Why Raising Money for RPM Companies Isn't Always a Good Thing

While RPM has the potential to revolutionize the healthcare industry, starting an RPM company requires careful consideration. One of the most significant decisions that executives must make is how to fund the business. While raising capital may seem like the obvious choice, in some cases it can actually hinder the company's scalability, flexibility and ultimately profitability in the long run.  In this post, we will examine the different approaches to funding a Remote Patient Monitoring company, and how each approach can affect the long-term vision and growth trajectory.

How Do You Scale an RPM Business Without Funding?

One way to achieve this is by securing contracts with health systems or other organizations, which can provide a steady stream of revenue to support growth. These contracts may involve providing RPM services to patients, such as remote monitoring or telemedicine consultations, or developing custom RPM solutions for healthcare providers. By securing these contracts, RPM companies can generate significant revenue without the need for external funding, allowing the leadership team to maintain control over the company's vision and remain agile.

This approach also enables RPM companies to focus on developing innovative products and services that meet the needs of their target market, rather than on pleasing external investors. Furthermore, by relying on internal resources, companies can maintain their independence and flexibility, which is crucial in a rapidly evolving industry such as healthcare. Overall, while external funding can provide RPM companies with additional resources, scaling without it can provide a more sustainable and long-term growth strategy.

Investors Typically Expect Profit Over Long-Term Growth

When RPM companies raise external funds, the founders are essentially giving up a portion of their ownership and control to investors. This can often lead to slower decision-making and misalignment between the company's vision and goals, as investors may have different priorities and perspectives than the company's founders. Additionally, investors typically expect to receive an immediate return on their investments, which may require the company to shift focus from developing innovative products and services to generating profits.

This shift in focus can ultimately hinder the company's long-term growth and development, as it may force the company to prioritize short-term gains over long-term vision. Furthermore, if the business fails to meet investors' expectations, they may pull their investment(s), leaving the company with limited resources and constrained options for moving forward. This can be especially damaging if the company has become heavily reliant on external funding and has not developed a sustainable revenue model. 

Raising external funds also comes with its own set of risks. In many cases, RPM companies may be forced to outsource much of the development process, which can create long-term partnerships that are difficult to break away from. These partnerships may not align with the company's vision or goals and can hinder growth in the long run. Additionally, when funds run dry, the company may be left without the resources needed to sustain operations or continue development.

A More Sustainable Approach to Growth

Bootstrapping, or relying on internal resources, is a viable alternative to external funding for RPM companies. By leveraging existing products and services and monetizing them, companies can grow more efficiently and effectively. This approach allows companies to maintain control over their vision and remain agile, enabling the company to pivot quickly in response to changes in the market. Customer feedback can also be quickly implemented to refine products and services, ensuring that the company is meeting the needs of its target market.

Bootstrapping isn't for everyone, but it is a sustainable approach to building a robust and successful RPM company. By focusing on developing innovative products and services that meet the needs of their target market, companies can build a loyal customer base and generate consistent MRR (monthly recurring revenue). This can in turn be reinvested in the business to support business growth and research & development of new products and services over time. As the company grows, it may eventually become attractive to investors, but by that point, the company will have already established a solid foundation and a proven track record of success.

The Importance of Staying Lean

In conclusion, while raising funds may seem like the logical choice when starting an RPM company, it can actually hinder scalability and profitability in the long run. Bootstrapping, on the other hand, provides a sustainable approach to growth and development. By leveraging existing products and services and monetizing them, companies can scale efficiently and effectively, without sacrificing control or aligning with external investors' interests. By staying lean, focusing on customer feedback, and developing innovative solutions, RPM companies can build a sustainable business that meets the needs of patients and the healthcare industry as a whole.

To find out more about how your clinic can start and scale its own Remote Patient Monitoring service, and how Accuhealth can help, visit accuhealth.tech