Untangle Health’s Segmentation of the Healthcare Market | Untangle Health

Creating Advantage for Commercialization in US Healthcare

An Untangle Health Thought Leadership Production

So your Organization is Actively Working to Penetrate the Healthcare Market…

On the surface, selling into the American healthcare market seems like an appealing strategy for technology companies (and technology / innovation departments within healthcare companies). And for the right companies with the right expertise and strategies, it definitely is. Some of the reasons healthcare looks like (and can be) an attractive market are:

The amount of spending in the US on healthcare in 2020 is estimated at $4.01 trillion (up from $3.81 trillion in 2019, and projected to reach $6.19 trillion (19.7% GDP) by 2028). (source: https://www.advisory.com/daily-briefing/2020/04/03/health-spending). On top of this, the demand for healthcare is only growing, with an increasing number of people living with co-morbidities, living longer, etc., the opportunity in healthcare is huge!
Healthcare is behind the times, and ripe for disruption. I can’t buy health insurance in a personalized way like I can order a Double Ristretto Venti Half-Soy Nonfat Decaf Organic Chocolate Brownie Iced Vanilla Double-Shot Gingerbread Frappuccino from Starbucks (whatever that is), and I don’t have any clue how much it will cost me to get relief from the inevitable stomach ache I get from drinking said beverage between the black box Provider charge master, payer coverage language that takes a higher level degree to interpret, and other complexities…to name a few. This is one example of the myriad of different ways in which healthcare is lagging behind almost every other major industry.
You’d be a hero! In the same sense as the White House brokering a deal in which the pharmaceutical giant Merck & Co. would help manufacture the new (rival) Johnson & Johnson coronavirus vaccine as well as all of the frontline healthcare workers putting their lives on the line to treat COVID-19 patients during the pandemic, you’d be doing your part to allow people to live longer, healthier, and ultimately more enjoyable lives.

…to name a few.

…and You’ve Come to Learn the Reality that Selling Into Healthcare is Difficult

As you’ve gotten deeper into your pursuit of healthcare market success, you have likely found that this market is not an easy nut to crack. You’re coming to understand why healthcare is so ripe for disruption, yet so many have failed when they were able to succeed in other industries. Some of these challenges may seem obvious:

the large number of public, private and government players trying to protect their share of the market, oftentimes at the expense of innovation
the misaligned (and often hard to decipher) set of incentives across different aspects and players within the industry
the long and treacherous procurement cycles, with roadblocks, dead=ends, and unexpected (and sometimes unreasonable) expectations across medical, financial, and technical buyer stakeholders
the dense and complicated collection of regulatory, compliance, and privacy laws companies must follow, and the public relations nightmare associated with mishandling personal health information and data.

…and while other challenges may be less obvious, they are no less important to executing a successful growth strategy into healthcare.

The Untangle Health Strategy Methodology True North

To take a quick tangent, a wise woman once told me “strategy is about tradeoffs.” This comment has stuck with me for many years because of its simplicity and broad applicability of my interpretation of its intent. I understand this statement to say that resources (time, money, people) are finite, meaning a company can’t invest in every potential growth ambition. But, by developing clear strategic options and understanding the value and cost considerations of those options (internally or through a consulting partner), a company can point its resources in the direction most likely to maximize its return.

At Untangle Health, we leveraged this sentiment as True North in the development of our defined and proven Strategy Methodology. To learn more about the Untangle Health Strategy Methodology, feel free to reach out.

Defining Digital Health

Digital Health is a common buzzword in many healthcare circles today, and has a wide array of different definitions. According to a HIMSS definition, “Digital health connects and empowers people and populations to manage health and wellness, augmented by accessible and supportive provider teams working within flexible, integrated, interoperable, and digitally-enabled care environments that strategically leverage digital tools, technologies and services to transform care delivery.”

At Untangle Health, we define Digital Health as the prevalence and advancement of technology within all aspects of healthcare. As broad of a topic as this is, the prevalence and investment in Digital Health solutions is impacting all facets of the healthcare ecosystem, and changing the way different segments within the healthcare market prioritize and interact with one another. Deeply understanding each of the segments and sectors within healthcare, and the impact Digital Health is having therein, will help any organization succeed in its growth ambitions in this market.

Creating a Competitive Advantage to Succeed in the US Healthcare Market

Regardless of whether you conduct the strategic work in-house or with a third party consultancy like Untangle Health, winning in healthcare requires a well defined methodology driven by experienced insiders and industry experts to untangle the web of complexities and maximize your organization’s likelihood of success. This will not only ensure you are taking the most direct path to profitable revenue growth, but will also help prevent you from throwing thousands (if not millions) of dollars behind a strategy that has little (or no) chance of success.

While the Untangle Health Strategy Methodology needs to be adapted for every organization and situation, when it comes to healthcare market expansion, a set of critical questions must always be answered:

Based on my organization’s growth aspirations, goals, and offering’s core competency…

How should I break down the healthcare market to focus on the right buyer profile(s)?
What hidden roadblocks am I on course to encounter, and how do I circumnavigate them effectively and efficiently?

