Selling into Health Insurance Companies

It is a persistent challenge to sell into health insurance companies. For those who have not done it themselves, feel free to apply the sluggish stereotype of the healthcare industry when thinking about how long it takes to close a sale. Sales cycles can last 90–720 days depending on how you calculate start and end. Implementations can be even longer.

As the Director of Product and Business Strategy for a 30-person health tech company, I play multiple positions on the field. One of those positions is an “idea guy” for the sales and marketing teams.

Here are a few nuances about health insurance company buyers and some pointers on how to set you and them up for success.

The Business vs. IT

If you are selling a service to “The Business” which represents the departments within the health plan who own the P&L, thinks can move quickly…until IT gets involved. If you are selling a health tech service or software, beware of the prospect’s IT organization getting over interested. IT’s interest can only go one of three ways:

1. They like the product and want to first assess how it can fit within their enterprise architecture.
2. They like the product but feel as though they can replicate the service in house.
3. They like the product, and want to integrate it, but have no time to apply to it within the next six months.

All three outcomes stall, if not kill, the deal. As you can imagine, the more parties involved in the decision making, the less power you have in the deal itself.

I recommend that you offer that your company will take on most of the IT related lift in order to minimize the need for your prospect’s IT organization. It may make things more painful for your delivery organization, but I guarantee you the pain will not hurt worse than a dry scratchy flow-less revenue pipeline.

The Business vs. The Business

If you were to walk into a health plan, like many companies, you will find a body of different departments with different objectives.

1. Product: Defines benefit packages, premium, and marketing
2. Actuarial: Determines the premiums to charge customers
3. Network: Builds relationships with providers and negotiates rates
4. Population Health: Develops programs to support members with health & social needs.
5. Quality: Facilitates programs that entice members to be compliant with national care guidelines
6. Information Technology: Supports all the above with technology infrastructure and support.

As a rule of thumb, these organizations do not talk to one another. I cannot tell you the number of times I have heard of two different groups basically working on the same thing. These plans are as siloed as an Exxon Mobile refinement facility. If your solution requires collaboration of two or more of these groups, expect to triple the number of sales calls you will need to make in order to secure the deal. Once again, more cooks in the kitchen, does not produce faster dinners.

If your product(s) can be sold into more than one of these groups, I recommend not getting too greedy, and closing your deals one department at a time. When you get the silos to talk, you have put yourself in the middle of a political frontier without a home base. Start building a settlement with one department. Make it successful. And then move on to the next.

Spending Seasons

If you have sold into large corporations before, you are probably used to prospects’ heightened interest at the end of Q4. That is when they realize that they have got budget left over and it’s use it or lose it. A good management team achieves their objectives under budget. Great management teams achieve their objectives using all of the budget. By underspending, they risk that budget being taken away for the following year and operating without a cushion. The self-interested nature of budget politics creates somewhat of a Q4 rush to spend money.

In the world of health plans, this phenomenon is accentuated by the healthcare specific Medical Loss Ratio (MLR) Rule signed into law with the Affordable Care Act (ACA). According to the Centers for Medicare and Medicaid, the federal body that regulates health insurance,

The Affordable Care Act requires health insurance issuers to submit data on the proportion of premium revenues spent on clinical services and quality improvement, also known as the Medical Loss Ratio (MLR). It also requires them to issue rebates to enrollees if this percentage does not meet minimum standards. The Affordable Care Act requires insurance companies to spend at least 80% or 85% of premium dollars on medical care, with the rate review provisions imposing tighter limits on health insurance rate increases.

Many health insurance companies are private companies. A handful are even publicly traded. Like any business, they want to grow. Heck, even non-profit health insurance companies want to compete and grow. If at the end of the year, the health plan looks like it will finish its fiscal with an MLR of 77% or 78%, expect that clinical and quality teams will be more than willing to spend money with you. Don’t be surprised when asked, “What can we spend more on with you?” Ride the wave, tiger. Ride the wave.