams an opportunity of to have more confidence on them being able to have something special to offer and then to be able to compete.
• 4:13
  SPEAKER_01: And, you know, other companies do that.
• 4:15
  SPEAKER_01: But what I think Bio Plus did so differently, it was baked into the fabric of the culture of the organization as well as operations.
• 4:24
  SPEAKER_01: And so a lot I don't see that very often.
• 4:27
  SPEAKER_01: Usually it's a marketing story that's being told.
• 4:30
  SPEAKER_01: And um, you know, you might even get really fortunate and have the entire sales team singing the same song, telling the same story, but operations was actually aligned to deliver on that value proposition.
• 4:45
  SPEAKER_01: All the employees were recognized and incentivized based upon the delivery of that value proposition.
• 4:52
  SPEAKER_01: And so you could really go into the organization and ask just any about anyone, um, you know, what was the brand promise or what was the company all about?
• 5:01
  SPEAKER_01: And anyone would be able to tell you.
• 5:03
  SPEAKER_01: And I just think that that's a real rare thing and it's something that does often get undervalued.
• 5:10
  SPEAKER_01: Um, but it's important because it helps you grow and scale your business.
• 5:15
  SPEAKER_01: And then it also gives you a really powerful narrative when you are going out to market and you're wanting to sell the company and you're wanting to persuade those prospective buyers that the company can exist without the founders and the senior leadership and really be able to hold under pressure.
• 5:34
  SPEAKER_00: I like that.
• 5:34
  SPEAKER_00: I was giving a talk a couple of weeks ago at Device Talks in Boston, and a founder stood up and was like, hey, great talk, but I can't get my product at the door.
• 5:43
  SPEAKER_00: No one wants to, yeah, da-da-da-da-da.
• 5:46
  SPEAKER_00: And I think that I see this a lot, and I'd love your thought process.
• 5:50
  SPEAKER_00: Very technical founders, or my expertise, which is founders with too many letters after their last name, often have a great solution, but they don't have that brand promise, that marketing, that piece, that storytelling.
• 6:04
  SPEAKER_00: And I honestly feel like if I could just put up one sign that says stop building features and build a brand, it would help everybody.
• 6:12
  SPEAKER_00: What are your thoughts?
• 6:13
  SPEAKER_01: Absolutely.
• 6:14
  SPEAKER_01: And also I would say um, so that is very common.
• 6:18
  SPEAKER_01: It's they are so passionate about solving the problem, especially the audience that you talked about, because those founders have lived that pain deeply.
• 6:28
  SPEAKER_01: And so they um so solving the problem to them is is just very glaring and apparent.
• 6:36
  SPEAKER_01: Um, but they are in love with the solution and they're actually typically looking for a problem to solve it.
• 6:46
  SPEAKER_01: Shove it into.
• 6:47
  SPEAKER_01: Shove it into, right?
• 6:49
  SPEAKER_01: Yeah.
• 6:49
  SPEAKER_01: And so very often they're not thinking through the business model, making sure, especially in the complexity of a healthcare environment where you've got a multi-sided market and it's not just B2C or B2B, it's often both.
• 7:02
  SPEAKER_01: Um, making sure that there is a buyer who is actually problem aware helps tremendously.
• 7:10
  SPEAKER_01: Um, but solution aware is a big deal too.
• 7:13
  SPEAKER_01: So that way they are actively aware of the problem and looking for solutions to solve that and creating that continuity and alignment.
• 7:21
  SPEAKER_01: And that story and that brand is a powerful tool for being able to communicate value.
• 7:29
  SPEAKER_01: Um, I I used to hear over over time working with um investors that were listening to pitches all day of, you know, Roxy, I heard 20 pitches today, um, about a half hour to 45 minutes each, and I still can't tell you what any of them do.
• 7:46
  SPEAKER_00: I mean, really, when I get pitched, you got five minutes, I'm done.
• 7:49
  SPEAKER_00: And by that time, I've already made a decision about your leadership team.
• 7:52
  SPEAKER_00: I've already decided if you can communicate, I've already decided so many things.
• 7:56
  SPEAKER_00: You have five minutes or less or less for that matter.
• 8:00
  SPEAKER_01: Yeah, yeah, exactly.
• 8:02
  SPEAKER_01: So the moral of the story is that story matters.
• 8:06
  SPEAKER_01: Um we can't undervalue that.
• 8:08
  SPEAKER_01: And that's not something that um we can just invest in later on when the company matures and gets more sophisticated, because if you don't have a power powerful story, you're very unlikely to get there.
• 8:20
  SPEAKER_01: Um, I think story um affects the exit, affects uh adoption.
• 8:26
  SPEAKER_01: Um, yeah, there's it's just very powerful.
• 8:29
  SPEAKER_00: I love that.
• 8:30
  SPEAKER_00: So when we think about companies that are one to three years out from exit, and again, these are the people coming to you every day.
• 8:37
  SPEAKER_00: You see them at the moment, they think they're close.
• 8:40
  SPEAKER_00: And of course, I'm sure you see all the things that they're missing.
• 8:43
  SPEAKER_00: So, what are the top one or two signs that a Helltech founder doesn't have any idea what the acquirer is actually looking for or what they're actually buying?
• 8:52
  SPEAKER_01: Yeah.
