Join top executives in San Francisco on July 11-12, to hear how leaders are integrating and optimizing AI investments for success. Learn More
The digital health and health tech drumbeat continues unabated in 2013.
More entrepreneurs, more startups, and more venture funding are coming into the category. Most of these innovators are introducing new products and services for consumers (patients), for providers (hospitals or practices), for health plans (insurers). Employers, especially the self-funded and self-insured ones, have historically been an afterthought – until now.
I can’t tell what is more popular amongst startups now — saying they’re targeting corporate wellness first and foremost, or saying that they have pivoted from DTC to B2B2C through employers. Recent surveys clearly support piqued interest levels, but what does it really mean to sell into the employer market?
Here are five questions a startup should ask before chasing the corporate golden goose.
Understand your customer
Healthcare initiatives are typically the domain of the human resources department, and in particular, the benefits team. The benefits leader is your customer and the employee is the benefits manager’s customer. These individuals come from diverse backgrounds. Some are right out of college and early in their career, others are on a management rotation program within HR, and many are grizzled veterans who have jumped from company to company, moving to larger employee bases. Still others come from medical backgrounds and could be physicians or nurses. There is not one prototypical benefits leader, and the individual is often a reflection of how the company manages and values its workforce. Appreciate them for where they’ve come from and what they aspire to do.
Understand your customer’s organization
Employer health solutions are an enterprise sale and will include the usual myriad of roles that go into an enterprise sales process. You may have a C-suite level introduction (eg, CFO), but that will most likely get you passed to another corporate executive (eg, SVP HR), who will most likely ask her functional lead (eg, VP Compensation & Benefits) to evaluate the opportunity, who will punt to her department lead (Benefits Director), who may ask his subject matter expert (Wellness Manager) to take point.
At some point, people with titles like finance, purchasing, procurement, legal and project managers may show up on the scene. Like Christopher Columbus exploring the organization’s seas, draw yourself a map or an org chart. Every one of these individuals is your customer, and every one of them needs to be bought in and supportive of what you do. Also, appreciate that there is turnover, churn and reassignments in these roles and that your champion may no longer be there at some point in the future.
Understand your customer’s employees.
The first question to ask is the size of the organization. A multinational jumbo-sized employer with 100K+ employees and retirees is a completely different ballgame than a 15-person small business. But size of the population is just the tip of the iceberg. Is it a white collar or blue collar workforce? Is it unionized or non-union? Is it centralized or distributed geographically? Is it in an urban or exurban setting? Are the employees male or female, younger or older, single or married, highly compensated or minimum wage, high level of education or more modest credentials, tethered to a desk or constantly on the go? Is the nature of the work physical? Is it stressful? What are the work conditions like? Are the employees accustomed to a rich benefits plan design or are they under a more consumer-driven health plan?
The list can go on and on, and it’s important to appreciate that rarely do corporate wellness solutions truly “scale” – where scaling doesn’t mean how scalable the technology is, but rather how broadly applicable and usable the solution is to an employer’s population base.
Understand your customer’s existing vendor landscape
Benefits teams administer healthcare to their employees with the operative word being administer. These teams, like all of us, are thinly staffed, overworked, and under top-down pressure to deliver results. All of them would like to be more strategic and more proactive, but the day-to-day often robs them of that luxury. As a result, key vendors become partners and much of the team’s capabilities get outsourced to consultants.
You may think your product is the most revolutionary and game changing solution for an employee’s health, but often, it needs to fit into an existing benefits architecture, and it needs to play nicely with the big boys at the table (eg, health plans). It can’t be understated that benefits consultants like Mercer, Towers Watson, and Aon Hewitt are huge influencers in the decision-making process. It used to be said that no corporate IT manager would be fired for buying IBM — the same could be said in benefits and their relationships with health plans.
Understand how your customer measures success
Here’s where the fun really starts, as I’ve often found there are two key objectives that benefits team strive for.
They need to manage direct healthcare spend (medical, pharmacy, dental, vision, behavioral, short term disability) as well as associated administrative spend (consultants, actuaries, analytics). And they need to ensure positive member (employee, dependent, retiree) satisfaction with these programs and their relationships with the corporation. The first objective is all the talk about managing trend, bending the trend, and eliminating waste – it’s what the finance folks in the organization will hold them accountable for.
The second objective is much softer, but any HR or business leader who cares about recruiting, retention, employee productivity, or absenteeism will get it. The perfect employer health solution demonstrates that it can help the company save money as well as increase employee satisfaction. Note, I did not say that a prime objective was to make your employees healthier – if you think ROI and satisfaction are hard to quantify, try measuring outcomes.
Corporate America is still funding approximately 50% of healthcare costs in the country. Even with the advent of exchanges, that figure may not change dramatically. It makes sense that startups in digital health and health tech want to get their innovations deployed to the masses through the relationships that employers have with their employees (and let us not forget their dependents).
Startups such as Fitbug (activity tracking device), Mequilibrium (stress management), Qliance (direct primary care), Teladoc (telehealth), and Zipongo (nutrition) have employer-focused efforts today, in addition to a DTC channel. It clearly is not as easy as snapping a finger and needs to be thoroughly thought out and resourced, but some startups are finding success pursuing this avenue.
Michael Yang is a Managing Director with Comcast Ventures focused on investing in health tech. He is an investor in Accolade, BodyMedia and Healthline.
VentureBeat's mission is to be a digital town square for technical decision-makers to gain knowledge about transformative enterprise technology and transact. Discover our Briefings.