How Digital Health Startups Can Sell to Health Plans & Secure Adoption
Cameron Jacox is the founder of Rocket Digital Health, the foremost digital health scale consultancy. Go-to-market is hard in healthcare, and we believe that you don’t need to reinvent the wheel to bring your brilliant invention to market. Having helped scale 13 digital health startups, including for 4 years as Chief Growth Officer at Lark Health from Series A to Unicorn status, Cameron & his team work with select startups to bring growth strategy to bear to beat their growth goals and catch their stride.
In a Hurry? Here’s the Summary:
In the case studies presented, several key strategies were employed by digital health startups to secure adoption by health plans. These strategies include:
Demonstrating clinical effectiveness and cost savings: Startups like Omada Health and Propeller Health conducted clinical trials and published their results in peer-reviewed journals to provide credible evidence of the effectiveness and cost savings of their solutions. This helped establish trust and credibility with health plans.
Seamless integration with existing healthcare systems: Companies like Ginger ensured that their platforms integrated smoothly with existing healthcare systems, providers, and electronic health records (EHRs). This made it easier for health plans to adopt their solutions without creating friction or adding complexity to existing workflows.
Focusing on underserved areas of care: Quartet Health targeted an underserved area in healthcare, integrating mental and physical health care, which is often not well-coordinated. By addressing this critical gap, they positioned themselves as a valuable partner for health plans seeking to improve patient outcomes and reduce costs.
Data-driven approach to demonstrate value: Livongo used anonymized, aggregated data to show improved clinical outcomes and cost savings for their platform, making a strong case for the value of their solution. By sharing this data with health plans, they were able to demonstrate the tangible benefits of adopting their platform.
Customization and tailoring to the unique needs of health plan populations: Startups like Livongo adapted their platforms to address the specific needs of different health plan populations, ensuring that their solutions aligned with the priorities and goals of each health plan they partnered with.
Establishing partnerships and fostering relationships: Many of these startups, such as Propeller Health and Ginger, formed partnerships with other healthcare stakeholders, including telemedicine providers, pharmacy benefit managers, and EHR vendors. These partnerships not only enhanced their solutions but also facilitated introductions and built trust with health plans.
Emphasizing patient engagement and personalized coaching: Companies like Omada Health focused on patient engagement, offering personalized coaching to ensure that their digital health solutions effectively addressed the needs of the end-users. By demonstrating high patient satisfaction and engagement, they made a strong case for health plans to adopt their solutions.
7 Winning Strategies for Digital Health Startups to Secure Health Plan Adoption
The digital health industry has seen tremendous growth in recent years, with startups developing innovative solutions to improve patient outcomes and reduce healthcare costs. Securing adoption from health plans is a crucial step for digital health startups, as it can lead to increased revenue and growth. In this article, we will discuss seven strategies that have proven successful for digital health startups seeking to partner with health plans.
Showcase Clinical Effectiveness and Cost Savings
Digital health startups must provide credible evidence of the effectiveness and cost savings of their solutions. By conducting clinical trials and publishing the results in peer-reviewed journals, startups can establish trust and credibility with health plans. Omada Health and Propeller Health are two examples of companies that have successfully demonstrated their solutions' clinical effectiveness and cost savings, leading to partnerships with major health plans.
Ensure Seamless Integration with Existing Healthcare Systems
Health plans are more likely to adopt digital health solutions that integrate smoothly with existing healthcare systems, providers, and electronic health records (EHRs). Ginger, a digital mental health platform, made it easy for health plans to adopt their solution by ensuring seamless integration with telemedicine providers and EHR vendors. This strategy reduces friction and simplifies the adoption process for health plans.
Address Underserved Areas of Care
Digital health startups that target underserved areas of healthcare can position themselves as valuable partners for health plans. Quartet Health focused on integrating mental and physical health care, addressing a critical gap in the market. By offering a solution that improves patient outcomes and reduces costs in an underserved area, Quartet Health successfully secured partnerships with major health plans.
Leverage a Data-Driven Approach to Demonstrate Value
Using anonymized, aggregated data to show improved clinical outcomes and cost savings can be a powerful tool for digital health startups to demonstrate the value of their solutions. Livongo, a remote monitoring and coaching platform for chronic conditions, used this approach to successfully secure contracts with major health plans, showing tangible benefits of adopting their platform.
Customize Solutions for Unique Health Plan Needs
Adapting digital health platforms to address the specific needs of different health plan populations is essential for successful adoption. Startups like Livongo tailored their solutions to align with the priorities and goals of each health plan they partnered with, ensuring a better fit and stronger value proposition.
Foster Partnerships and Relationships within the Healthcare Ecosystem
Establishing partnerships with other healthcare stakeholders can enhance digital health solutions and facilitate introductions to health plans. Propeller Health and Ginger formed partnerships with telemedicine providers, pharmacy benefit managers, and EHR vendors, which not only enhanced their offerings but also built trust with health plans.
Prioritize Patient Engagement and Personalized Coaching
Digital health startups that emphasize patient engagement and offer personalized coaching can make a strong case for adoption by health plans. Omada Health, for example, focused on patient engagement and satisfaction, ensuring that their digital health solution effectively addressed end-users' needs. This approach helped them secure contracts with major health plans.