• 8:53
  SPEAKER_01: So sometimes, um, especially if it's a founder-led company still, that there is not enough maturity in the infrastructure, in the structure of the business for the business to be able to operate on its own.
• 9:10
  SPEAKER_01: And so sometimes when they're going through that due diligence process, um, they may decide not to buy that company and they're waiting for them to have more maturity, um, or that it they will uh discount it and make adjustments for the risks associated with a business that's being so dependent on the founder.
• 9:30
  SPEAKER_01: And I think that although that seems really obvious, um, when you're outside of it, that when you're the founder, um you've been mostly rewarded for the blood, sweat, and tears that you've put into the company, right?
• 9:46
  SPEAKER_01: And so I think, and it becomes your baby.
• 9:49
  SPEAKER_01: And it's like the longer you've been incubating that baby, the more passionate and attached you are to it.
• 9:56
  SPEAKER_01: And so, really, the maturity of the business and becoming an attractive acquisition target is the ability to be able to actually pull away and hire competent people to, you know, be the ones that are in the deal in the room with those customers and you no longer having to take on that role.
• 10:14
  SPEAKER_01: And I think that that's a huge surprise for a lot of founders.
• 10:19
  SPEAKER_00: So a lot of times I see what I like to term pilotitis.
• 10:23
  SPEAKER_00: So healthcare systems will have one pilot, then another, then another, and they never actually scale any of the stuff that they're doing.
• 10:29
  SPEAKER_00: And sometimes it actually comes back to the founding team for whatever solution they have out there.
• 10:34
  SPEAKER_00: They have a great prototype or a great, I can do a pilot solution, but not necessarily something that can really scale today.
• 10:41
  SPEAKER_03: Yeah.
• 10:42
  SPEAKER_00: So when we think about that from a commercialization side, it's hard to sell a company that every health system is piloted, but no one's actually scaled.
• 10:52
  SPEAKER_00: How do you get around that?
• 10:53
  SPEAKER_00: Or do you adjusting to scale the darn thing?
• 10:57
  SPEAKER_01: Well, I I I've done a lot of workshops around piloting and developed a lot of frameworks for that.
• 11:04
  SPEAKER_01: And one of the things is more is not better.
• 11:08
  SPEAKER_01: Um, and and there's a lot of coaching uh around clients of maximizing focus and bandwidth and resources.
• 11:17
  SPEAKER_00: Oh, I mean, we could just stop the whole podcast right there.
• 11:19
  SPEAKER_00: Because every founder wants to do too many things that are actually not their business.
• 11:22
  SPEAKER_00: Right.
• 11:23
  SPEAKER_00: Well, they drop the mic, we're gonna stop it right now.
• 11:25
  SPEAKER_00: Thank you, Roxy.
• 11:26
  SPEAKER_00: Appreciate it.
• 11:29
  SPEAKER_01: Um yeah, enough said, right?
• 11:32
  SPEAKER_01: Um, yeah, and it's again, you know, it's so much easier to say these things and and make it seem like it's black and white when you're on the outside.
• 11:42
  SPEAKER_01: When you're inside, it's much more difficult to see.
• 11:45
  SPEAKER_01: There's a lot more emotional involvement.
• 11:48
  SPEAKER_01: Um, and and you just get caught up in it.
• 11:50
  SPEAKER_01: Like I, you know, I do that, I'm sure you do, even in my own business.
• 11:54
  SPEAKER_01: Like we need outside people to be able to help um prevent us from getting caught up in shiny opportunity syndrome.
• 12:01
  SPEAKER_01: Um, so more pop, so more pilots are not necessarily better.
• 12:05
  SPEAKER_01: If anything, I I call it pilot purgatory, death by pilot.
• 12:09
  SPEAKER_01: So very similar to what you're talking about.
• 12:11
  SPEAKER_01: Um, like you don't want your pilot strategy or pilot plan to be the death of your business, right?
• 12:18
  SPEAKER_01: You want it to lead to success.
• 12:20
  SPEAKER_01: Um, so not as many pilots.
• 12:23
  SPEAKER_01: The other thing that I um have experienced uh and and coached around too is a lot of times the founders will get really woo-woo or really excited about a pilot with a large health system, a Fortune 20 or Fortune 100 brand, as if, you know, having the stamp of Cleveland Clinic or John Hopkins is going to be their fast path to success.
• 12:49
  SPEAKER_01: And often it ends up being their fast pass to their pilot purgatory or pilotitis, that you as you call it, because those brands are very demanding and you usually want to um, you know, meet all of their needs.
• 13:08
  SPEAKER_01: They often don't represent the whole of the market.
• 13:11
  SPEAKER_01: So a lot of the features and functionality that you're building into the solution for those specific um uh companies aren't necessarily going to be transferable and and um allow for you to monetize um in a holistic market.
• 13:26
  SPEAKER_01: So there's just a lot.
• 13:27
  SPEAKER_01: It's not to say that you should never have one of those, but there's a lot to take into consideration.
• 13:32
  SPEAKER_01: The other thing that um I would say on this before we uh change gears is negotiating upfront in the pilot process of what's gonna happen when A, B, and C take place.
• 13:47
  SPEAKER_00: I could not agree more.
• 13:49
  SPEAKER_01: I mean, exit criteria, like build them into the contract, do it.
• 13:52
  SPEAKER_01: Completely.
