Four Ways to Land Your First Health Plan Customer

Navigating the pathways to land your first customers in digital health requires more than a product and mere enthusiasm; it requires strategy, finesse, and an understanding of customer needs. Especially if that customer is a payer.

And in a space where trust and credibility is paramount, how does a newcomer initiate the flywheel?

I talked to some of my favorite digital health founders from my portfolio— from Amino, Brightside, Cityblock, and Omada— to hear how they landed their first payer customers. And in this article, I share some key learnings.

B2B2C (and B2C2B) healthcare business models

First off, who is the customer in digital health? This question may seem straightforward, but in healthcare nothing is straightforward 🤪. Often, the person who uses your product or service is not the one who pays for it. Or, we have a hypothesis about who the customer is, and find out they have no interest in paying.

In some digital health startups, the users are the patients or healthcare consumers, while the customers — those who foot the bill — are often a separate group entirely. These can be self-insured health plan sponsors, insurance companies, employers, or other healthcare organizations. 

According to Rock Health, B2B2C (or B2C2B) startups made up about a third of all funded digital health companies in 2017.

This acronym represents a business model that includes both business-to-business (B2B) and business-to-consumer (B2C) relationships.

• Business-to-Business (B2B): This refers to transactions between businesses. It involves selling products or services from one business to another.

• Business-to-Consumer (B2C): This involves selling products or services directly to individual consumers.

The B2B2C model combines these two channels, meaning that your solution must cater to two distinct but interconnected groups. It must appeal to consumers (the C) in terms of usability, features, and value it brings to their healthcare journey. Simultaneously, it should present clear benefits to the payers (B), whether it's cost savings, improved health outcomes, or increased efficiency.

Usually B2B2C refers to both B2B2C and B2C2B, but there is a bit of nuance here. In B2B2C, the business customer (e.g. the health plan or employer) oversees the end user. An example of this is an employer offering Gympass to its employees. The employer pays for the service and includes info about signing up in employee onboarding, newsletters, and in flyers in the break room.

In B2C2B, the startup acquires the customer, but a third party still pays. An example of this is ZocDoc, which allows patients to book medical appointments, and clinics pay for pay for each booking plus an annual fee for being listed on the platform.

Of course, many startups end up with a blended model. You may end up doing B2C and B2C2B (like Brightside), or B2B2C and B2C2B (like Kindbody).

As a founder, this distinction is helpful for shaping your product development, marketing strategy, and customer acquisition efforts. You'll need to communicate the value of your solution differently to users and payers, and you'll also need to understand their unique needs, pain points, and decision-making processes.

It also means that your sales cycle might be longer and more complex, as you'll need to convince not just the end-users of the value of your product, but also the organizations that will pay for it.

Four strategies for landing your first health plan customers

Selling to health plans or employers involves notoriously long and brutal sales cycles. That is because these entities often have stringent requirements, long decision-making processes, and complex purchasing systems.

As Toyin Ajayi, Co-founder & CEO of Cityblock Health, explains, “We have real human beings, with real lives, real needs, and a regulatory framework that surrounds their care. The cost of failure could be catastrophic, if it involves compliance or patient safety breaches, and/or the human cost of unwinding a relationship. So I think many purchasers in healthcare understandably take a conservative approach and bias towards no, particularly when contemplating a partnership with a new or unproven company. As a result, deal cycles are long and tortuous, and there are more individuals with veto rights than there are green lighters within most organizations”.

“The cost of failure could be catastrophic, if it involves compliance or patient safety breaches, and/or the human cost of unwinding a relationship. So I think many purchasers in healthcare understandably take a conservative approach and bias towards no, particularly when contemplating a partnership with a new or unproven company.”

So how do you get started in B2B2C sales?

1. Leverage your network

Often, the first port of call when seeking your first customers is your immediate network. Founders tend to work in areas they know well, and come with a network of valuable contacts from their past work in the space. But if your network is limited, you’ll want to surround yourself with others who have professional connections in your space. You should be asking your investors, mentors, and early employees for the right introductions. And make new connections on your own at trade shows or even on social media.

