There is a debate brewing about whether healthcare startups should still be selling to employers, particularly as many HR professionals battle point solution fatigue and struggle to manage multiple solutions at once.
However, during a panel discussion at the MedCity News INVEST Digital Health conference held in Dallas on Wednesday, executives overwhelmingly said that employers are still a viable market for startups. That said, it depends on the startup and whether it can have a meaningful impact on costs and support enough employees.
So how should startups approach employers? Healthcare companies need to know their worth, according to Liana Douillet Guzmán, CEO of FOLX Health and a panelist. FOLX Health is a healthcare provider for the LGBTQIA+ community that began direct-to-consumer and eventually shifted to serving employers as well.
“If you don’t feel really confident in what you’re offering, then you’ve got to revisit what you’re building and why and for whom,” Douillet Guzmán said. “For us, that meant building for the community. When we went into [the employer market]it was a test-the-water situation, but we didn’t need it from a business perspective. Our DTC business was doing really well. … I think it has allowed us to go into conversations from a place of partnership. And because of that, it has allowed us to drive better outcomes for the employees at those employer companies.”
Another panelist noted that startups need to pinpoint the problem they’re trying to solve.
“Really identify it and spend time on it. There are employers who will speak to you. They may not buy from you, but they will give you their opinion,” said Josh Sturm, chief revenue officer of Color Health. The company serves employers and provides screening, counseling and treatments for cancer.
Sturm added that startups should collaborate. All entrepreneurs understand the challenges in building a business, and it’s easier to succeed by working with each other rather than figuring it out alone.
It’s also important to find the right employer channel, according to Jim Winkler, chief strategy officer of Business Group on Health, an advocacy organization for large employers. While the Fortune 50 companies may seem appealing, the mid-size employer market moves faster and is looking for innovation, he said.
During an interview, Winkler stated that employers are also seeing a trend of more narrow point solutions attempting to sell to them.
“Often their pitch is, ‘Within this big space, this little piece doesn’t get proper attention paid to it. So we built a thing for that,’” he said. “And as an employer, you sit there and say, ‘I get it rationally, but on my list of the top 10 things I’ve got to deal with today, that’s coming in 17th.’ And so I’m not going to buy a product that just does that [narrow thing]. I would say, ‘Really good point. I wish these vendors did that too.’”
In addition, startups need to be looking at healthcare issues more globally. Besides the way healthcare is paid for, most healthcare challenges are global challenges, Winkler said.
“It is always amazing to me how many people have really good ideas, but when I say, ‘Can you do something outside the U.S.?’ they’re like, ‘We have a Spanish version of our app.’ Large and mid-sized employers, by and large, are multinational organizations. … They’re trying to address well-being globally. They’re trying to address cancer globally. They’re trying to address marginalized populations globally,” he said.