• 13:53
  SPEAKER_01: It had it has to be into the contract because otherwise, what I've seen happen is from the founder's perspective, they had a very successful pilot and they're completely blindsided that it doesn't lead to sales at the end of that pilot time.
• 14:10
  SPEAKER_01: And so you've got to bake in what happens when your sponsor leaves, leadership changes, strategic initiatives change.
• 14:19
  SPEAKER_01: Um, and what happens when you actually get results?
• 14:25
  SPEAKER_01: Actually, right.
• 14:27
  SPEAKER_01: And if you wait till the end to negotiate that, um, the terms change and it gets way more complicated and a lot more difficult.
• 14:35
  SPEAKER_01: And I just say you're leaving money on the table if you don't do that up front.
• 14:39
  SPEAKER_00: I think one of the things that I've done that has helped lots of founders is don't call it a pilot, call it phase one, and then build your contracts around phase one, assuming a phase two and how that works.
• 14:50
  SPEAKER_00: I think when we say the word pilot, we know they're gonna throw it away, even though we have high hopes.
• 14:55
  SPEAKER_00: But the organization that you're putting in, they're treating it like a true pilot.
• 14:58
  SPEAKER_00: They don't actually have skin in the game.
• 15:00
  SPEAKER_00: Usually a pilot has been given to them for free from the startup or whatnot.
• 15:04
  SPEAKER_00: So they are not really invested.
• 15:07
  SPEAKER_01: Yeah.
• 15:07
  SPEAKER_01: And I advocate for not doing a free pilot.
• 15:10
  SPEAKER_01: Like you only have so many dollars and so much attention and so many people resources.
• 15:16
  SPEAKER_01: Um, like I would just encourage founders and innovators to do their best to not do a free pilot.
• 15:25
  SPEAKER_01: Like, no, we all know that in life, people don't value what's free.
• 15:30
  SPEAKER_00: Exactly.
• 15:31
  SPEAKER_00: Absolutely.
• 15:33
  SPEAKER_00: So when we think about a strategic acquirer, they open the diligence folder.
• 15:38
  SPEAKER_00: Yep.
• 15:39
  SPEAKER_00: What's the one thing you you would say that they're gonna go look at before anything else?
• 15:43
  SPEAKER_00: The one thing that's gonna tell them the most piece of the story.
• 15:46
  SPEAKER_00: They look at this one thing when they open the folder and they're like, yes.
• 15:49
  SPEAKER_00: Or they open this and they're like, oh heck no, I am not looking at this at all.
• 15:54
  SPEAKER_01: Yeah, that's a really um, it's a real good one.
• 15:57
  SPEAKER_01: I I would say, um, gosh, there's so many different things we could unpack here.
• 16:01
  SPEAKER_01: I mean, first off, you you have to have the numbers, right?
• 16:04
  SPEAKER_01: You have to be able to demonstrate, you know, quarter over quarter, year over year growth, right?
• 16:09
  SPEAKER_01: It's got to be on the right trajectory.
• 16:11
  SPEAKER_01: Um, but that in itself is not enough.
• 16:14
  SPEAKER_01: And that's definitely one of the anthems and messages or foundating uh principles of the book is that growth doesn't necessarily mean success.
• 16:25
  SPEAKER_01: Um, sometimes growth can actually be also a death trap, just as like pilot, right?
• 16:31
  SPEAKER_01: So you've got all these things that seem like they're early indicators of success that could actually be warning signals.
• 16:37
  SPEAKER_01: And so it's building the infrastructure into the organization to actually survive the company's success.
• 16:48
  SPEAKER_01: Right.
• 16:48
  SPEAKER_01: And so again, that's we don't think about very often.
• 16:52
  SPEAKER_01: But some of the stories that are profiled in the book talk about those that did and those that didn't and how the where those companies ended up ended up being in two very different places.
• 17:06
  SPEAKER_01: Um really for the growth to it's really easy for the growth of an organization to outpace the infrastructure that is being built.
• 17:16
  SPEAKER_01: And so you've got to have that repeatable, scalable um model.
• 17:21
  SPEAKER_01: And, you know, so often it's in people's heads.
• 17:27
  SPEAKER_01: Yes, it absolutely is.
• 17:29
  SPEAKER_01: And and so when you're going through that due diligence process and that strategic buyer is is evaluating that opportunity, um, they want to be able to see that there's some type of infrastructure in place.
• 17:43
  SPEAKER_01: And if it if they don't, there's there's, you know, when we think about acquisition trends that have been changing over time, you've got so many um acquisitions that have blown up post-acquisition that there's a lot of things that are happening in the market to really be able to shore that up and to be able to um, you know, uh protect their investment, ensure transferability.
• 18:10
  SPEAKER_01: So some of that is um, you know, where founders might get a the full payout up front or maybe have like a two or three year runway.
• 18:20
  SPEAKER_01: You're seeing them being required to stay on longer for more of a three to five year runway.
• 18:27
  SPEAKER_01: Or they might have some, it might be requiring some rollover equity, um, like 40%.
• 18:34
  SPEAKER_01: Um, instead of you getting it cash, your part of the terms is for that to be reinvested in the new organization because you've got to believe in it.
• 18:45
  SPEAKER_01: If I'm gonna buy it, I want to know that you who built it, believe in it.
