US Health Market, Decoded
A Practical Glossary for Israeli Founders Last Updated: December 2025Getting Started: How US Healthcare Actually Works
The U.S. healthcare system is enormous, fragmented, and financially driven. Clinical value matters, but alone it rarely wins. Buyers think in terms of reimbursement, workflow, incentives, evidence, compliance, and risk. Understanding the language : the terms payers, providers, and regulators use to justify decisions : is essential to selling into the system.
This glossary translates core concepts into operational knowledge: who pays for what, how reimbursement actually works, how health systems buy technology, and what evidence is needed to unlock coverage. Use it to frame your product’s value, design the right integrations, price correctly, build the right regulatory path, and avoid common mistakes that slow or kill deals.
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01
The U.S. Health System Landscape
A high-level view of how care, payment, and regulation intersect.
Payer▶
Any entity that finances healthcare: commercial insurers, Medicare, Medicaid, Medicare Advantage plans, Managed Medicaid plans, and employers (via self-insurance).
Why it matters to founders Payers determine who pays for your solution, what they will reimburse, what documentation is required, and whether a product is considered medically necessary. Scaling in U.S. healthcare is impossible without aligning your value to payer incentives. (Every GTM strategy must map to a payer incentive!)
Providers▶
Entities that deliver care: hospitals, integrated delivery networks (IDNs), physician groups, ASCs, SNFs, FQHCs, and home health agencies.
Why it matters to founders Providers are the ones who must actually use your product, so workflow fit, documentation requirements, integration with EHRs, and billing implications determine whether they can adopt you. Even small workflow friction can kill adoption.
Regulators▶
Agencies such as CMS, FDA, ONC, OIG, and state health departments govern reimbursement, device classification, data access, privacy, and compliance.
Why it matters to founders Regulatory classification determines whether your solution requires FDA clearance, what evidence is needed, whether it is reimbursable, and how it must protect data. For digital health startups, misunderstanding the FDA or privacy requirements is one of the most common and most expensive mistakes.
Intermediaries
Entities that influence access, pricing, contracting, and adoption – often more than the buyer you think you’re selling to. examples:
PBMs (Pharmacy Benefit Managers)▶
Intermediaries (e.g., CVS Caremark, OptumRx, Express Scripts) that manage the pharmacy benefit for health plans and employers. They control formularies, negotiate drug prices and rebates, determine patient cost-sharing, and manage specialty pharmacy networks.
Why it matters to founders for digital health If your solution touches medication use, adherence, prescribing, specialty drugs, chronic disease management, or cost-of-care models, PBMs may be the true gatekeepers. Without PBM alignment, medication-related solutions struggle to scale – PBMs shape access more than payers do.
TPAs (Third-Party Administrators)▶
Service organizations that process claims, manage benefits, and operate provider networks on behalf of self-insured employers. The employer takes financial risk, but the TPA runs the operational infrastructure (e.g., eligibility, claims, reporting).
Why it matters to founders for digital health Selling to employers almost always requires TPA cooperation. Even if HR loves your product, deployment won’t move without TPA integration for claims, eligibility files, billing, and reporting. For many employer-facing solutions, TPAs-not employers-are the real operational buyers.
GPOs (Group Purchasing Organizations)▶
Organizations (e.g., Vizient, Premier, HealthTrust) that negotiate pricing and supply contracts for hospitals and health systems using collective purchasing power.
Why it matters to founders for digital health A GPO contract can streamline procurement and enable multi-hospital adoption – but it does not guarantee demand. You still need a clinical champion, a budget owner, and a strong ROI story. GPO alignment accelerates procurement; it does not replace it.
Benefits Consultants / Benefits Brokers▶
(Mercer, Aon, Willis Towers Watson, Lockton, Gallagher, Alliant)
Advisors hired by self-insured employers to design benefits, evaluate vendors, run RFPs, negotiate pricing, and manage compliance. Consultants heavily influence employer decisions and act as curators of which digital health solutions are even considered.
Advisors hired by self-insured employers to design benefits, evaluate vendors, run RFPs, negotiate pricing, and manage compliance. Consultants heavily influence employer decisions and act as curators of which digital health solutions are even considered.
Why it matters to founders for digital health Employers almost never buy directly. They buy what their benefits consultant recommends. If a consultant does not validate you, you won’t get into employer pipeline, no matter how strong your ROI is. Earning consultant trust is one of the highest-impact GTM levers for startups targeting employers.
