The aging of the Baby Boomer generation has long loomed over the American healthcare system, which is simply not prepared to handle the extra demand of this huge cohort becoming elderly. And COVID put a magnifying glass on how important this issue becomes in criss—at least half of states faced shortages and a third of hospitals ran out of staff.
Nomad Health helps providers around the country fill urgent staffing needs, and provides the tools, information, and support to make travel nurse assignments more appealing. It now is reaching more than 100,000 clinicians and 4,000 healthcare facilities.
The fast growth is in part attributable to the many years Alexi spent as a physician jotting down notes on the problems that needed solving, long planning to bring his medical degree into the startup world. The issue of staffing eventually presented itself as the most urgent. “I realized that it was a big problem, that had a very interesting potential solution and would have a positive and large impact on the broader healthcare system. It seemed like I couldn't not do it,” he says.
Primary’s Sam Toole sat down with Alexi to talk about how healthcare founders need to solidly define a business model from day one, how he brings together a team of industry insiders and outsiders, and the importance of picking a big, hairy problem to solve.
See a deeper dive on our new digital publication, First Edition.
What were some of the things you did in your early days as a founder that were informed by your on-the-ground experience as a physician?
Well, I think first and foremost was actually choosing a problem to solve that was a real problem. Based on my own lived experience as a physician, I was able to smell my way to a real challenge and also think about what a real solution would be, because I would be the consumer of that solution. In that regard, I felt very fortunate to have that background and experience that, I think, put me past first base with starting a company.
Then in those early days, as much knowledge and experiences I had from my own professional life and ten years in the field, there's still a lot you don't know. So my network was very valuable to me. I was able to reach out to a lot of people to ask early questions, do early user interviews, make early sales, test things small and big, "What should the name of the company be? Is this a compelling business proposition?" It was very helpful to be able to lean on a network that was really just a phone call away and people that I had a long history with.
One question that comes up a lot with enterprise health specifically, is how to navigate the long sales cycles. What were some insights you went in with? What are some things that you learned along the way?
I had the benefit of knowing what the third rails of healthcare were. I really wanted to pick a problem with a solution that avoided a lot of those more challenging aspects of healthcare. Some of the big ones are: dealing with protected health information, dealing with payers, and trying to sell to enterprises. We were very fortunate in definitely avoiding the first two, then even on the enterprise sales cycle, we were trying to sell a better version of something that people already bought.
We were not trying to say, "Here's something you've never heard of before." We were saying, "Here is something that you do already, that I can demonstrably improve for you because of A, B, and C. Give us a shot. By the way, you don't have to rid yourself of your current solution. We'll go alongside, just put us in a head-to-head match." That helped us cut the enterprise sales cycle substantially. It's still hard. You have to find the right decision-maker, you have to get them to even talk to you. Then you have to convince them to even give you a shot. So we were navigating a couple months long cycle as opposed to a more common 12 to 18 month healthcare sales cycle.
No matter how short your sales cycle, it’s still very hard to successfully sell in healthcare because it’s just such a complex meshwork. But if you have a very clear value proposition, a very clear way to pitch that to the decision-maker, hey, you're in a decent spot. So my advice to any healthcare founder, you really do need to think about how you're going to navigate the sales part of the problem before you start the company.
There are so many nuances in healthcare. What were some of the other aspects of navigating those nuances that you brought into your team, or just your overall approach?
Yeah, there are a lot of challenges, forget about for a startup, just for any company in healthcare. I think there are a few things that are vitally important. Number one is that you really need to know how you're going to make money. This is not like consumer internet, where you're like, "Okay, let's go get a billion users, and then we'll figure out how to make some money." You need to earn your keep in healthcare. In order for you to make money, you need to show how you are valuable to someone who will buy your services.
A lot of healthcare startups ignore that part of the problem. They say, "Well, this is really a better way. This check-in process for the clinic is so fantastic." I agree it's better, but it doesn't matter if no one wants to pay for it. If it's not clear how you're going to monetize your product, you're dead in the water. I hate to say it, but it is true. I mean, healthcare is a business, and it is brutal. You need to make sure that you have a clear business model from the very beginning.