By adopting these seven strategies, digital health startups can increase their chances of securing health plan adoption and driving growth in the competitive healthcare market. Demonstrating clinical effectiveness, seamless integration, and customization, while addressing underserved areas, leveraging data, and fostering partnerships, are all essential factors in winning over health plans and ensuring long-term success.
Case Studies: Digital Health Companies Selling to Health Plans
Digital health startups can succeed in selling to health plans by demonstrating the value of their solutions, tailoring their offerings to the specific needs of their clients, and fostering strong relationships with key stakeholders. Here are a few case studies that illustrate these strategies:
Omada Health: Omada Health, a digital health startup offering a digital diabetes prevention program, focused on showing the clinical effectiveness and cost savings of its solution. They conducted a randomized control trial, publishing the results in a peer-reviewed journal, which demonstrated that their program led to significant weight loss and improvements in blood sugar control. This evidence, coupled with their focus on engagement and personalized coaching, helped them secure contracts with major health plans, including Cigna, Humana, and Kaiser Permanente.
Ginger: Ginger, a digital mental health platform, prioritized seamless integration with existing healthcare systems and providers, making it easier for health plans to adopt their solution. They established partnerships with telemedicine providers and EHR vendors, ensuring their platform could be used alongside traditional care pathways. By focusing on improving access to mental health care and reducing costs, Ginger secured contracts with major health plans like UnitedHealthcare and Aetna.
Propeller Health: Propeller Health, a digital health startup offering a connected inhaler and digital platform for asthma and COPD management, focused on demonstrating the real-world impact of their solution. They conducted several studies, showing that their platform reduced emergency room visits and improved medication adherence. By emphasizing the positive outcomes and cost savings, they were able to form partnerships with health plans like Express Scripts, a major pharmacy benefit manager.
Livongo: Livongo, a digital health startup providing remote monitoring and coaching for chronic conditions such as diabetes and hypertension, used a data-driven approach to demonstrate the value of their solution. They shared anonymized, aggregated data with health plans to show improved clinical outcomes and cost savings. By tailoring their platform to the unique needs of different health plan populations, they were able to secure contracts with major health plans like Anthem, Blue Shield of California, and CVS Health.
Quartet Health: Quartet Health, a digital health startup focused on integrating mental and physical health care, positioned itself as a valuable partner for health plans by addressing an underserved area of care. They developed a platform that connected primary care providers, mental health providers, and patients, facilitating better care coordination and improving access to mental health services. By demonstrating the value of their solution in closing care gaps and reducing costs, they secured partnerships with major health plans like Highmark and Blue Cross Blue Shield of North Carolina.
Understand the different types of contracting models in digital health.
Understanding the different types of contracting models in digital health is critical to selling to health plans. The type of contracting model a plan uses will determine how much you can charge for your product and what benefits it provides the customer. Common contracting models include:
Capitation. This is a method by which payers contract with providers to provide care for a patient based on a fixed price per person, regardless of the actual costs incurred by that provider during the contract period. It's often used when developing new care delivery systems or managing chronic conditions where there are high costs associated with managing specific illnesses over time (e.g., diabetes).
PMPM Rate or Fixed Fee per Member per Month (FPPMM). A flat fee paid each month regardless of how many patients are seen by providers; these contracts often also include additional payments tied to performance metrics like quality measures or cost savings achieved through improved care management techniques (e.g., an outcome-based payment arrangement).
Avoid being commoditized.
Digital health startups need to be able to differentiate themselves from the competition. There are dozens of competitors, and it's hard for a buyer to choose between all those options. To get healthcare organizations interested in your product, you have to show them why your offering is better than the alternatives.
The first step is to focus on showing that what you're doing is different from what everyone else does. If a buyer sees several companies offering similar products, they may choose not to purchase any of them right away because there aren't enough unique features for the buyer to justify purchasing one over another (that's called commoditization). To avoid competing against similar products, make sure yours stands out from them by showcasing its unique value propositions or how it works differently than other companies' offerings.
Don't underestimate the process and regulatory burden on the health plan side.
When a health plan engages with your startup, there are a few things to keep in mind. First, don't underestimate the regulatory burden on health plans. They have a lot of rules to follow and that can make it difficult for them to work with startups.
Second, don't assume you're the best partner for your customer. Health plans may want to partner with other vendors who can help them set up digital health platforms or develop new products and services. This is especially true if you're an early stage startup that doesn't have all the pieces yet (e.g., experience working with big insurance companies).
Finally, understand that you might need multiple partners on both sides of this equation—the startup side and the healthcare provider side—to succeed in getting these new solutions off the ground successfully!
It may take a while to sell to a health plan, but it's worth it if your product is scalable or targeted at a specific disease state and has proven value.
It may take a while to sell to a health plan, but it's worth it if your product is scalable or targeted at a specific disease state and has proven value. That said, there are still many different stakeholders involved in the decision-making process for your product, including the provider network and payer.
Health plans have a lot of decision makers and processes around buying new products that make them more challenging than other types of customers. When selling to them, you'll want to make sure you're spending enough time on each communication touch point so they can see what your product looks like in action. Health plans also want to know how it fits into their overall strategy as well as how much it will cost them over time.