• 18:49
  SPEAKER_01: And so, you know, put your money into the future of the company.
• 18:52
  SPEAKER_01: So there's a lot of those things that are happening um around the deal terms that are uh consequences of not having those things in place um during the due diligence process.
• 19:06
  SPEAKER_00: I think it's interesting with kind of your first book focused mostly on earlier stage organizations.
• 19:12
  SPEAKER_00: Sometimes they're not even ready to exit, but they need investment.
• 19:16
  SPEAKER_00: And it's almost the same thing.
• 19:17
  SPEAKER_00: But like you said, it's showing your maturity, showing that you've documented it.
• 19:24
  SPEAKER_00: If someone gets hit by a bus, the company will still go forward.
• 19:27
  SPEAKER_00: And I can't tell you how many arm wrestling matches I've had with C-suite of so many organizations around, oh, well, we don't have time for X, Y, or Z.
• 19:37
  SPEAKER_00: And it's like, well, you're not gonna get funded or get on an acquisition path without it.
• 19:42
  SPEAKER_00: So you have to actually do that work.
• 19:45
  SPEAKER_00: It's not sexy, but you need to document, you need to do this, you need to do that.
• 19:48
  SPEAKER_01: Yeah.
• 19:49
  SPEAKER_01: And I think that, you know, that's also like the the persona, right, or the profile of that early stage founder is inherently not usually the characteristics of someone that loves documentation and systems processes, right?
• 20:08
  SPEAKER_01: They're the ones that want to break things, they are innovative, they want to move fast.
• 20:14
  SPEAKER_01: Um, and and part of their success is not requiring all those things in place and having the confidence and taking the risk and not relying on all of that stuff.
• 20:27
  SPEAKER_01: But there becomes this shift within the growth of the company to where those characteristics that made probably for a phenomenal CEO of an early stage company start to shift.
• 20:40
  SPEAKER_01: And so you either need to find a new CEO or you need to make sure that as you're building your leadership executive team, that you're bringing people that have more complementary skills, that have experience with the building in the systems and the processes and the maturity.
• 20:57
  SPEAKER_01: Um, so that way you can still be that radical rebel that's innovating, um, but that being married with the other things that are important for demonstrating maturity, um, giving prospective investors confidence as well as prospective buyers.
• 21:13
  SPEAKER_00: Of course, those founders having enough kind of knowledge of themselves and ability to take that feedback from people like us, not always easy.
• 21:23
  SPEAKER_00: Not always easy.
• 21:25
  SPEAKER_00: It's a headbanger.
• 21:27
  SPEAKER_00: It is, but it really is the difference between an organization that will succeed or one that will fizzle.
• 21:32
  SPEAKER_00: And unfortunately, the founding team and the leadership team is so vitally important.
• 21:36
  SPEAKER_00: And those are pretty important pieces of it.
• 21:39
  SPEAKER_01: Yeah.
• 21:40
  SPEAKER_01: So it's kind of the story of my of like the the cornerstone of my journey.
• 21:45
  SPEAKER_01: So when I was getting my doctorate in business, you you have to identify like what is the business problem that I say that you want to be married to for the next like three to five years because you're eating, sleeping, and drinking with this thing.
• 21:58
  SPEAKER_01: And the statistic that I came Across was that 95% of innovations that are brought to market fail to reach any adequate level of success or adoption.
• 22:08
  SPEAKER_01: And for me, earlier on, that was just really jarring because you've had this explosion of innovation that was happening in healthcare, still happening in healthcare.
• 22:18
  SPEAKER_01: And so I was just like my mind was just blown of like, wait a minute, we're pouring, you know, trillions of dollars into innovation.
• 22:27
  SPEAKER_01: What do you mean that 95% of them are going to fail?
• 22:30
  SPEAKER_01: So really being able to unpack what, why, what are those pitfalls?
• 22:35
  SPEAKER_01: What are those common pitfalls that founders find themselves uh falling into?
• 22:40
  SPEAKER_01: And what are those strategies for success?
• 22:42
  SPEAKER_01: And really, that's all those strategic insights that are baked into the first book.
• 22:47
  SPEAKER_01: I love that.
• 22:48
  SPEAKER_00: So when we think about kind of the pharma side versus the health tech side, commercialization can be a lot different.
• 22:57
  SPEAKER_00: And I know you've dealt with both sides.
• 22:59
  SPEAKER_00: So what do you think translates between them and what absolutely does not?
• 23:05
  SPEAKER_01: Well, the first thing that comes to mind that translates between them is patient experience.
• 23:11
  SPEAKER_01: Whether it's pharma, pharmacy, you know, no matter what healthcare entity, um, there's more than likely a patient that's going to be on the end of that experience.
• 23:24
  SPEAKER_01: And so um focusing on weaving in the customer or the patient voice early on in the process is very important.
• 23:35
  SPEAKER_01: Um, building out and being very intentional about the patient experience and that not being an afterthought.
• 23:44
  SPEAKER_01: Um, building um, you know, this is an example, um, a practical example of one of those things that are that infrastructure, that maturity is what we would call a voice of customer program, right?
• 23:57
  SPEAKER_01: So in an earlier stage company, it's typically the founder that's going to be having the, they are the voice of customer program, right?
• 24:04
  SPEAKER_01: They are in all of those conversations with the customer.