The other thing I'd say is, because of the nuances of healthcare, it is important that at least one, hopefully multiple, people on your team have some real-world experience in healthcare that’s quite relevant to the particular problem you are facing. Healthcare is not just healthcare, it is 17 different unique industries. There's clinical practice, there's life sciences and biotechnology, there's pharmaceuticals, there's insurance, there are so many different things. Not all healthcare experts are expert in all parts of healthcare. Bringing on knowledge that is very relevant to the nuances of your specific sector, your specific problem set is critical in the early days.
It's also important to have people who are divorced from that knowledge. One of the greatest problems of healthcare is that it has so much inertia and there's a lot of sort of received knowledge about, "This is just the way that we do it." It's very hard to make a disruptive change, if you are so committed to and have grown up in the environment that you were trying to disrupt. To have that person who can come in at the problem sideways is also valuable.
You want to have both sides, the expert and the innovator.
Anything that you feel like you've learned in building your team to get those two sides of the equation to fit together well?
When you build your team that way, you're going to end up with people with a disparate set of previous experiences, which is intentional, right? You also need to be able to bring all of those people along on the same journey. From a very early stage, it is important to define why you exist, what you are trying to accomplish, and how you are going to do it. Setting that mission and vision and values very early on is important. In the early days of any startup, you don't know exactly everything that you're going to be doing. You can place that pin in the ground far down the road and say, "This is where we're going. We're going to have a circuitous pathway there, but here is our touchstone. This is why we exist. This is what we should look like in order to achieve that mission. Here are some of the things that we will and will not do along the way."
Creating that sort of mythology for the team is extremely important early on, when you're going to have more failures than successes. Then it becomes also very valuable when you're a large organization and you can't transfer knowledge by osmosis. You need to have a very crisp and clear communication strategy with your team, so that everyone knows how their work links up with the broader mission, how their leaf connects to the branch, which connects to the trunk. That kind of stuff is worth investing in very early on.
Besides all of the great advice that you've already shared, is there anything else that, if you're talking to a new healthcare founder, you want to make sure you're passing along?
I don't know if this is unique to healthcare founders, I think it would just be to any founder. Almost everybody you talk to is going to say that your thing will not work. Before you decide to jump on the journey, you have to think about two things. One is, what is your personal resolve? Do you have that ability to put the blinders on, put your earmuffs on, and pursue this goal? In other words, do you just have that grit? Can you take the blows?
And pick a problem that has a lot of angles to it. Pick something that's hairy and complex. If it's something narrow, it's probably not an exciting long-term business. Healthcare companies can be wooed into solving small problems or narrow problems because everything in healthcare is so big. I mean a “niche” market in healthcare can be a $5 billion market. That's huge, but it may not be enough of a problem. There may not be enough scope to the problem; it might not be worth spending five to 10 years of your life trying to solve. If it's so narrow, the problem may not exist in five years, just by changes in regulation, changes in the way the payers work, changes in the way that even science works. Pick a problem that you can continue solving for a long time. I think that's how you build a great company, potentially a generationally important company.
And why has New York City been a great place to build Nomad Health?
The New York City to Boston corridor is probably the most important healthcare and biotechnology corridor in the entire world. Some of the smartest people doing the smartest work in healthcare, both on the delivery side and on the life science side, are within 150 miles.
There's of course a deep finance industry here, too. You've got lots of venture and private equity firms, and obviously for later stages, public markets are all really centered around here. This is a strong point on the map. And New York is also a center for so many other industries, so you have access to a truly world-class talent pool across so many sectors.
All of those things are really conducive to starting a great company here. It really shows the power of the concept of a city, especially an amazing one like New York. You can just hop on a subway and be in touch with some of the best people doing the best things in your industry. It's a fabulous place to start a company. I just love New York City in general, and I think that's actually just a great draw for most people. There's just a lot of good reasons to want to live here. Why not be in a place where people want to be?
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