Getting past the pilot: Tips for entrepreneurs partnering with health plans

This article was originally published here

Health systems and insurers are actively seeking out technologies and innovations that drive change in the healthcare system, many focusing on solutions that make healthcare a more seamless experience for people to access and navigate. Given that healthcare represents 17.8 percent of the U.S. economy, health plan investment in innovative startups that create efficiencies and enable better patient outcomes should continue for the foreseeable future.

However, while investments are being made, many health plans are challenged to launch and scale commercial partnerships with these innovators after the closing dinner.  Some are stuck in a health plan’s procurement spin cycle, or unable to grow beyond an initial pilot, all of which can be a life-or-death challenge for a startup company, only adding to the underlying investment risks.

For health plans’ strategic investment programs to mature, they must resolve the challenge of bringing innovations to scale for the benefit of broader membership.
Ultimately, the burden falls to entrepreneurs to decide where to invest their time and limited resources. I have observed decades worth of partnerships, many of which have not lived up to expectations. Entrepreneurs should consider the following when evaluating potential strategic partners and investors to increase their chances of success:

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Do they have a long-term vision?

Every company has their mission on their website, but is their business structured to support their vision? Not all health plans are aligned with their often transformative-sounding mission statements, and their annual business objectives are not always driving toward marketplace disruption. Entrepreneurs should really examine whether the plan and its leaders are incentivized to implement innovations – or just keep doing what they do.

Right room, wrong people

Time and time again entrepreneurs make agreements with health plans to fund a pilot, the teams get to work, and as the pilot wraps up, no long-term agreements are made. At times technology and time spent are wasted, and entrepreneurs are left scratching their heads.

To ensure a long-term partnership, entrepreneurs must ensure they’ve established direct relationships with a cross-functional team inside the health plan — including an executive sponsor (with real budget and decision-making authority) and leaders from other business units touched by the startup’s technology. Ensuring these key players are making decisions, and offering input from the start will lead to successful partnerships.

Adapt. And then adapt again.

Every health plan has their own processes and systems. Some require procurement approvals in advance, others after some work has been accomplished. Some parties may require roundtables and constant check-ins, while there are organizations that want progress reports at the end of each quarter. In every aspect of health care, no size fits all. Entrepreneurs must be nimble and adapt to each plans’ internal processes and requirements.

Are they tire kickers?

Not every health plan has deep experience in partnering with startups – and it is clear that few of us get it right the first few times.  There are many lessons for organizations to learn about aligning incentives, driving project budgets, making systems integrate and data sharing easier. Entrepreneurs must examine the plan’s track records: Do they stick it out for the long term, or are they tire kickers? Can they execute on the partnership once they make the investment? If entrepreneurs find stage-agnostic portfolios with a track record of long-term investment commitments, chances are the plan is in it for the long term, and not looking to kick the small guys to the curb.

Healthcare is a mess, and the industry has many problems and needs. Smart entrepreneurs have no shortage of opportunities to create billion dollar companies.  However, if companies choose to use partnerships to speed their growth and development, entrepreneurs must always keep in mind that the wrong partner can smother them with attention, bury them in the process, and ultimately freeze them in pilot mode. Many strategic investors are looking for ways to facilitate these partnerships to run more efficiently and allow for better functioning. Startups and entrepreneurs, let us know what you are experiencing, what’s working well, and what’s not, in the market.

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