Key Market Drivers, Trends & Opportunities for Software Tech Companies in the Healthcare Sector - Part Three of Three04 June 2018
Roger Wallhouse, Founding Partner, Health Systems Solutions Ltd, with over 30 years' healthcare sector experience, and John Symon, SVP, International Markets at Boss Equity, discuss the opportunities and challenges for Software Tech SME's trying to penetrate the healthcare sector.
Timescales to get decisions can pose a real problem. The NHS has no idea the demands it places on its suppliers. To deal with the NHS, companies need perseverance, patience and resource.
Once a relationship is established, the NHS eventually begins to understand what it takes to implement the systems. THe first thing a company dealing with the NHS has to realise is that whatever timescales they are used to with other companies in other sectors, they do not apply in the NHS. The sales cycle with the NHS is much longer and therefore the cost of sale is higher. In a 'financially squeezed' environment, the opportunity to raise prices can be a barrier, so you have to be quite astute in terms of how you deal with price and payment and how you present the cost benefit.
Acquisition Trends in the Healthcare Sector
JS: Is size an issue? - Will there be a big increase in major acquisitions and what role do SME companies have in this area?
RW: I've been involved in the healthcare sector for many, many years - and throughout that time the landscape has changed and I think that will continue. There are undoubtedly huge opportunities in the NHS and in the health market for those companies who can sustain their commitment to it. What you find, is that the large corporates who serve multiple sectors, very often dip their toe into the NHS and find that the timescales they're used to and therefore, their 'earnings per share', can't be met - And so they leave. And there has been a history of that.
The history of innovation in the NHS comes from SME's. And it's those SME's that offer the future for the NHS. And I think the Private Equity (PE) and Venture Capital (VC) market understands that. I have to say that in the UK, the PE and VC companies don't always appreciate the value of the SME's and therefore, raising funds for growth is difficult if you're dealing with the NHS. This is because they take the view that you have one customer. You don't, you have many customers. But, I think the M&A market will be very vibrant