To help you answer these questions, we at Untangle Health have provided an initial take on some considerations to take into account regarding each major healthcare market segment, as well as our recommended breakdown of the underlying sectors (some of which are well established and broadly known).

The Provider Segment:

This segment primarily consists of individuals or facilities responsible for providing care to patients. Some fundamental examples include hospitals, outpatient clinics, skilled nursing facilities, and the staff that work within them.

Key Considerations:

Longer sales cycle (6 months min)
Looking for “plug and play” solutions that require little resourcing investment to implement and stand-up, but are also skeptical of “plug and play” pitches due to the complex nature of Provider System of Record interoperability
Varying IT staff capabilities with a large number of competing priorities can push sold projects out many months (or years!) before starting
Always pushing to understand ROI on investments, primarily around cutting costs
Can have severe technical limitations around third party solutions due to difficulty getting information in / out of core Systems of Record (namely, EHRs)
Some M&A to increase efficiencies, especially in terms of leverage with payer network contract negotiations (bigger the health system, the more it can demand in payer reimbursement)

Provider Sectors, all of which may be broken down into further sub-sectors thereafter:

Large Academic Health Networks (e.g. ACOs, teaching hospitals)
General Medical & Surgical Hospitals
Rural / Community / Critical Access Hospitals
Nursing and Residential Care Facilities (SNF, hospice, home health)
Provider Owned Ambulatory Practices (Primary Care)
Specialty Groups (dermatology, substance abuse, dental)
Diagnostics and Imaging Centers (labs, radiology)
Outpatient Service Centers (ambulatory surgical centers, infusion centers)
Integrated Delivery Network (IDN) – a network of providers and facilities that offers a full range of services within a specific geography
Pharmacies – loosely defined as an organization dedicated to the dispensing of medicinal drugs, this sector can be further broken down into retail, specialty, and e-commerce, among others

The Payer / Plan Segment:

This segment primarily consists of companies that pay for medical, surgical, prescription drug, and sometimes other healthcare expenses incurred by the member (insured). In America, most individuals are insured through their employer (commercial group insurance) or the government (Medicare, Medicaid, and Affordable Care Act individual plans).

Key Considerations:

Sales cycle revolve around renewal dates, open enrollment, and fiscal year budget planning
Looking to streamline by bringing care delivery in house (or vice versa with Provider-Sponsored plans)
Highly focused on customer retention and acquisition, and ability to show value to members (who pay for something they hope to rarely use)
Motivated by solutions that reduce care costs such as preventative care, member wellness programs, and generic drugs
Can have severe limitations around third party solutions due to antiquated core technology (namely, Claims Adjudication System) and / or programming code

Payer Sectors, some of which may be further broken down into sub-sectors thereafter:

National Commercial (e.g. United, Aetna)
Regional Commercial (e.g. BCBS, Medica)
Third-Party Administrators (TPAs, ASOs)
Provider-Sponsored Health Plans (e.g. Kaiser Foundation Health Plan, Premier)
Government-Sponsored Health Plans – Medicare, Medicaid, Tricare, Affordable Care Act Exchange Plans (Obamacare)
Insurtech (e.g. Oscar Health)
Specialty Health Plans – Medicare Advantage, Dental, Vision (e.g. Delta Dental)
Pharmacy Benefit Managers (PBMs) – third-party administrators of prescription drug for health plans

The Life Science (LS) / Medical Device (MD) Segment:

This segment is harder to pin down to the wide variety of organizations that do business in this space. Even so, we’ve provided some key questions that can help:

Who is the company selling to (tech, non-tech, Provider, Payer, etc.)?
How many products do they offer (single, multiple similar prods, conglomerate with 100s of different products)?
What is their area of focus (e.g. TA, geography, R&D vs. production)?

Key Considerations:

Jackpot industry leading to cyclical spending aligned to the successful launch of blockbuster products
Historically larger budgets for consultants and other third-party vendors
Often large, bureaucratic, and siloed operational groups focused on maximizing revenue from core platforms / assets and breaking down operational inefficiencies
Lot’s of M&A, especially with larger, brand-name organizations with expertise in getting products to market acquiring technologies from smaller, R&D focused targets

LS / MD Sectors:

A starting point for this segment would include the following sectors, all of which may be further broken down in sub-sectors thereafter:

Pharmaceutical – R&D
Pharmaceutical – Generic Manufacturing
Contract Research Organization (CRO)
Medical Device – Implants & Protheses (pace makers, stints)
Medical Device – Surgical Equipment (scalpels, clamps)
Durable Medical Equipment (sutures, crutches)

The Healthcare Information Technology (HCIT) Segment:

This segment primarily consists of companies that provide technologies utilized by other organizations in the healthcare industry. This could include Provider, Payer, LS/MD, or even other HCIT companies as well. While it is a major problem that there is no established, hard and fast way to divide up this segment, and many companies can arguably qualify for multiple sectors, here is how we break it down at Untangle Health.

