Launching a venture into healthcare is often considered “high risk, high reward.” A solid foundation can take some risk out of your sales model and improve the chances of achieving a big reward. Because healthcare has never been the earliest adopter of broad-based IT products, there remain many great opportunities within the sector. Entrepreneurs that can deliver efficient workflow and patient management solutions, analytics engines, and consultative services that help organizations evolve out of the fee for service model into a cost based model could strike it rich in the next decade. In order to succeed you will have to be resolute, make wise choices and, most importantly, absolutely execute when opportunity knocks.
Know Your Sales Cycle
Due to the highly regulated nature of the healthcare market, selling into the sector takes longer and often costs more than in other markets. It complicates everything from product development to the programs available to the marketing team. With HIT it’s necessary to develop value props around workflow advantages and prove your product solves age old analytical problems. People are cautious in healthcare, and without evidence and supportive beta customers, nothing sells in healthcare.
Encourage your team to report losses openly. You need to understand where you are winning, but it’s just as important to fully understand your losses and address the product features and marketing tools needed to change the pattern. Getting your team comfortable with reporting losses will enable them to accurately reflect the business’ legitimate market opportunity. Understanding when a deal is lost will help you know when to stop investing resources into a dead deal. Mastering the sales cycle will also help you be tenacious when things aren’t going your way.
Choose Partners Carefully
Large distribution companies thrive in healthcare. These groups are often challenging to manage, demonstrate little loyalty when things aren’t going well, and frequently underperform. A big reason for this lack of performance is that healthcare products are complicated to learn and demand more training time and more formal processes to develop a high performing team. These factors don’t always mesh with distributors looking to drive fast sales. Healthcare has an extremely high rate of specialization and therefore you need to be sure that your distribution partner’s broader book of business is highly aligned with your product or service. If you don’t have the “mind-share” of those reps, your product will never come out of the bag.
Deliver Again and Again
Epic, one of the nation’s most successful Electronic Healthcare Record (EHR) suppliers, built its business in a slow and methodical way. It took them almost 20 years before they were the market leader and they did it mostly by doing what other software vendors struggle with—meeting deadlines. Healthcare executives are risk averse and willing to reward for proven results.
Think of it as an evidence-based market where the evidence isn’t always just medical data in a clinical study, it’s proven in the form of highly targeted beta sites with CTOs, CFOs, and clinicians willing to speak openly about the success your product brought their institution, or the money it saved them. Successful selling in healthcare demands good reference accounts and you won’t earn those endorsements unless you deliver time and time again.
“Land and Expand” is a common tactic that can work in healthcare. It really helps to understand which department may influence future buying habits from other departments. It will help your team identify the correct champion necessary to shepherd the deal to success. There are only about 1,000 large hospitals in the U.S., so it’s also a good idea to make sure the first sale into an account can be leveraged again and again.
Despite efforts to curtail healthcare’s growth it remains the largest sector of the U.S. economy—almost 20% of GDP. There are incredible needs in the field around informatics, security, care coordination, and research to drive clinical breakthroughs. There will always be competition and internal challenges, but if you are tenacious and execute when opportunity arises, great rewards await you in healthcare.
Author: Sean Sigmon, Partner