• 24:07
  SPEAKER_01: So they have a pulse of satisfaction or dissatisfaction, and they usually have some kind of manual mechanism for being able to pivot and adapt or mitigate that.
• 24:19
  SPEAKER_01: Whereas as the company starts to mature, you know, building in a more structured voice of customer program to really be able to measure the patient experience in real time, not just after the fact.
• 24:33
  SPEAKER_01: And then being able to, you know, route that to operations for mitigation and then route the wins and the successes into your sales and marketing team, your commercial team, so that that positive feedback can be disseminated across the organization as well as repurposed back into um, you know, the sales and marketing efforts and helping you win business because of that satisfaction that you're delivering.
• 24:57
  SPEAKER_01: So I think like regardless, patient experience is is something that is very important.
• 25:04
  SPEAKER_00: I think it's interesting that you say that because I could not agree more.
• 25:08
  SPEAKER_00: But when we think about it from a commercial perspective, I've been at little places, medium-sized places, even really big places that fail to do a true win loss.
• 25:18
  SPEAKER_00: And you have to get third-party people sometimes to do the loss side, but a lot of people are just skipping it.
• 25:24
  SPEAKER_00: And so they just keep banging their head on the exact same messages that they're trying or the exact same ways of approaching patients or clients, et cetera.
• 25:33
  SPEAKER_00: And it doesn't work, but they don't know why.
• 25:36
  SPEAKER_00: And it's interesting.
• 25:37
  SPEAKER_00: I I just feel like wind loss is one of those areas that just isn't getting done anymore.
• 25:42
  SPEAKER_01: No, absolutely.
• 25:43
  SPEAKER_01: You know, it's it you're too busy.
• 25:46
  SPEAKER_01: And I mean, quite frankly, who wants to hear that?
• 25:49
  SPEAKER_00: Nobody, nobody wants to hear it.
• 25:50
  SPEAKER_00: It's true.
• 25:51
  SPEAKER_01: Unless you have guaranteed that everybody's gonna be right raving fans, um, you know, there's a lot of risk um and potential ego bruising that can be tied to really being able to measure and assess that.
• 26:06
  SPEAKER_01: But that really at the end of the day, if we want to be able to scale and grow thriving organizations, we have to be willing, not even just willing, but aggressive and actively looking for and learn to learn what we don't already know.
• 26:25
  SPEAKER_01: And certainly the customer's perspective is is important.
• 26:31
  SPEAKER_01: Go figure.
• 26:32
  SPEAKER_01: Um that I've always thought was really baffling about healthcare is that these are the a lot of the things that we're talking about are like just table stakes for running a successful business in other industries.
• 26:46
  SPEAKER_01: And so it's always just been so interesting, maybe even somewhat frustrating, that you can have billion-dollar healthcare organizations that don't apply these best practices.
• 26:58
  SPEAKER_01: And then we'll say, you know, well, look what I've done.
• 27:00
  SPEAKER_01: Why do I need to do that?
• 27:02
  SPEAKER_00: And it's like, oh my gosh, but if you actually applied those, imagine you what you could do with your so we've talked a lot now about kind of maturing the business, making sure that you've done some of the unsexy things like documentation, really considering the voice of the customer.
• 27:20
  SPEAKER_00: And these kind of put you in a spot where you can decide what to do next.
• 27:24
  SPEAKER_00: The market right now is interesting.
• 27:26
  SPEAKER_00: And from what I'm seeing, everyone's demanding more.
• 27:31
  SPEAKER_00: And so I'd love your thoughts.
• 27:34
  SPEAKER_00: Today, with the MA climate, as it actually is, is this a moment to accelerate towards an exit window or pull back and build?
• 27:42
  SPEAKER_00: What are you advising your clients?
• 27:44
  SPEAKER_00: Ooh.
• 27:45
  SPEAKER_01: So I would say that it varies depending on the sector that you're in and the business that you have.
• 27:54
  SPEAKER_01: Um, so um, you know, I was doing some, you know, research recently on what were some of those um more current um MA trends.
• 28:04
  SPEAKER_01: And if you are an a behavioral health company with all the shortages that are happening in the market, like those things, those convergence of trends end up being a recipe for exit.
• 28:19
  SPEAKER_01: Um one of the things that's also interesting is that if you are an AI native or company, that you're gonna get a much higher premium than if you are not and you're just trying to bolt AI data on the side or a feature on the side.
• 28:39
  SPEAKER_01: So those are some of the nuances that you know you'd want to explore and unpack to be able to see what makes sense for you.
• 28:48
  SPEAKER_01: Um I mean, I think that there's a lot of work to be done to be ready for exit.
• 28:56
  SPEAKER_01: Um, it slows down the the process, um, but you'd much rather slow down the process and get all the right things in place to maximize that multiple and that premium.
• 29:11
  SPEAKER_01: And unless you're want the next guy to to to sign to and you know, which is fine.
• 29:18
  SPEAKER_01: You know, there's a time and a place for that as well.
• 29:21
  SPEAKER_01: Um, but um there's there's a a client that um we worked with that went to market, um, tried to sell.
• 29:33
  SPEAKER_01: Um, it was a PE roll-up and was told basically that they needed to be more integrated and took several years to build that integration in and to strengthen the commercial model, to be able to develop what that new narrative was going to be when the companies are combined, building out a model to be able to leverage all of the synergies and cross-sell opportunities between the multiple organizations that were essentially serving the same comp uh customers.