Key Considerations:

Shorter sales cycle (could be weeks)
Lots of variation in terms of offerings (could be anything from software to hardware, B2B to B2C focused, data capture / tracking to data models and storage) – the most complex segment by far)
Inconsistent features (some offer professional services, interoperability capabilities, etc.; some don’t)
Companies can target buyers in the major healthcare segments (Provider, Payer, LS/MD) or even other players within its own DH/HCIT segment
Most significant number of start-up companies, and institutional (PE / VC) investment, leading to an increased emphasis on revenue and growth (over margin and efficiency)
Complex Go-To-Market strategies are common as vendors fit together pieces to meet buyer expectations
Organizations anchored in another major healthcare segment (Provider, Payer, LS/MD) may invest in teams or business units that act as an HCIT company within the broader organization

HCIT Sectors, many of which may be further broken down into sub-sectors thereafter:

Digital Therapeutics and Devices – evidence-based therapeutic interventions driven by high quality software programs to prevent, manage, or treat a medical disorder or disease. Digital therapeutics is a relatively new discipline that uses digital implements and devices like mobile devices, apps, sensors, wearables, remote patient monitoring, the Internet of Things, and others to spur behavioral changes in patients
Diagnostic Testing (Lab/Path) – a medical procedure that involves testing a sample of blood, urine, or other substance from the body. Laboratory tests can help determine a diagnosis, plan treatment, check to see if treatment is working, or monitor the disease over time
System(s) of Record (SoR) or Source Systems of Record (SSoR) – a data management term for an information storage system (commonly implemented on a computer system running a database management system) that is the authoritative data source for a given data element or piece of information. With healthcare, this spans Electronic Health Records (EHR), Enterprise Data Warehouse (EDW), Claims Adjudication Systems, Master Data Management (MDM), and other systems where data originates and/or is stored
Healthcare Data Exchange – a solution or platform that enables healthcare professionals, patients, researchers, and/or analysts to access and secure patient medical information securely. This data typically originates in Provider or Payer systems, and can include PHI (Personal Health Information) or be de-identified, depending on the use case. Examples include Healthcare Information Exchanges (HIEs), Data Aggregators (e.g. IQVIA, Flatiron Health, HealthVerity, and Amazon Data Exchange (ADX) for Healthcare)
Integration and / or Interoperability – solutions that enable health information systems throughout the healthcare market to communicate and exchange usable data within and across organizational boundaries in batches or in real-time. Solutions and products in this sector extract, transform, normalize, parse, and load information between multiple tools and systems, and can accommodate a varying degree of data models and modalities
Business Intelligence and Analytics – software that provides enterprise analytics, Clinical Decision Support, and / or reporting on clinical, operational, and financial data. Products ingest, analyze, and report or display data in a format such as dashboards and scorecards
Patient Engagement and Acquisition – patient engagement and acquisition systems are used to deliver higher quality services to patients, whether that is delivering more consumer-focused experiences through the use of Customer Relationship Management (CRM) systems, providing health consumers access to information about providers via customer ratings, or facilitating real-time patient scheduling workflows
Telehealth and Virtual Care – tools and solutions that use electronic information and telecommunications technologies to support and promote long-distance clinical health care, patient and professional health-related education, public health and health administration. Technologies include videoconferencing, the internet, store-and-forward imaging, streaming media, and terrestrial and wireless communications
Genomics – an emerging medical discipline that involves using genomic information about an individual as part of their clinical care (e.g. for diagnostic or therapeutic decision-making) and the health outcomes and policy implications of that clinical use.
Diagnostic Imaging – includes a variety of non-invasive methods of looking inside the body to help determine the causes of an injury or an illness, and to confirm a diagnosis. It is also used to see how well the patient’s body is responding to a treatment for an illness or a fracture
Workforce Management (WFM) – an integrated set of processes that a company uses to optimize the productivity of its employees. WFM involves effectively forecasting labor requirements and creating and managing staff schedules to accomplish a particular task on a day-to-day and hour-to-hour basis
Population Health Management – the means by which Providers use data to assess population health, health disparities, and Social Determinants of Health (SDOH), and to develop interventions to improve populations, cost-effectively, over time
Revenue Cycle Management – the processes used by healthcare systems to track revenue from patients and/or insurers, from the patient’s initial appointment or encounter with the healthcare system to the final payment of balance

As you can tell (and likely already know), there are a lot of different buyer personas and execution landmines when selling into healthcare. Based on our experience, the best way to ensure you maximize your likelihood for success is to enlist the right team of functional and industry experts to:

Align your organization’s offering to key target buyers and
Address complexities and nuances of the healthcare market proactively and head-on

…because for every company who threads the needle and earns their piece of this complex ecosystem, there is a wasteland of corporations who got tripped up and failed.