Network Administrators (Network Management Teams)▶
Teams within health plans, TPAs, and provider networks that manage in-network providers, contracting, credentialing, adequacy standards, reimbursement rates, and participation rules.
Why it matters to founders for digital health If your solution includes clinical services (telehealth, virtual specialty care, hybrid care models) or relies on provider networks, network administrators decide whether you can operate in-network, what you get paid, and whether members can access you. Many startups close the “innovation” or “medical” team and then get blocked at the network step – this team often has final veto power.
Insurance Models
Fully-Insured vs. Self-Insured▶
In fully-insured plans, the carrier (e.g., UnitedHealthcare) takes the financial risk. In self-insured plans, the employer takes the risk and hires a carrier only for administration (ASO).
Why it matters to founders ROI- or cost-saving solutions must target self-insured employers; fully-insured employers don’t financially benefit from savings – the insurer does. Many Israeli founders mistakenly pitch ROI to the wrong stakeholder.
ASO (Administrative Services Only)▶
An arrangement where a health plan processes claims and provides admin services, but the employer holds the risk.
Why it matters to founders Many solutions require integration with the ASO vendor; ignoring them will stall or block employer sales.
Stop-Loss Insurance▶
Insurance purchased by self-insured employers to protect against catastrophic, high-cost claims (e.g., NICU, cancer).
Why it matters to founders For products preventing acute high-cost events, the true buyer may be the stop-loss carrier, not the HR team. This is a major untapped path for digital health startups.
Sales Cycle▶
Time from first meeting to contract signature. In healthcare, typically 12-18 months, sometimes 24.
Why it matters to founders Founders often underestimate the runway. If your startup cannot financially survive one full sales cycle, GTM will collapse.
02
Payers & Payment Models
Understanding how buyers pay for care, their risk models, and incentives are key to determining your pricing, ROI argument, and buyer persona.
Fee-for-Service (FFS)▶
Providers are paid per visit, test, or procedure. More volume = more revenue.
Why it matters to founders Solutions that reduce utilization (fewer visits, fewer tests) lose revenue in FFS environments. Your messaging must explain how providers still benefit – via efficiency, throughput, documentation, or payer reimbursement.
Value-Based Care (VBC)▶
Payment tied to outcomes, quality metrics, and total cost of care – often through shared savings or downside risk.
Why it matters to founders If your solution improves measurable outcomes or reduces avoidable costs, VBC buyers become strong early partners. But you must quantify the impact (readmissions, ED visits, adherence, A1c, etc.).
Upside vs. Downside Risk▶
● Upside-only: Providers get a bonus for savings but face no penalties if they don’t.
● Downside risk: Providers must repay losses if they overspend.
● Downside risk: Providers must repay losses if they overspend.
Why it matters to founders ● Upside-only = soft buyers; incentives are weak.
● Downside risk = strong buyers; urgent need for ROI-positive tools.
Founders should target organizations with real financial risk exposure.
● Downside risk = strong buyers; urgent need for ROI-positive tools.
Founders should target organizations with real financial risk exposure.
Bundled Payments▶
One fixed payment for an entire episode of care (e.g., joint replacement).
Why it matters to founders Your value must show up at the episode level – not just as a better step in the workflow. Startups that reduce complications, readmissions, or unnecessary post-acute spend shine here.
Capitation / Global Budget▶
Providers receive fixed per-member-per-month payments independent of the number of services provided.
Why it matters to founders Capitated systems adopt tools preventing hospitalizations, ED visits, complications, or improve chronic care which create immediate financial value. Products that replace billable services are often acceptable here – unlike FFS.
Medicare▶
Federal insurance for individuals aged 65+ and certain disabled populations.
Why it matters to founders Medicare policy often sets nationwide norms. Digital health startups serving seniors or chronic disease populations must understand Medicare coverage, codes, and evidence expectations.
Medicare Advantage (MA)▶
Private insurers running Medicare benefits, Revenue is often tied to Risk Adjustment: how sick the patients are documented to be, and Star Ratings (quality).
Why it matters to founders MA is the fastest-growing payer segment and highly incentive-driven. If you improve Star Ratings or reduce total cost of care, MA plans will pay.
Risk Adjustment / HCC Coding▶
A payment model where MA plans earn higher reimbursement for accurately documented patient conditions (using HCC codes).