• 30:04
  SPEAKER_01: Um, and what they're able to get in the future for the company is going to be completely different than what they would have gotten three years ago, four years ago and successful.
• 30:16
  SPEAKER_00: I think it's interesting.
• 30:17
  SPEAKER_00: I've been at places where I'm like, hey, what what's your integration strategy or what's your AI strategy?
• 30:22
  SPEAKER_00: What's your this strategy?
• 30:23
  SPEAKER_00: Because even if you don't have something built in right now, you need to have a plan because every funder, every investor, every acquirer is going to want to see that.
• 30:34
  SPEAKER_00: And a lot of places, like again, early stage companies in particular, oh, we don't have time for that.
• 30:39
  SPEAKER_00: Oh, we're we're gonna deal with that some other time.
• 30:42
  SPEAKER_00: That's phase two.
• 30:43
  SPEAKER_00: And I think that it really makes them shoot themselves in the foot sometimes.
• 30:47
  SPEAKER_00: Couldn't agree with you more.
• 30:49
  SPEAKER_01: It's so true.
• 30:50
  SPEAKER_01: And AI is such a difficult thing, right?
• 30:53
  SPEAKER_01: Um, you know, it's it's a conversation that we're all having, we're all trying to figure it out.
• 30:59
  SPEAKER_01: It's changing every day.
• 31:00
  SPEAKER_01: Um, the conversations that I have with clients, um, you know, in in full candidness and transparency, is a lot of those CEOs and founders are, I don't know what to do.
• 31:13
  SPEAKER_01: I know I need to do something, but I really don't know what I need to do.
• 31:17
  SPEAKER_01: And some of them feel like they need to wait on the sidelines until things kind of like um become more clear.
• 31:24
  SPEAKER_01: Uh and boy, there's a lot of risk associated with a wait and see strategy.
• 31:31
  SPEAKER_01: Um, but there's also the reality is that no matter what pathway we choose, it's not going to be static, it's going to be fluid.
• 31:40
  SPEAKER_01: Um, you know, there's new models, new platforms, new solutions, um, new competitors.
• 31:46
  SPEAKER_01: I mean, it's just, it's changing so fast.
• 31:49
  SPEAKER_01: And so, you know, I would just advocate for anyone, no whether whether you're a small, medium, or large, like don't have a wait and see strategy.
• 31:57
  SPEAKER_01: Um, prioritarize it, get in the trenches.
• 32:01
  SPEAKER_01: Um, the other thing that I've, you know, years ago when we started first looking at AI, um, I started assigning that to different folks on my team and thinking about how does AI change our own organization.
• 32:16
  SPEAKER_01: And really, it became quick, quickly apparent to me that this is going to be really make a difference on whether I actually have a company in the future or not.
• 32:25
  SPEAKER_01: And it's not something that I can just delegate to my team.
• 32:28
  SPEAKER_01: It's something that I need to own and take full responsibility for and figure out a way to make time for it.
• 32:35
  SPEAKER_01: So I might have to delegate other things that I would normally do to make space.
• 32:40
  SPEAKER_01: I literally have time on my calendar every week, AI thinking time.
• 32:44
  SPEAKER_00: I like it.
• 32:45
  SPEAKER_00: Yeah, I mean, inaction is still an action and inaction still has risk.
• 32:50
  SPEAKER_00: Yeah.
• 32:51
  SPEAKER_00: And so you could put your head in the sand, but there's gonna be implications of that for sure.
• 32:55
  SPEAKER_00: Absolutely.
• 32:56
  SPEAKER_00: Well, I want to ask you a little bit about the book.
• 32:58
  SPEAKER_00: So when we think about your bestseller, how health innovators maximize market success, and you have your new book too, you know, across both books, what is the idea that readers are gonna hit and go, oh my goodness, I've been doing this backwards the whole time?
• 33:13
  SPEAKER_00: So the one that's gonna reliably stop people.
• 33:16
  SPEAKER_00: Tell me a little bit about that.
• 33:18
  SPEAKER_01: So it would be two different things.
• 33:21
  SPEAKER_01: Um I think that for the first book, um I would say that, well, I would say like one of the common takeaways is that there is a framework and a system and a process that you can go through to be able to figure out step by step, what do I need to do?
• 33:47
  SPEAKER_01: What do I need to do next?
• 33:49
  SPEAKER_01: It's not going to be prescriptive, but there is a lens and a framework to look at.
• 33:54
  SPEAKER_01: And so for an early stage company, um we talk about this in the book is problem solution fit, product market fit, business model fit, um, really being able to use that three innovation lens of uh desirability, viability, and there's another one in there.
• 34:14
  SPEAKER_01: Um it'll come to me.
• 34:19
  SPEAKER_01: Um, but using those lenses, because you know, it may seem like it's academic, but those are proven models for a reason.
• 34:28
  SPEAKER_01: And so being able to follow those frameworks is really important.
• 34:32
  SPEAKER_01: And then also, you know, similarly in in the new book, like there are patterns um that organizations follow, um, that there is inevitably a point in every organization where something's something starts to break and what got you there isn't going to get you there, or what got you here isn't going to get you there.
