market entry barriers

8 Most Common Healthcare Market Entry Barriers & How To Overcome Them

In my view, there is no harder market to gain a foothold in than healthcare. In this post, I will share my personal experience in the healthcare industry. I then discuss the most common healthcare market entry barriers and the market entry strategy your organizations can undertake to overcome them.

In my 30 years of experience in business, I have worked across many different industries.  I came to the healthcare industry relatively late. In 2012, I started a business with a good friend who was a physician. 

I had to learn a lot of things. The learning curve was very steep. If I knew then, what I currently know, I would have probably switched to an easier industry. However, I am glad that I didn’t.

It’s now 9 years since I started my journey in the healthcare marketing industry.  I love it and continue to find it as the most fascinating industry. If you’re interested,  you can read my story here and here.

The barriers to market entry by healthcare B2B organizations are especially high.

I mentor startups in Austin. Quite often, I try to convince entrepreneurs to avoid healthcare. Why? Because I know how much they have to learn, and the many issues they have to navigate through. Entering the healthcare market is not for the faint-hearted. 

The 8  Barriers To Healthcare Market Entry

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Barrier  #1 Difficulty In Understanding How Healthcare Operate

Healthcare is a parallel universe. It operates differently than any other industry I have worked in. The economic model is different. Although the traditional fee-for-service model sounds familiar it’s not.

As a patient, you go to see a physician, the physician provides a service but then, the payment model is weird. Typically you pay a bit and someone else pays the rest. 

Sometimes that other payer is the government (aka Medicare), sometimes it’s your State (Medicaid) and often it’s your employer’s health insurance plan. Sometimes it’s all you.

To complicate matters further,  the economic model is changing to what is known as value-based care. The basic premise is that healthcare organizations are no longer paid for curing individual people as a service but are paid for keeping a population of patients as healthy as possible.  

Getting your head around this is tricky!

Barrier #2 –  Risk Aversion

Healthcare is a more risk-averse industry than any other industry I have worked in. Why? It’s about consequences. In banking, if you screw up someone loses money and someone gets fired.

In healthcare, if you screw up, someone could lose their life. And someone loses money as well. While there is a great deal of innovation within healthcare, this does not come easily.

And while you may hear that healthcare organizations are eager to learn from other markets, that does not mean that they will be fast to adopt them. 

Don’t confuse interest in learning with interest in purchase.

Barrier #3 Conflicting Agendas

The primary motivation of people in healthcare is different from other industries. People go into healthcare generally to do good.

However, healthcare is a business. Generating revenue and lowering costs are as important in healthcare as they are in other industries. There is a tension between these two motivations that can cloud decision-making.

This slows down the purchase process.

Barrier #4  High Number of People Involved In Purchase Decisions

According to the Conference Executive Board (CEB), a Gartner division, there are 5.1 people involved in making a purchase decision in a typical business.

Healthcare is not typical. In my experience, there are more people involved and they have different competence in making business decisions.

This, therefore, is a market entry barrier as more time is needed before purchase decisions can be made.

Typical buying groups include physicians, nurses, technical specialists, as well as IT and hospital operations. It’s not unusual to have 10 or more people involved in the decision.

Many of these people have little experience in making commercial decisions.

Barrier #5 Buyers are Harder to Reach

I know that all sales and marketing people always think that their customers are hard to reach. Take it from me, they are even harder to reach in healthcare.

If you have physicians or nurses involved in the decision, don’t forget that their day job is caring for patients so they don’t have much time to answer your emails.

Barrier #6 Regulations

Every industry has regulations but healthcare has many of the same regulations as other industries AND many regulations that are unique to healthcare.

HIPAA regulates patient information and more. The FDA regulates what drugs, devices, and services can be delivered to patients and when.

Then there are more nuanced rules about how you can engage physicians. If you take the time to understand the pertinent aspects of these regulations.

In the process, you may find opportunities that you can address, and which will tackle some of the market entry barriers that could have crippled your business.

