Why Your Next HealthTech CTO Might be New to Healthcare

Healthcare technology continues to be one of the fastest growing sectors fueled by unprecedented capital inflow. In 2021, digital health companies raised $57.2B USD across 2,930 deals, a 79% increase from the previous year¹. In 2022, despite some consolidation and slow down, investments are still strong, paralleling the current market climate. Given this growth, it’s no surprise that there has been tremendous talent activity in the space. Historically, healthtech organizations have hired technology talent from within the healthcare sector. However, in many other growth sectors, we see talent join from other industries..

So, what’s happening in healthtech? Is the sector still prioritizing domain experience over customer-centered design,  technology, and leadership skills that healthtech leaders are required to have?

Our analysis suggests that it is not, and in fact, sometimes healthtech companies are better off looking outside…

At both newly crowned unicorns and public healthtech companies with a market cap of $350M USD or more, top technology leadership often comes from other sectors. 53% of chief technology officers at leading healthtech organizations were at a technology-first organization immediately prior to appointment. Furthermore, a whopping 87% of the same chief technology officers worked at a technology organization at some point in their career. A similar analysis completed a few years ago would have yielded different results - the majority of these leaders have been appointed since 2020. 

But why have healthtech organizations begun to hire their tech talent from outside the sector?

Through recent conversations with several healthcare technology C-suite leaders, RRA identified the top three reasons for considering top technology leadership from outside the industry.

1. Increased customer centricity

Customer-centricity tends to be a core tenet of tech-first organizations. We analyzed CTO alumni of Uber, Stripe, and Amazon – all companies whose successes are often measured against a positive user experience. The objective of many healthtech organizations is to alleviate the woes that many patients and providers face within our current healthcare system and existing solutions. Technology leadership with world-class, customer-first experience can help healthtech organizations achieve such objectives.

2. A new perspective on relevant regulatory expertise

CTOs that join healthcare organizations from other highly regulated industries like financial services or fintech bring a deep expertise and different perspective on regulatory and security matters. These executives pair customer-centricity with an added understanding of the importance of data privacy. Executives from regulated industries already know how to design products with user data security in mind.

3. Comfort with complex technical systems

Healthtech companies may hire a CTO from another sector to find talent familiar with highly complex systems that must integrate with legacy technology. For example, a leader from a high-growth SaaS organization likely possesses great technical knowledge around interoperability and large volumes of data that is extremely relevant for the healthtech industry. Highly technical skills are critical for organizations dealing with large volumes of data and systems that require innovations and integrations.

The new healthcare technology leader profile

To better understand the profiles of these CTOs, RRA also examined their functional backgrounds. 81% of these leaders have a functional background in software engineering, and often started their careers at a large technology firm as a software engineer. 40% of leaders have product management experience as well, and often progressed from software engineers into product managers over the course of their careers.

The healthtech CTO of tomorrow

Healthtech organizations can differentiate themselves by sourcing talent that brings perspective from an industry with innovative tenets that healthcare aspires to, such as consumer technology or fintech. Because a chief technology officer is so critical to the success of a healthcare technology organization, it is imperative that individuals responsible for filling that role know where to source the best talent. Healthcare sector experience is no longer the most important factor in determining if a candidate is a good fit; instead, the CTO of healthtech’s tomorrow should bring customer-centricity, exposure to a regulated industry, and complex technical experience.

Authors

Noël Auguston leads Russell Reynolds Associates’ global Healthcare Technology practice. She is based in Boston.

Hope Cummins is a member of Russell Reynolds Associates’ knowledge management team, focusing on Healthcare Technology. She is based in San Francisco.

References

^{1 CBInsights. State of Digital Health 2021 Report. https://www.cbinsights.com/research/report/digital-health-trends-2021/}