• 34:55
  SPEAKER_01: And and so being able to uh identify those inflection points and not ignore those um uh sooner than later, and then being able to start figuring out what do you need to do and go through that process of the things that we talked about, I think that that is really essential.
• 35:16
  SPEAKER_01: Um, and you know, listening to folks like us, you know, I mean, I'm not trying to pat myself on the back or you, but I mean, let's face it, like having an expert, a third party, um is a game changer.
• 35:29
  SPEAKER_01: Um, you need to have what, and it may not even be URI, right?
• 35:34
  SPEAKER_01: Like it could be anybody out there or somebody else that's an expert.
• 35:37
  SPEAKER_01: Um, but having that third party partnership um, I think is essential no matter which stage the company is in.
• 35:45
  SPEAKER_01: And that's something that I think is also a common theme in in both of the books is that that framework, that process, and that strategic guidance that's helping you um be that partner through the um the grow, the scale, and the exit phase.
• 36:01
  SPEAKER_01: Yes.
• 36:02
  SPEAKER_00: I think, you know, one of the nice things about being an objective third party is that we are not as emotionally tied in to your solution.
• 36:10
  SPEAKER_00: And so when it goes away, I'll be okay.
• 36:13
  SPEAKER_00: A lot of founders, when it goes away, it they will not be okay.
• 36:16
  SPEAKER_00: And so it's easier for us to put forth real direct tactical thought processes on, hey, this is what we could do next, and here's the pros and cons.
• 36:26
  SPEAKER_00: You gotta decide, it's your business.
• 36:28
  SPEAKER_01: Absolutely.
• 36:29
  SPEAKER_01: Yeah, yeah.
• 36:30
  SPEAKER_01: But to be open and to um um, you know, have that thinking partner.
• 36:35
  SPEAKER_01: One of the things that we've been doing too is shifting, and and you've probably been doing this with your clients as well, is you know, helping clients with how do you leverage AI to be your thinking partner for some of this work and building out prompts and and models to be able to test those ideas and then being able to not only test those ideas, but you know, what would what would happen if you um, you know, gave the same assignment to your executive team and had them think through some of these ideas with AI, they probably get very different insights than if they were doing that the brain of one, right?
• 37:23
  SPEAKER_01: Um, but then also being able to advocate for having that facilitate discussions.
• 37:29
  SPEAKER_01: So being able to come back into that monthly or weekly, you know, whenever that meeting and be able to talk about like, did we get to the same place?
• 37:38
  SPEAKER_01: And if not, why?
• 37:40
  SPEAKER_01: And being able to have strategic conversations.
• 37:42
  SPEAKER_01: So not only just baking in AI into our products and services that we're delivering to customers, but even into our operational infrastructure and our strategic um planning and strategic mapping.
• 37:58
  SPEAKER_00: Yes, I could not agree more important.
• 38:00
  SPEAKER_00: And again, like you mentioned before, for the business of health tech or the business of whatever the founder is doing, running your business is actually an important part of it, or else your product and solution won't survive.
• 38:13
  SPEAKER_00: Well, when we think about kind of one more question before we close, okay.
• 38:18
  SPEAKER_00: What is a health tech company or commercial model that was right on the diagnosis but came too early?
• 38:24
  SPEAKER_00: So something in that deserved to work, didn't get traction, but probably deserves a second look right now.
• 38:31
  SPEAKER_00: Ooh.
• 38:32
  SPEAKER_02: Um so something that could have been successful, but wasn't.
• 38:42
  SPEAKER_02: Because it was too early.
• 38:44
  SPEAKER_02: Because it was too early.
• 38:45
  SPEAKER_02: Oh my gosh.
• 38:47
  SPEAKER_01: So interestingly, early on in my career, like maybe over 20 years ago, um, I was just first getting into healthcare.
• 39:00
  SPEAKER_01: And I was reading all this is before the Affordable Care Act, and I was reading about all this innovation and transformation that was happening in healthcare.
• 39:10
  SPEAKER_01: And I remember feeling this real sense of urgency.
• 39:14
  SPEAKER_01: I felt like there was going to be this window of innovation.
• 39:17
  SPEAKER_01: And if I didn't hurry up and get into healthcare, I was gonna miss it.
• 39:22
  SPEAKER_01: Um, so naive, right?
• 39:24
  SPEAKER_01: And we're still innovating in healthcare and have and have so much work to do.
• 39:31
  SPEAKER_01: Um gosh, I think value-based care is probably one of them, right?
• 39:36
  SPEAKER_01: Um, so value-based care is something that we've been talking about.
• 39:41
  SPEAKER_01: God, I was part of it's a four-letter word at this point, right?
• 39:44
  SPEAKER_01: I mean, uh I was a part of building out a business model and uh go-to-market for or a commercial model for a pay for performance um business model for chronic neck and back pain before the Affordable Care Act.
• 40:01
  SPEAKER_01: And so it was like way, way, way early.
• 40:06
  SPEAKER_01: Um and so, you know, that's kind of a good example of how it's today, they're actually getting a premium multiple at exit for value-based care versus fee for service.
• 40:20
  SPEAKER_01: Um, and so it's it's a better time nowadays to be delivering value-based care, maybe more so than it would have been earlier on when um, you know, when we were still trying to figure it out.
• 40:34
  SPEAKER_01: And we didn't value value-based care as much, and we didn't have models built out.