David Vivero, Founder & CEO of Amino, offers an excellent example of this. The customers at Amino are self-insured health plan sponsors and health plans. Even though he was new to working in healthcare when starting Amino, he utilized his investors, board, and other CEOs in his network to connect him with early customers. The underlying trust and familiarity of these relationships often make them more open to your value proposition.

One great piece of advice David offered is that CEOs should always make the first sales, “Do not hire sales people until you're feeling like you can teach someone else what works and what doesn't”.

Another great piece of sales advice? Sean Duffy, Co-founder & CEO of Omada Health always tells entrepreneurs to never call their business a startup: “At Omada, we were a digital health ‘company’ from day Zero.”

2. Use data and research to demonstrate value

Brad Kittredge, Co-founder & CEO of Brightside has always been obsessed with data. Brightside began with cash pay and direct demand, transitioning to payers by demonstrating the results of a "pilot" these payers didn't know they were part of.

He explains: “Once we had at least 500 people from a given payer who had completed at least 12 weeks of treatment, we went deep in analyzing the data: How quickly we served them, how well we engaged them, the outcomes we were able to deliver, and the ratings and direct feedback they provided. We invested a lot of time and resource packaging this up into a 40 page report with extensive data visualization.”

This data-driven approach effectively builds credibility and trust, and underscores the power of data in validating a digital health solution. Their obsession with evidence continues. Brightside has now published 10 papers on their methods and outcomes.

3. Offer incentives for early customers

In the early stages, it can be beneficial to offer incentives that lower the barriers to entry for prospective customers.

Amino, for instance, gave discounts and delayed payments in return for customer references and feedback. This approach serves a dual purpose: it incentivizes customers to try your product and provides you with valuable insights to refine your offering.

But you have to be strategic about this approach. Toyin Ajayi warns: “I've seen so many early stage companies take major discounts on pricing or unfavorable terms all for the shot at winning that marquee customer — and they end up wasting precious time, overfitting their product and entering into non-accretive financial constructs that they'll then have to unwind eventually”. She instead recommends founders focus on smaller, more nimble organizations where they can quickly build real relationships with the key decision-maker, and gain early traction before trying to secure the bigger players in the ecosystem.

4. Know your internal champion, but remember that people leave jobs

Sean Duffy of Omada Health emphasized finding internal champions passionate about your cause in a risk-averse market.

“There's no shortcut to your first customers,” he said, “other than finding internal champions that are passionate about the cause and the outcomes you're hoping to achieve. All of our first customers viewed the current state of metabolic care in the U.S. as an injustice and cared more about new solutions to that problem than their internal career advancement.”

Internal champions are game changing, but keep in mind that people leave jobs all the time. Building your entire relationship on a single champion might risk stability if that person leaves or shifts their focus. So while identifying and nurturing internal champions is key to early success, simultaneously broadening relationships and integrating yourself within different layers of the organization can provide a more resilient connection, ensuring long-term partnership and growth. It's about striking a balance between the enthusiasm of a dedicated advocate and the need for a sustainable, broad-based engagement.

You’ve got this

The complexity of digital health, with its web of users, payers, and stakeholders, mirrors the human body itself—a system of interdependent parts functioning as a whole. We can learn a lot from those who have scaled companies in the space. Some key take-aways:

• Buyers want at little risk as possible. Green flags include funding, strong advisory relationships, and calling your business a “company” instead of a “startup”.

• You have to build credibility and trust brick by brick. Take time to demonstrate value. Bring on experts in the field.

• Be capitalized enough to support long sales cycles and pilots for longer than you think. Just contracting will likely take months of time and thousands of dollars.

• CEOs always make the first sales. Do not hire sales people until you're feeling like you can teach someone else what works and what doesn't.

• Lower the barriers for early customers, but make sure you aren’t making unsustainable agreements.

• Focus on smaller, more nimble organizations where you can quickly build real relationships with internal champions and key decision-makers, before going after bigger players in the ecosystem.

Like the practitioners of medicine, founders must embrace both the science and the art of the job. Recognize that you aren’t just selling a product but contributing to a larger narrative of better healthcare for all.

Thank you David, Brad, Toyin, and Sean for contributing to this piece. To learn more from these brilliant founders, follow them on X!