Leading The Way For Digital Transformation In Employers
In partnership with the Digital Health Institute For Transformation (DHIT), we held the first in an upcoming series of events dedicated to the entrepreneurs, academics, investors, and operators who are building the companies and doing the research that will ultimately lead to improving every corner of our healthcare system.
The topic of discussion for our first panel centered around employer distribution. The fact is, nearly 170 million Americans receive their health insurance through their employer. Countless polls demonstrate that over 50% of employees rank health insurance as a top reason for staying at a job. However, the cost of providing health insurance to employees has never been so staggering. In fact, the average annual family premium for a health insurance policy in the US is over $22,000! These factors make the employer health insurance market an attractive marketplace for digital health tools looking to reduce costs while improving member experience. However, the employer market can be very difficult to navigate. Here are some tips for digital health companies looking to grow in the employer space.
Understand what motivates employers. I once had a mentor and long-time CEO tell me “if you’re selling me a product that will make my employees happy and save me money, I will buy it every time. And if all you do is make my employees happy, I’ll probably keep it.” Employers are obviously motivated to generate cost savings, but cost savings comes in many different forms. Reducing overall healthcare costs takes time. In the meantime, you have to deliver a better employee experience to create small wins, testimonials, and success stories while you drive user adoption.
Don’t overstate your ROI. To piggy-back on the first point, many digital health companies lead with savings as their main value-prop. While many digital health solutions have potential to create meaningful savings for employers, most also rely on user adoption to achieve it. Consumer behavior change is hard - especially in healthcare where the system is intimidating, the stakes can be high, and the issues can be emotional. If your value-prop hinges only on cost-savings, you set yourself up for failure even if you deliver a fantastic customer experience for your users.
Know the players. And while you’re at it, start an acronym tracker. There are many different parties that come together to create an employer health plan. Insurance brokers, consultants, third-party administrators (TPAs), pharmacy benefit managers (PBMs), general agents (GAs), professional employer organizations (PEOs)... and the list goes on. Depending on your market segment, location, industry targets, etc., you’ll encounter many different players that can be helpful or can be gate-keepers.
Be creative with your pricing. And be open to pilots! Over the past 5+ years employers have spent the equivalent of a cup of coffee per employee per month on so many different solutions that many have reached a point where they are spending more like a bar tab a month on each employee. More and more employers and brokers are looking to point solutions to get creative with their pricing. Don’t be afraid to put your money where your mouth is and enter into shared-risk contracts because you’re beholden to a SaaS style pricing strategy. In the end, great products that deliver on an improved member experience and cost savings will continue to win.
Be broker friendly. Again and again I hear from digital health leaders that their employer sales strategy has run into a roadblock with brokers. You find a great prospect, get a meeting with HR/finance, and then… they introduce you to their broker. Health insurance is the second largest line item in most employers’ budgets. As such, they turn to experts (brokers/consultants) to advise them on strategies that have a huge impact on their business. While brokers can be gatekeepers, they can also be fantastic allies. Invest in your value proposition and test it with brokers. Their job is to know the broader market and their feedback can be tremendous in how you develop your positioning. A strategy that I’ve seen be successful is to develop a broker advisory group that taps into their expertise to provide valuable product and GTM feedback on how to set yourself apart.
In the end, achieving success in the employer market takes patience for digital health start-ups. But with half of America relying on their employers for their healthcare coverage, it is an important market for any digital health company with growth aspirations. Great individual results don’t always translate to success in the group world, so make sure you invest the time into understanding the market and tailoring your product positioning and measurements of success. Consumers, providers, employers, payors, and the government all stand to benefit. In order to accelerate the digital transformation, we need to create community, best practice sharing, and collisions that lead to real outcomes.