• 40:40
  SPEAKER_01: Um, you know, it just takes a long time in healthcare to get that figured out.
• 40:44
  SPEAKER_01: Um, AI is another really good one.
• 40:46
  SPEAKER_01: So I've got a story in the book of Ali, the founder of Babylon Health.
• 40:51
  SPEAKER_01: Um that's what I mean, we've all read about that one.
• 40:55
  SPEAKER_01: We've all read about it, written about it.
• 40:57
  SPEAKER_01: Yeah.
• 40:58
  SPEAKER_01: Um in and so, you know, here you have someone that was advocating for an AI doctor, an AI in your pocket years ago, way before we were um today.
• 41:12
  SPEAKER_01: And had market conditions been where they are now, um, probably would have been a a lot more successful.
• 41:20
  SPEAKER_01: I think there's probably tons of examples of just being too early.
• 41:24
  SPEAKER_01: But you know what?
• 41:25
  SPEAKER_01: At the same time, Sarah, I would say that that can't be an excuse either, because one of the things that I've seen working with early stage companies is anytime there's failure, um, or I shouldn't say anytime, but often when there's failure, it's just because they were just too innovative and they were just too early.
• 41:47
  SPEAKER_01: And and so that just cannot be an excuse, right?
• 41:50
  SPEAKER_01: I mean, there's, you know, you think about Steve Jobs and the iPod and a thousand songs in your pocket.
• 41:58
  SPEAKER_01: Like, you know, that was extremely early.
• 42:02
  SPEAKER_01: No one was asking for that.
• 42:03
  SPEAKER_01: No one was even thinking of having a thousand songs in your pocket.
• 42:08
  SPEAKER_01: Um, but there's there's a way to be able to create conditions to make it ripe um for growth.
• 42:18
  SPEAKER_01: And so, yes, there are times when businesses or innovations are truly early and you've got to wait for the market to catch up.
• 42:27
  SPEAKER_01: But we can't, we just have to, you know, make sure that we're not using that as an excuse because we've disregarded um, you know, all of the other indicators that were guiding us in a different place.
• 42:40
  SPEAKER_00: I would agree with that.
• 42:41
  SPEAKER_00: I think it's easy as a founder to say we're too early and too innovative.
• 42:45
  SPEAKER_00: Deeply looking into why that might be is a whole other ballgame.
• 42:51
  SPEAKER_00: Well, I have two rapid fire questions for you, and I asked this for all of the guests on the show.
• 42:55
  SPEAKER_00: So, what's the clinical reality, or in your case, the commercial reality that most people in health tech get completely wrong?
• 43:01
  SPEAKER_00: Short answer.
• 43:02
  SPEAKER_02: Clinical reality, um or commercial reality.
• 43:06
  SPEAKER_00: Stor story doesn't matter.
• 43:08
  SPEAKER_00: That's what they're I like that one.
• 43:10
  SPEAKER_00: And then when's the last time you changed your mind about something in this industry?
• 43:14
  SPEAKER_02: Oh gosh.
• 43:18
  SPEAKER_00: Am I that stubborn?
• 43:19
  SPEAKER_00: Am I that bullheaded?
• 43:21
  SPEAKER_00: For those of you listening, my jaw just dropped.
• 43:23
  SPEAKER_01: No, don't uh no, I would say that um, you know, I think my mind is always changing um in this industry on what's possible, um, as well as, you know, things that you think that are going to be successful aren't, and things that you think that there's no way this is going to be successful ends up being wildly successful.
• 43:50
  SPEAKER_01: So I think that that's probably the biggest takeaway is um, you know, never under underestimate um uh change in opportunity in healthcare.
• 44:00
  SPEAKER_00: I like that.
• 44:01
  SPEAKER_00: Well, Roxy, this is exactly the conversation I was hoping for.
• 44:04
  SPEAKER_00: The commercial reality underneath the clinical story from someone who's actually carried companies through the exit.
• 44:09
  SPEAKER_00: So thank you for your time.
• 44:10
  SPEAKER_00: But before we go, can you tell people where to find you and how to get a hold of your books?
• 44:14
  SPEAKER_00: All right.
• 44:15
  SPEAKER_01: So if you are looking at video, here is a uh what the book looks like.
• 44:20
  SPEAKER_01: And you can find it on Amazon.
• 44:23
  SPEAKER_01: You can look up Winning a Healthcare, Dr.
• 44:25
  SPEAKER_01: Roxy Mooney, and you will be able to find it.
• 44:28
  SPEAKER_01: You can also find it on our website, which is legacy-dNA.com.
• 44:33
  SPEAKER_01: And it will be available July 8th.
• 44:37
  SPEAKER_00: Exciting.
• 44:38
  SPEAKER_00: So for everyone listening, if the gap we talked about today land for you, the distance between solving the clinical problems and building something an acquire will actually buy, follow Roxy's work, subscribe to the clinical realist wherever you get your podcasts.
• 44:48
  SPEAKER_00: And if you're working through a live clinical AI or commercialization question inside your org, give me a ring.
• 44:54
  SPEAKER_00: Let's do this.
• 44:54
  SPEAKER_00: I'm Dr.
• 44:55
  SPEAKER_00: Sarah Matt, and this is the clinical realist.
• 44:56
  SPEAKER_00: See you next time.