How can startups sell products to US payors?

The U.S. healthcare market, particularly health insurance, is vast, complex, and competitive. Large health plans such as the Blues, UnitedHealthcare, and Aetna cover millions of members and wield significant influence over which healthcare products and services their providers offer. For a startup, breaking into this space can be challenging but not impossible. Success requires a combination of strategic partnerships, regulatory alignment, and a deep understanding of how payors operate.

Having worked both on the payor side and startup side for the last three decades I will share with you how a startup can successfully sell its product or service to U.S. payors.

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1. Understand what the Payor Priorities and Pain Points are

To sell to U.S. payors, it is essential to understand their needs, priorities, and the pain points they are actively trying to solve. Common concerns for health plans include:

• Cost containment: Payors seek ways to reduce operational costs and healthcare expenditures, particularly on chronic diseases and expensive treatment protocols. It is not an exaggeration to say that 10% of the members in a health plan account for 80% of the payors costs. Having a product or service that can help a payor manage members with chronic conditions will always get an interested ear from a payor.

• Improved health outcome: Payors are increasingly measured by their ability to keep patients healthy and out of the hospital. Solutions that improve patient outcomes, reduce readmissions, or manage chronic conditions can be attractive.

• Regulatory compliance: Products or services that help health plans navigate complex regulations such as HIPAA, Medicare Advantage, or the Affordable Care Act are valuable. In the last two decades the U.S. healthcare system has gotten extremely complex from a regulatory standpoint. Having a solution that can assist in this area is very attractive to payors.

• Patient/member satisfaction: Improving member engagement and satisfaction is critical for maintaining market share in a highly competitive industry. This is no more relevant than in Medicare Advantage (MA). Payors are competing with each other to hold onto members and avoid members switching (Churn) during the yearly open enrollment period. The longer a payor can hold onto a member the more opportunity a payor has to manage that member more efficiently thus leading to better health outcomes and a better financial outcome for the payor. There are huge financial opportunities for payors in MA from a Medicare STAR Ratings perspective. Having a product or service that can assist in this area or help a payor gather information effectively and efficiently for the yearly CAHPS surveys that all MA plans must administer is extremely attractive to payors. Many payors while they might not admit it struggle to get good data that can be used to show the quality of the care their members are receiving.

• Technology transformation: With the rapid digital transformation of healthcare, payors are looking for innovative technologies that streamline workflows, enable data analytics, and provide telehealth or remote monitoring solutions. Tailoring your solution to meet these needs will make it much easier to secure the attention of payors.

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2. Ensure Regulatory and Compliance Readiness

U.S. payors operate under stringent federal and state regulations. Any product or service must adhere to regulations such as the Health Insurance Portability and Accountability Act (HIPAA), HITECH Act, and rules set by my former employer the Centers for Medicare and Medicaid Services (CMS) if the product is targeting for example the traditional Medicare or MA or Medicaid populations.

A startup company must ensure:

• HIPAA Compliance: If the solution involves handling protected health information (PHI), it must have robust security and privacy features to comply with HIPAA.

• FDA Approval (if applicable): If your product is a medical device or a digital health tool that requires FDA oversight, securing approval can demonstrate credibility and trustworthiness to payors. Depending on the product or service this can be a costly and time-consuming process for the startup, so it is essential that the startup approach the FDA approval process with a clear understanding of the process, costs, and timeline involved.

• Adherence to Value-Based Care Models: Payors are increasingly moving toward value-based care, meaning they are incentivized to improve outcomes rather than pay for the volume of services. If a startup can use its product or service as something that can assist in this area regardless of size the startup it will get the attention of payors.

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3. Demonstrate Clear ROI and Outcomes

One of the first questions a payor will ask is what evidence the startup has that its product or service will either reduce costs or improve patient outcomes. Startups can do this by presenting:

• Clinical Evidence: Provide real-world data or clinical trial results demonstrating the effectiveness of your product. For example, if your solution reduces hospital readmissions, provide measurable statistics that illustrate this.

• Cost-Benefit Analysis: Clearly show how your solution saves money, either by reducing operational costs, avoiding penalties (such as those related to hospital readmission), or improving efficiency.

