Designing a Successful Digital Health US Go-to-Market
Designing a Successful Digital Health US Go-to-Market
By: Emmanuelle Lipski
The global healthcare market is experiencing accelerating growth, undergoing fundamental changes and is on the constant look-out for new solutions.
At the same time, Israel is home to some of the most impressive and sophisticated technologies out there, which has earned it a solid reputation, including in the healthcare field. That being said, due to the small size of the local market, Israeli technologies simply need to export, and the US tends to be the “market of choice” for Israeli entrepreneurs, driven by its size ($558B EBITDA in 2021 according to a recent report by McKinsey), robust profit pools, talents and funding opportunities as well as demand for change (driven by an aging population combined with increasing healthcare cost, as demonstrated by increased state and federal health expenditures and employee premium contributions).
Successfully working with the US market can be challenging and even life threatening to companies if not managed properly as it requires a deep level of understanding of its pain points and customer needs, dynamics and regulatory landscape.
The question of how to design a US go-to-market model for health tech start-up founders comes up so often that we decided to host a meet-up event, together with colleagues from McKinsey & Company and Covington, who also support Israeli entrepreneurs venture into the US market.
There are 3 questions that start-up founders need to tackle early on in their path to grow into a different market, as part of their process to understand the market and customer needs and before developing their product strategy:
- Who is your target customer?
- How do you articulate your value proposition accordingly?
- How do you then structure your go-to-market?
Who is Your Target Customer?
One of unique characteristics of the healthcare market that differs from the other tech industries is that the users, payers and “benefiters” are not necessarily the same entity! This makes this question even more important to resolve early on:
- Who pays for your product/service?
- Who is the end user?
- Who benefits from it (usually financial benefits but not only)?
This step of the process requires to examine the stakeholders one by one, and understanding their needs and stance towards the solution you’re trying to develop. Looking carefully at the patient, the PharmaCo (or med device manufacturer), the Pharma Benefit Manager, the Provider (including both the organizational structure and the individual physician), the Payor (both commercial and government) as well as the Plan Sponsor or Employer:
- What do they care about (e.g., how do they make money)?
- What is their number one priority or challenge?
- What is their stance towards your solution (should they work with, against, in what capacity)?
- Who is the right person to approach in the organization?
Taking the example of the provider, who typically cares about expanding its billable offering (e.g., RPM), improving its quality metrics (e.g., reducing the risk of adverse events) and increasing its productivity: how does your solution fit onto their value chain, from clinical to non-clinical activities? Who do you approach in the organization (given a relatively fragmented decision making process and high physician autonomy)? How do you demonstrate impact (are you aiming at quality or direct cost reduction metrics)?
Now examining the payor perspective: the payor’s priorities usually include improving clinical outcomes (which often goes hand-in-hand with a reduction in cost of care), improving engagement and access as well as differentiating customer experience.
While there is usually some stakeholder alignment in terms of the one who pays for it and the one who benefits from it (e.g., selling patient data to a PharmaCo), there are often many stakeholders involved in the end-to-end patient journey and nuances to the stakeholder map that are worth considering.
How Do You Articulate Your Value Proposition Accordingly?
Once you have identified your target customer, the next step is to tailor your value proposition accordingly. In other words, how are you solving their most pressing issues and how do you prove that you can do it?
Broadly speaking there are 3 main sources of value you can deliver to your target customer
- Improved clinical outcomes: Do you enable patients to live longer and/or with a higher quality of life? Are you able to reduce their clinical risk? Do you impact their level of activity? Do you enable a higher drug response or adherence rate?
- Reduced cost of care: Do you enable a reduction in hospitalization and/or office visits (frequency, duration)? Do you improve the productivity of the personnel? Do you impact the frequency or impact of acute care events? Do you offer cheaper drugs vs alternatives?
- Improved patient experience: Do you improve the patient’s perceived quality of care, convenience and/or satisfaction?
Regardless of the angle you choose to deliver value, the next step is to be clear on how do you assess your impact, whether that’s through clinical trials, observational or meta-analysis studies, real-world evidence studies, etc. While some companies choose one path to value and focus on demonstrating impact along the way, others will adjust their value proposition over time (e.g., building a B2C business model to gain customer traction and moving to a B2B play once they are able to demonstrated clinical outcomes).
How Do You Structure your Go-to-Market?
Once the value proposition is clearly articulated to convince your target customer to work with you, then comes the GTM structuring
- What is your regulatory pathway? Depending on the product or solution you’re developing, you may fall within or outside the FDA path (e.g., general wellness, admin support are usually not regulated by the FDA). Again, you can choose in some instances to develop a non-regulated product (with no medical claims) and transition to the FDA regulated path once you are able to make medical claims.
- What is your pricing model? Are you going for a one-time fee, a subscription-based model, a variable price (e.g., per usage), value-risk sharing or a reimbursement (by private state or federal government programs)?
- What is your sales and marketing approach? Do you plan to target your customers digitally?Do you plan to hire your own sales force? Do you plan to work with channels (licensor, joint venture, partner, service provider) and if so, how do you structure their compensation?
- How do you protect your innovation? Whether you’re developing unique datasets, insights, algorithms or other, what is the right strategy to protect your know-how? Strategies can include patents, copyrights, trademarks, contracts (e.g., non-competes, lock-in licenses, confidentiality) and more.
In conclusion, venturing into the US market as an Israeli health player is definitely a big challenge. We however think that understanding your target customer, articulating your value proposition accordingly and structuring the right go-to-market model can accelerate your path to success.
We hope you got some helpful tips or food for thought through this post and look forward to seeing the next wave of Israeli health tech innovations grow and mature into large multinational companies.
Oh, and if you have any thoughts or ideas on the topic please reach out!