MATTER & Kellogg launch new course to help students learn the business of healthcare entrepreneurship

As a business, healthcare is weird.

In other industries, if you produce a product that solves a problem, someone will buy it. Of course, you have to play with all the things that you learn about in business school, such as pricing, promotion and product refinements. And it’s never a sure thing: Someone may not be willing to pay enough for it. You might not be able to get your message out. Your competition may eat you for lunch.

All those factors come into play in healthcare, too. But in healthcare you have to also deal with the fact that while your product may solve a problem — your product may improve health and even make doctors smile in the process — there may not be a viable business model because of the cockamamie way we pay for healthcare. The business model of healthcare distorts the market so that the normal economics of business don’t necessarily apply.

If you’re going to build a healthcare business, you have to first learn the business of healthcare. You have to learn how money moves through the healthcare system — where it flows, pools and eddies, and where there are opportunities to tap into the stream to create an economically viable business that not only solves a healthcare problem but does so in such a way that will also allow you to create market demand.

Too many entrepreneurs go into healthcare thinking it will work like other industries. They focus on their product or technology, and figure they’ll address the business model later on in the process. Or they make assumptions that healthcare will work like other industries. Unfortunately, that means too many entrepreneurs don’t build viable healthcare businesses.

In order to help aspiring healthcare entrepreneurs, MATTER has teamed up with Northwestern University’s Kellogg School of Management to create a course that will help business school students better understand the nuances and challenges of building a healthcare business.

In this 10-week course, which kicks off this week, students will first learn how pharmaceutical, medical device and digital health businesses work. They’ll learn about the business models of each segment, as well as trends in financing, regulatory considerations and how new products get to market.

The second half of the course will be experiential: Teams of students will be paired with early stage MATTER startup companies to help the businesses sort through key challenges. Students may focus on helping the entrepreneurs determine if they have the right business model, if they have identified the right customer segment or if they have identified the right partners. In doing so, the students will experience first-hand some of the challenges of building a healthcare enterprise — in ways that just wouldn’t be possible in a classroom.

The course is being developed and led by two Kellogg professors and MATTER board members with deep healthcare experience: Pete McNerney and David Schonthal. In addition to leading the classroom sessions, they will also mentor the student teams as they work through their projects with the startup companies. Demand for the course has been high: Twice as many students and startups applied as there are spots.

This course will be an experiment, which is consistent with one of our core values at MATTER: “never stop experimenting.” No doubt we’ll learn a lot in the process about the right types of students, the right types of startups, the right projects and the cadence of the course. Our goals are to help students better understand the nuances of healthcare entrepreneurship, help companies solve complex challenges, and help us learn how to do this even better next time.

We hope this course will energize these students to further explore healthcare entrepreneurship and that they’ll leave this experience even more inspired to do something that matters.