• Pilot Programs and Case Studies: Offering to start with a small pilot program where results can be tracked and reported and can mitigate the risk perceived by payors. Use case studies from other partnerships to provide proof of your product’s success in comparable settings.

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4. Build Strategic Partnerships

Partnering with other companies or stakeholders in the healthcare ecosystem can help small companies gain credibility and access to larger networks. There are two key areas of partnership to consider:

• Technology Partnerships: Collaborating with established healthcare IT vendors (e.g., Epic or Cerner) or data analytics companies can lend credibility to your product and increase its visibility to payors.

• Provider Networks: Forming partnerships with hospitals, physician groups, or even Accountable Care Organizations (ACOs) already working with the payor can make it easier to demonstrate value. Payors often rely on feedback from their provider networks when evaluating new products or services.

5. Develop a Strong Value Proposition for Health Plan Executives

When pitching to a payor, your message must be clear, compelling, and tailored to the executives who make purchasing decisions, typically Chief Medical Officers (CMOs), Chief Information Officers (CIOs), or Chief Innovation Officers. To capture their attention, your pitch should:

• Focus on Outcomes: Describe how your solution aligns with the health plan’s goals of improving outcomes, reducing costs, or driving patient engagement.

• Leverage Data: Use metrics, studies, and case results to back up your claims. Decision-makers need tangible proof that your product works.

• Show Scalability: Payors need solutions that can scale across thousands or millions of members. Be prepared to discuss how your product can be deployed on large scale if the opportunity exists.

• Emphasize Integration: Most U.S. payors have complex systems in place for claims processing, patient management, and reporting. Demonstrating that your product can integrate smoothly with existing systems is crucial.

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6. Navigate the Health Plan Sales Cycle

Selling to payors involves a longer, more complex sales cycle than selling to individual providers or smaller organizations. The process often involves several layers of decision-makers and requires multiple rounds of evaluation. Here is how to navigate this:

• Get Buy-In from Multiple Stakeholders: Ensure you engage not only with C-suite executives but also with clinical and operational teams. These stakeholders often influence the final decision and are more concerned with how the solution fits into their daily workflows.

• Patience and Persistence: Payors can take several months or even years to adopt new technologies or services, given the regulatory implications and large-scale impact of changes. Maintain regular communication and offer ongoing support throughout the evaluation process.

• Be Flexible on Pricing: Consider alternative pricing models such as pay-for-performance, risk-sharing agreements, or pilot-based pricing that tie compensation to measurable outcomes, which can make the purchase more attractive.

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7. Leverage Trade Shows, Industry Events, and Health Plan Forums

Attending healthcare conferences, such as the AHIP (America’s Health Insurance Plans) Institute or HIMSS, can provide networking opportunities with key decision-makers from payors. These events often host networking sessions, panels, and exhibits where you can engage directly with payor leaders. In addition to in-person events, participating in virtual health forums or webinars can further expand your reach.

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8. Secure Venture Capital or Strategic Investment

Many payors, especially large ones, have venture capital arms (such as Cigna Ventures, UnitedHealth Group’s Optum Ventures, and Kaiser Permanente Ventures). Securing investment from one of these entities not only brings in funding but can also facilitate closer partnerships with the payor itself. This creates a win-win situation where the payor has a stake in your success, increasing the chances of adoption.

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9. Highlight Innovation and Unique Capabilities

Lastly, payors are constantly looking for innovative solutions that give them a competitive edge in the market. If your product or service incorporates cutting-edge technologies like artificial intelligence, telehealth, predictive analytics, or blockchain, be sure to highlight how these innovations can transform their offerings and help them stay ahead of industry trends.

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In conclusion, selling to payors is not a short-term goal but requires a strategic, multifaceted approach. For a startup, the key lies in aligning your solution with the health plan’s needs, demonstrating strong ROI, ensuring compliance with regulations, and building the right relationships. With persistence, strategic planning, financial resources, and a deep understanding of how payors operate, startups can break through the barriers and succeed in partnering with payors creating a win-win situation and allowing a startup to realize or exceed its potential.