It in general, the key thing is to get smart about the rules. By doing this, you will safely 

Barrier #7  800 lb Gorillas 

Every industry has its dominant players or 800 lb gorillas which can be real obstacles to market entry.

 In healthcare, there are multi-billion dollar companies that you may not be aware of, and that has great influence over purchase decisions.

For instance,  in healthcare technology, the Electronic Health Record vendor Epic,  is so powerful that many of its customers will not make a decision to buy a technology if Epic says that it will be on its roadmap. Even if customers have to wait for several years.

You have to get to know who the major players are in your market. It’s important that you understand their strengths and weaknesses.

Above all, do not underestimate how hard they can make it for you to penetrate your segment of healthcare.

Barrier # 8 Longer Sales Cycles

When you start selling in the healthcare industry, the first thing everyone will tell you is that sales cycles are longer. Why? See barriers No1-7.

These cumulatively make cycles much longer than other industries. This is a fact and you better get used to it. This is a key obstacle to market entry for organizations who need quick ROI

Unfortunately, there is little or nothing you can do to accelerate sales cycles. The key thing is to plan for how long it will take you to start getting paid by a prospect.

In my own business experience, on average, sales cycles were 9-months. My largest-ever deal took 4 years and 2 mergers to close. 

Strategies To Overcome Market Access Barriers

When I started my healthcare business, the best piece of advice I was given was to get relationships and lots of money.

You need relationships to get to the right people and you need money to outlast the cash flow impact of the eternal sales cycles.

And so, to address the market entry barriers, I would  specifically suggest the following:

Strategy #1. Do your Homework 

A key strategy to overcome the market entry barriers is taking your time to learn. The more time you take to learn, the more you will be ready to effectively address some of the market access barriers.

market research

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You need to go deep on issues that relate specifically to your offering.  Understand the regulatory issues, figure out how customers are organized, and how they buy.

Further, learn how the players are, get to grips with the market trends. It could take you six months to feel confident,  but you can’t take shortcuts on this.

Taking shortcuts will only means being ill-prepared to tackle the key market entry barriers.

Strategy #2.  Taking Your Time

One of the advantages of the glacial speed at which healthcare makes decisions is that technology lifecycles are longer. You can afford to take a bit more time developing the right strategy than you can in other more commercially driven industries. 

Start by creating a list of questions you need to answer about your market, your offering, and how you will be successful. Then develop a systematic and deliberate process to answer those questions.

In the process, you will be finding answers on how best to tackle some of the market entry barriers.

In the work we do for clients, we first help them get feedback from customers to understand if there is a need that our clients want to be fulfilled and if the need is great enough to warrant considering your solution.

We dive into barriers to entry and market sizing. These are the foundations for a go-to-market strategy.

Strategy #3. A navigator To Help Overcome Market Entry Barriers

Find someone who can help you navigate through some of the market entry obstacles. In my case, I was lucky.

My partner had a lot of experience as a physician and a healthcare lawyer. Further, he had the right connections that we needed for our business to smoothly kick-off.

He taught me what I needed to know to get up the learning curve. He was also very efficient in getting connected to the right people because of his credentials. Not to forget, he was a charismatic guy which also helped.

We Can Help You

If you can’t hire an experienced physician, hire healthlaunchpad. Apologies for the direct pitch but this is one of the things we do and we have the knowledge and connections to help you navigate through the many market entry barriers within the healthcare. 

If after reading this, I haven’t frightened you off, get in touch. I would love to learn what you are planning. We may be able to help.

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Featured Photo by L.Filipe C.Sousa on Unsplash

Adam Turinas

Adam Turinas is a long-time technology marketing leader and entrepreneur. He is the co-author of the Total Customer Growth book and founder of Total Customer Growth LLC. Adam spent two decades marketing for Dell, IBM, Bank of America, and dozens of other major marketers. In 2012 he founded, grew, and eventually sold a healthcare technology software business and then created healthlaunchpad, a leading healthtech marketing firm that teaches clients how to use ABM.