In the life of any startup, there are moments of inflection—points where you have to honestly assess what’s working, what isn’t, and be willing to make a fundamental change in direction. In late 2022, IOMED went through one of these moments. We made the difficult but necessary decision to pivot our business model to better align our incentives with those of our hospital partners and life science clients.
This post is a candid account of that pivot: why we did it, the challenges we faced, and what we learned in the process.
The Old Model: Free Pilots and Project-Based Work
Like many startups, our initial go-to-market strategy was focused on reducing friction. We offered hospitals a free pilot program to get them onto our network, with the goal of monetizing through project-based work with pharmaceutical companies who would then query the data.
On the surface, this model made sense. It lowered the barrier to entry for hospitals and seemed to offer a clear path to revenue. However, over time, we identified some critical flaws:
- Misaligned Incentives: The project-based model created a transactional relationship. Value was delivered intermittently, and it didn’t foster the long-term, collaborative partnerships we wanted to build with both hospitals and researchers.
- Unpredictable Revenue: Revenue was lumpy and dependent on the specific needs of individual research projects, making it difficult to forecast and invest in long-term platform growth.
- Slow Value Delivery: The sales cycle for one-off projects was long, and the value to our hospital partners was not always immediate or obvious. This sometimes led to a feeling that they were “data providers” rather than active partners in a research ecosystem.
The Pivot: Towards a Sustainable Data Partnership
We realized we needed a model that treated access to research-ready, real-world data as a strategic capability, not a one-off service. This led to our pivot towards a Data Space Platform (DSP) subscription model.
Under the new model:
- Hospitals as Partners: Hospitals become true partners in the data space. We work with them to create a sustainable model where they are compensated for providing access to their de-identified, OMOP-standardized data.
- Researchers as Subscribers: Life science companies subscribe to the platform, gaining ongoing access to run feasibility analyses, discover patient cohorts, and generate insights across the network. This provides them with a powerful, always-on tool for their research and development pipelines.
- Aligned Incentives: This model aligns everyone’s incentives. Hospitals are rewarded for maintaining high-quality data. Clients get continuous value and predictable costs. And we get the recurring revenue needed to continuously improve the platform for everyone.
The Challenge of Changing Course
Pivoting is never easy. It required difficult conversations with our existing partners and a complete re-articulation of our value proposition. We had to explain to our team why the change was necessary and get them excited about the new vision. We had to be transparent with our hospital partners, showing them how the new model would provide them with more sustainable value in the long run.
The experience was a powerful lesson in entrepreneurial agility. It reinforced that a startup’s strategy is not set in stone. It must be a living thing, constantly tested against market feedback and refined based on what you learn. The key is to never lose sight of the core mission. Our mission has always been to make health data more accessible and useful for research. Our pivot wasn’t a change in that mission, but a change in the strategy to best achieve it.