How to Assess Healthcare Technology Using SMART Innovation™
Many health tech investments fail to deliver a strong return, despite the promise of innovation.
The challenge lies in identifying which solutions will thrive in a crowded field where most do not.
Investors require a structured approach to evaluate which innovations have the highest potential to deliver both impact and financial returns.
A framework to assess the characteristics that position a company and its innovation for success can provide clarity and confidence in your investment decisions.
Investing in health technology innovations requires a robust approach to evaluate their potential value, clinical impact, and likelihood of success.
The SMART Innovation™ framework—Simple, Modifiable, Actionable, Relevant, and Trusted—provides a structured method for assessing innovations against key metrics that align with clinical and market needs.
The framework helps investors identify opportunities that not only address critical healthcare challenges but also align with strategic growth and risk mitigation objectives.
This guide offers insights into applying SMART principles to make informed investment decisions.
1. Introduction to SMART Innovation™ for Health Tech Investors
The SMART framework ensures that innovations address real-world healthcare challenges while maintaining adaptability, usability, and trust.
By focusing on key forces driving change in healthcare—such as value-based care, workforce challenges, health equity, and sustainability—SMART principles help identify innovations with strong potential for success.
They also reveal what innovations need to thrive when critical factors are not yet in place.
2. Simplicity: Ease of Use and Implementation
Why It Matters:
Health tech solutions must be intuitive and easy to integrate into existing workflows to ensure adoption by clinicians and patients.
Investor Questions to Consider:
- Is it clear how the innovation functions and what specific problem it solves?
- Is the innovation user-friendly, requiring minimal training for stakeholders?
- Does it integrate seamlessly with existing healthcare IT systems (e.g., EHRs)?
- Can the solution demonstrate significant reductions in complexity compared to current alternatives?
Key Indicators:
- Design that aligns with clinical workflows, reducing disruption.
- Feedback from pilot studies highlighting usability.
- Demonstrable time or effort savings.
3. Modifiability: Adaptability and Scalability
Why It Matters:
Healthcare environments vary widely, requiring solutions that can adapt to different settings, scales, and evolving regulations.
Investor Questions to Consider:
- Is the technology modular or customizable to fit diverse clinical environments?
- Can the innovation scale efficiently from pilot programs to large health systems?
- Does the product roadmap account for updates and new features based on user feedback?
Key Indicators:
- Modular design enabling customization for different specialties or populations.
- Evidence of successful scale-up or adaptation in pilot programs.
- Clear plans for post-launch improvements and updates.
4. Actionability: Real-Time Interventions and Business Viability
Why It Matters:
Health tech solutions should enable timely decision-making and offer a sustainable business model.
Investor Questions to Consider:
- Does the innovation provide actionable insights or interventions in real-time?
- Is the technology designed to drive measurable improvements in clinical or operational outcomes?
- Does the company have a viable go-to-market strategy and revenue model?
Key Indicators:
- Use cases demonstrating timely interventions (e.g., clinical alerts).
- ROI metrics from pilot studies showing cost savings or outcome improvements.
- Clear, scalable commercialization strategy.
5. Relevance: Alignment with the Quintuple Aim
Why It Matters:
Innovations must address significant healthcare challenges while aligning with broader systemic goals.
Investor Questions to Consider:
- Does the solution solve a critical problem identified by clinicians or patients?
- How does the innovation improve outcomes, reduce costs, or promote health equity?
- Is the product’s impact significant enough to justify adoption and investment?
Key Indicators:
- Strong clinical need validated through stakeholder interviews or market research.
- Alignment with value-based care and and access goals.
- Clear, measurable value propositions.
6. Trust: Regulatory, Privacy, and Security Compliance
Why It Matters:
Adherence to regulatory, security, and privacy standards is critical for building trust with stakeholders and ensuring market success.
Investor Questions to Consider:
- Has the technology met relevant regulatory requirements (e.g., FDA, CE marking)?
- Are data security and privacy protections robust and compliant with standards like HIPAA or GDPR?
- Does the company demonstrate transparency in addressing potential risks or limitations?
Key Indicators:
- Documentation of regulatory clearances or certifications.
- Third-party audits or endorsements of data security measures.
- Proactive risk management plans.
7. Practical Application of SMART in Due Diligence
Steps for Investors:
- Conduct Stakeholder Interviews: Speak with clinicians, administrators, and patients to validate usability, relevance, and adoption likelihood.
- Analyze Pilot Data: Look for strong evidence of impact on clinical outcomes, cost savings, or workflow improvements.
- Evaluate Scalability: Assess the company’s ability to adapt and scale its solution for broader adoption.
- Review Regulatory Pathways: Verify that regulatory and compliance requirements are clearly defined and achievable.
- Assess Market Fit: Confirm that the innovation addresses a significant market gap with a sustainable competitive advantage.
By applying SMART principles, investors can gain confidence in their decision-making, ensuring each opportunity aligns with broader portfolio goals and delivers measurable outcomes.
8. Red Flags to Watch For
- Overcomplexity: Technologies that require extensive training or disrupt existing workflows may face adoption challenges.
- Inflexibility: Solutions that cannot adapt to different settings or scale effectively may limit market potential.
- Unclear Value Proposition: Innovations lacking measurable benefits for patients, providers, or payers are unlikely to gain traction.
- Weak Regulatory Strategy: Delays or failures in meeting compliance requirements can derail commercialization efforts.
- Insufficient Pilot Data: Lack of real-world validation undermines confidence in the innovation’s impact.
Recognizing these red flags early is essential to maintaining a strong and resilient portfolio, minimizing exposure to high-risk ventures.
9. Case Study: Applying SMART to Assess an AI-Powered Diagnostic Tool
Scenario:
An AI-powered diagnostic tool claims to improve breast cancer detection rates while reducing false positives.
Using SMART:
- Simple: Is the tool seamlessly integrated into radiologists’ workflows, such as PACS and EHRs, and does it minimize cognitive load?
- Modifiable: Can the algorithm adapt to different imaging systems, patient demographics, and evolving clinical guidelines?
- Actionable: Does it provide interpretable, real-time insights that directly inform diagnostic decisions and reduce delays?
- Relevant: Is it targeting a critical gap in breast cancer diagnostics, with measurable impacts on detection accuracy and patient outcomes?
- Trusted: Has it achieved regulatory approvals like FDA clearance and demonstrated transparency, data security, and rigorous validation?
Outcome:
Investors can evaluate the tool’s clinical utility, scalability, and market readiness using SMART criteria to make an informed decision.
10. Conclusion
The SMART framework provides health tech investors with a practical, evidence-based approach to evaluating innovations.
By focusing on simplicity, modifiability, actionability, relevance, and trust, it helps identify technologies with high adoption potential that address critical healthcare needs and align with modern healthcare goals.
Incorporating SMART into your due diligence process enables more confident, strategic investment decisions that drive measurable outcomes and meaningful returns.
Whether assessing a single opportunity or managing a portfolio, the SMART Innovation™ framework empowers you to make informed decisions that maximize impact.
Contact us today to explore how we can support your health tech investment strategy.