What I wish I had known about selling to health systems

In the wake of the 2009 Affordable Care Act, a group of people left Red Hat to start a digital health company. The company, which was led by Red Hat’s former COO, attracted funding from Canaan Partners and Mayo Clinic Ventures. It built a solution that won an ONC Innovation Challenge and counted HCA, Montifiore, and Cedars Sinai among its customers.

The company, called Axial Exchange, ultimately merged with another firm. I was an Axial co-founder.

Axial was a thrilling zero to one experience. We delivered digital solutions to dozens of hospitals and clinics at a time when most hospitals didn’t even have an EHR.

Selling to hospitals and health systems was expensive for Axial and remains a key industry challenge today. Outcome selling is considered the most effective methodology for enterprise software sales. But zeroing in on outcomes at a health system is easier said than done.

Consider the payer mix. Around 45% of collections might come from Medicare and Medicaid, 45% from dozens of private insurers, and 10% directly from patients. Further, the American Hospital Association lists 16 different payment models ranging from Fee For Service (where increasing the quantity of clinical services drives revenue) to Value-Based Care (where decreasing the volume of clinical services drives profits).

Now layer in the full cast of stakeholders across clinical service areas, administration, and IT and you have a complex web.

Digital health entrepreneur Neal Khosla describes this dynamic:

Health systems also have change-averse cultures with complex internal relationships. There are discrepancies between the desires of primary care physicians and specialty care. There are discrepancies between the priorities of the health informaticians and the providers. Administrators prioritize different things than both providers and informatics folks. Buy-in and adoption require all these parties.
Neal Khosla

Aaron Patzer, the founder of Mint.com and current digital health entrepreneur, joined the Redox Podcast and shared this take on selling to health systems:

In [selling to] a hospital, you have 19 ‘yesses’ of everybody that you thought was a decision-maker and someone comes out of the corner with a title you haven’t heard of … [something like] “Chief Security Information Officer” [and casts doubt on the solution] … but patients are a vulnerable population so you have to be secure and careful.
Aaron Patzer

As Aaron points out, health systems are right to set a high bar for digital solutions. Patients’ privacy and well-being are at stake. This resonates strongly with me. If Axial had zeroed in on smooth implementations, world-class data security, and enterprise-grade scalability we would have de-risked our solution in the eyes of health systems. This would have resulted in a less expensive sales cycle. The truth is that if Axial had partnered with Redox, Axial would have been a much more successful company.

Redox has implemented more than 250 digital health applications at more than 700 healthcare organizations spanning 45+ EHR systems. Digital health companies that partner with Redox are able to leverage all of this industry experience. Namely:

Fully HIPAA compliant, SOC2 Type II and HITRUST certification
A proven process that reduces integration time from 100 days to 30 days
One secure connection to EHRs that reduces redundancies and reduces the attack surface area
Robust bi-directional APIs for internal and external consumption
Vendor agnostic data normalization.

The Redox network of healthcare organizations provides digital health companies with access to 700+ potential customers that understand the value of these capabilities.

When partnering with Redox, these capabilities become your capabilities. Smart digital health companies make them part of their sales message. Without these capabilities, you are at risk of having your deal derailed in the 11th hour by a well-meaning health system stakeholder. With them, you are on your way to scaling your digital health solution.