This is the first submit in our new collection on virtual health cross-to-market. For more digital health content material, visit a16z.com/virtual-health-builders and observe a16z Bio on Clubhouse.
Digital Health is presently one of the quickest growing segments in the VC-funded universe, and we’re seeing virtual fitness agencies scale to new tiers of growth. Many later level digital care groups have demonstrated quality-in-magnificence growth charges, even relative to the broader purchaser and company software area. And healthcare is no longer completely a neighborhood sport — new tech-enabled care shipping groups are accomplishing national scale of their first few years within the marketplace, whereas conventional gamers might have been in just a handful of states after a decade of existence.
But this marketplace business wasn’t always this warm — during the last 10 years, more than one generations of healthcare technology corporations struggled to get raise-off, no longer because their products and services weren’t transformative, however because they failed to locate an executable path for sustainable distribution and price seize. Distribution — arguably the most vital driver of failure or achievement in the fast-developing virtual fitness area — was historically a totally steep hill to climb. Some of that changed into actually due to the general immaturity of the market and its lack of ability (or resistance) to take in and pay for novel, technology-based totally products that didn’t slot without problems into present budgets and care plans. Some of it became that businesses lacked the capital so as to live to tell the tale long employer income cycles that have been the primary route for going to marketplace.
Behind the present day increase of the virtual fitness marketplace is a revolution in how virtual health organizations move-to-marketplace. A wave of innovative agencies are fundamentally re-envisioning what healthcare looks like, and it’s time that the GTM playbooks for virtual health of yore be rewritten to acknowledge what’s occurring inside the modern (and future) marketplace. In this blog, we provide an explanation for how and why the go-to-market motion has modified for digital health, as well as an introduction to the new GTM motions in virtual health. In the coming weeks and months, we will present a sequence of Go-To-Market Playbooks for Digital Health Builders to share insights and knowledge from leading digital health founders and builders.A decade ago, digital health lacked the capital for agencies to raise sufficient financing to stay out lengthy B2B sales cycles.The evolution of digital fitness: How did we get here?
These evolutions in move-to-marketplace are part of the general evolution of the digital fitness space. In the early 2010s, the number one distribution channel for virtual health products was through incumbent carriers, payors, and existence sciences corporations, as well as early hobby with self-insured employers. The go-to-marketplace motions have been akin to standard company sales, with field sales groups, long income cycles, and land-and-expand strategies that would in the end bring about employer-extensive deployments with more than one merchandise. As a end result, virtual fitness businesses were confined to helping legacy players inside the shape of internal workflow tools or in the back of-the-scenes managed offerings. They had little or no reach into real patient-dealing with studies, which made it hard for them to seize fee because they had been to date removed from the quit users.
As the overall patron tech revolution gained momentum and healthcare infrastructure started out to mature, the next wave of virtual fitness startups in the mid-2010s started going “complete stack” to compete directly with legacy players for patients and companies. Some businesses (e.g., Noom, Headspace, and Ro) offered immediately to clients, whilst others (e.g., One Medical and Lyra) discovered success with huge employers, who would provide the offerings to their personnel as protected blessings.
Fast ahead to nowadays, and a dizzying number of recent and compelling care options for patients in new codecs have hit the marketplace. Novel fee models, growing healthcare charges, shifting monetary duties, a customer choice for digital-first studies, and emerging market segments with new consumer dynamics have spread out new distribution channels which have fundamentally rewired the healthcare cost chain. For instance, new digital care regulations related to compensation policy have made it feasible to bill for services that traditionally have been now not monetizable, so startups can take the shape of a digital-first clinic and collect patients at once through digital advertising, whilst getting reimbursed as an in-network provider at the backend. Additionally, COVID-19 has elevated the transition to virtual and decrease acuity care, and consumers have end up a main payor of sorts, representing nearly $500B of out-of-pocket healthcare spend in 2021, and growing 10% 12 months over yr. Cash pay services and telehealth marketplaces have emerged to fill the void of cheap, purchaser-friendly offerings that patients should purchase without delay even as they’re still underneath their fitness plan deductibles. These new virtual health corporations constitute an rising marketplace segment of small agencies which can be ability give up customers for brand new digital fitness infrastructure solutions.
The new go to markets in virtual health
We are seeing 5 new move-to-market motions in virtual health — B2C2B, B2SMB, hazard-primarily based contracting, -sided networks, and distribution partnerships thru aggregators. While we describe these below as wonderful motions, move-to-marketplace is complicated and varies for every corporation. In fact, organizations might even draw on multiple cross-to-marketplace techniques from this list, and that mix may also alternate as the corporation matures.