What Startups Must Know about the B2B2C Health Care Model

By Danielle Davis

As Big Health shifts its focus to providing a more consumer-driven health experience, startups with direct-to-consumer solutions find it increasingly encouraging to adapt their product to be sold through existing channels in the health industry. An example is entering the market as a population health solution that insurance carriers and employers can offer to – and subsidize – for their large user-bases. But what does that mean for the start-up? Their product? Their go-to-market approach?

Yo-Fi Wellness Founder and CEO, Jeff Croy, has been there, and talks to me about what he’s learned about taking a consumer solution into the health industry. A perfect fit for a population wellness program, Yo-Fi is an online platform that allows people to access video classes that help them create healthier lifestyles. Bringing together on-demand videos of yoga classes, fitness instruction, nutrition information and meditation sessions, Yo-Fi lets users to personally select the healthy living initiatives they want to make part of their everyday lives and helps them work at them from any web-based device.

Because the company didn’t initially set out with this B2B2C model, Jeff offers a unique perspective on what it takes for a start-up company to make the transition into the health industry and meet the needs of not only the consumer, but their employer and their insurance company as well.

Here are the three things you need to know before you toss your consumer solution into the population health marketplace.

1. There are buyers, and there are users.

“One of the unique things about the B2B space within healthcare,” explains Jeff, “Is that the buyers are different than the users. And what the buyer needs is very different than what the user, or the typical consumer, would need to make a purchasing decision.”

“Especially early in the product development process, your solution designer needs to pay as much attention to the buyer as he or she does to the user. This can be VERY tough to grasp – especially for a new entrepreneur entering this space.”

Jeff couldn’t be any more right. If there is ever a challenge that I see entrepreneurs wrestle with, it’s identifying all the various players and figuring out the right business model in the health industry.

The challenge (and the opportunity) is that there are a lot of different ways that the health system – and its myriad players – can pay for things. Depending on what the product is, how it works, which health outcomes it impacts, and the channel it takes to market, the cost can belong to the consumer, the company they work for, their insurance company, or any combination of the three.

Before you decide to take your consumer solution out of its relatively straightforward consumer-model world, make sure that you fully understand how health industry cost-sharing models could impact the way your company makes money. And, it’s not just how you’re getting paid. Healthcare’s equally complex distribution model may change the way you sell to your end-customers as well – putting agents, wellness program administrators, employers, HR departments, and a host of others between your brand and your end-users, potentially impacting marketing and sales costs along the way.

2. The problem you’re trying to solve will change.

It’s a domino effect. As your model starts to adapt to having users and buyers, you inevitably have to take a good long look at whether or not the solution you’re bringing to this expanded market meets the needs of all of the players involved.

“The most important thing,” Jeff says, “is really understanding, with as complete precision as possible, what problem the buyer is trying to solve. It’s not good enough to have a great product that really works, it has to have a real purpose – and that can’t be entirely feature-driven. In population wellness, it has to be genuinely addressing a human problem.”

The “human problems” Jeff alludes to are the same problems that healthcare’s biggest players are trying to take on: improving cost, quality, and access to healthcare; reducing health risk factors; improving disease management and chronic condition management; improving daily health habits; etc.

So, how do you go about recasting your solution as “the answer” to these kinds of big, systemic problems?

“Entrepreneurs need to understand the pressures that are impacting payers and the companies that work with payers. It’s a more defined, regulatory environment. HEDIS, Medicare Star Scores – look at those programs to help understand what the economic drivers are for payers. We spent our entire time in Healthbox learning about Florida Blue…it became our focus and the framework for how we think about and deliver our program.”

“Lots of entrepreneurs have solutions that are looking for problems,” Jeff adds. “Just ask lots of questions. Try to understand how your solution could work.”

“Even if you took a very successful consumer company, and challenged them to develop their product to succeed in the population wellness space, it would be different. It would take a dedicated effort and a different mindset.”

“Lots of solutions are only addressing the needs of the user and not the buyer; you have to address the needs of the buyer... You need two value propositions.” - Jeff Croy, Yo-Fi Wellness Founder and CEO

“Lots of solutions are only addressing the needs of the user and not the buyer; you have to address the needs of the buyer… You need two value propositions.” – Jeff Croy

3. You need two value propositions.

A value proposition summarizes the meaningful way a brand satisfies a functional or emotional need. As if that weren’t hard enough to drive at, now Jeff says you need two. One for your user, and one for the buyer.

“Lots of solutions are only addressing the needs of the user and not the buyer; you have to address the needs of the buyer…the population manager. You need two value propositions.”

“Features and design might be great for consumers, but they don’t address what the real needs are from an operational and economic standpoint for that population manager.” 

What appeals to population managers? (Or payers and their enterprise clients, for that matter?)

“Data is much more at the forefront.”

“You have to be able to collect and manipulate whatever data they want and deliver it however they want it. In companies working with populations of thousands or even millions, the data needs are incredibly rigorous.”

Jeff adds that the user experience – and the marketing message around it – is also a factor in the population manager’s value proposition. Both have to be appropriate for the population healthcare market, meaning direct-to-consumer messaging and experiences typically have to change.

“They are looking for a population-based marketing message around experience. For example, there are a lot of great fitness apps like Daily Burn, or workouts like P90X. Their value prop is: ‘we’re going to give you a tool that’s going to get you into incredible shape.’ That’s fine for some people, but you have to address the needs of the larger population.”

“The population health perspective asks you to talk to that person who needs to be supported – who needs help creating healthier living habits that fit into their busy and hectic life. You can still talk about how you’ll get them into incredible shape, but you have to support them with incremental changes – cooking a healthy meal, managing time at work, ways they can get exercise while at their kid’s soccer game…”

Don’t forget – your value proposition is more than just marketing. If you alter the way you talk about the value of your experience to better appeal to the population manager, you need to make sure that the reality of that experience for the end-user is one and the same. That means that the customer experience you offered when you were direct-to-consumer may now have to change to better serve a larger, more diverse population.

Last Thoughts About Entering the Health Industry

In the end, I asked Jeff what he really thought about re-packaging a consumer solution for the healthcare industry.

“It’s very challenging. You really have to learn before you just drop a product on this market. You have to be vulnerable enough to ask people that you may not know – but that you respect and trust – for advice. And you have to ask for advice at every single stage of the game. The other thing is that you have to be patient with each client. You want to fill your pipeline fast, and go to market fast, but have the understanding that your timeframe is not what’s important; it’s the market’s timeframe. I think some of the best companies that don’t make it – it’s because of time.”

Where are they now

Yo-Fi Wellness came out of our Healthbox Accelerator in the fall of 2013 having completed a number of successful pilots – proving their model and customer experience as a population wellness solution. The company is currently serving a population of around 150,000 and growing. Yo-Fi is refining its channel partner strategy, producing new content and hiring additional staff to manage its growth.

About the Author

Danielle Davis

Danielle Davis, MBA, works as an Innovation Consultant for GuideWell Innovation where she manages the relationship with partner Healthbox to run accelerators for entrepreneurs in the health industry. A financial whiz, Danielle is also actively involved in Waste Not Want Not, a local non-profit tackling hunger in her community. Connect with Danielle on LinkedIn or email her at danielle.davis@guidewell.com.