Why it matters to founders Tools that help capture accurate diagnosis codes (HCC coding) or improve Star measures (e.g., adherence, screenings) generate direct revenue for MA plans – one of the strongest ROI stories in healthcare.
Medicaid & Managed Medicaid▶
State-administered insurance for low-income populations; typically delivered through managed care organizations (MCOs).
Why it matters to founders Benefits vary by state. Solutions addressing access, maternal health, behavioral health, and chronic care can perform well – but require state-by-state GTM.
Self-Insured Employers▶
Employers who take the financial risk for employee healthcare claims; the insurer only processes claims (ASO model).
Why it matters to founders This is the fastest and clearest path to ROI-driven sales. Startups offering cost savings, improved productivity, or condition management often begin here.
Fully-Insured Employers▶
Employers pay premiums; the insurer bears the financial risk.
Why it matters to founders ROI-based solutions don’t work here – savings accrue to the insurer, not the employer. Many founders pitch the wrong segment; fully-insured groups rarely buy digital health solutions directly.
Stop-Loss Insurance▶
Protection that self-insured employers buy against catastrophic claims (preterm birth, cancer, trauma).
Why it matters to founders If your solution prevents high-cost events, your real buyer might be the stop-loss carrier, not the employer. Very few startups understand this untapped channel.
03
Payment and Risk Mechanisms
How care gets paid for, what codes exist, who can bill, and why all of this determines whether your product can scale.
3.1 Coding Systems
ICD-10-CM (Diagnosis Codes)▶
A standardized list of diagnosis codes used to document patient conditions and justify medical necessity.
Why it matters to founders If your product requires billing, every claim must include ICD-10 codes that justify why the service was needed. ICD-10 also powers risk adjustment, which directly affects Medicare Advantage revenue. Poor documentation = lost revenue and denied claims.
CPT Codes (Category I, II, III)▶
Codes maintained by the AMA that describe medical, surgical, and diagnostic services.
● Category I = established, broadly reimbursed services
● Category II = quality tracking (not paid)
● Category III = emerging technologies with optional reimbursement
● Category I = established, broadly reimbursed services
● Category II = quality tracking (not paid)
● Category III = emerging technologies with optional reimbursement
Why it matters to founders CPT defines whether and how a new service is reimbursed.
WARNING for founders:
● Getting a new CPT code takes 18–24 months, requires extensive clinical evidence, and approval is not guaranteed.
● Most startups should align with existing codes (e.g., RTM, CCM, psychotherapy, RPM) instead of relying on a future Category I code.
WARNING for founders:
● Getting a new CPT code takes 18–24 months, requires extensive clinical evidence, and approval is not guaranteed.
● Most startups should align with existing codes (e.g., RTM, CCM, psychotherapy, RPM) instead of relying on a future Category I code.
HCPCS Level II & J-Codes▶
Codes for supplies, equipment, and drugs. J-codes specifically represent physician-administered medications.
Why it matters to founders Device companies or hybrid digital therapeutic models may require HCPCS codes. Without the right code, providers can’t bill – which blocks adoption.
Place of Service (POS) Codes▶
Codes identifying the care setting (clinic, telehealth, home, facility).
Why it matters to founders POS determines reimbursement rates and eligibility. For example, telehealth must use specific POS codes and modifiers to avoid denial.
Modifiers (e.g., 25, 59, 95)▶
Two-character additions to CPT/HCPCS codes indicating special circumstances like telehealth (95), separate E/M service (25), or multiple procedures.
Why it matters to founders Incorrect modifiers = automatic claim denial. Digital health products touching telehealth or asynchronous care must support modifier logic.
RVUs (Relative Value Units)▶
Medicare’s formula for determining payment to physicians based on work effort, practice costs, and malpractice risk.
Why it matters to founders Many health systems pay physicians based on RVUs – not salary. If your product reduces billable activity without increasing RVUs elsewhere, physicians may resist adoption.
3.2 Key Reimbursement Mechanisms
DRG (Diagnosis-Related Group)▶
A fixed payment per inpatient hospitalization based on diagnosis, severity, and expected resource use.
Why it matters to founders For inpatient-focused products (e.g., sepsis detection, discharge optimization), value must map to DRG economics: shorter length of stay, fewer complications, fewer readmissions.
APC (Ambulatory Payment Classification)▶
Medicare’s outpatient equivalent of DRGs – defines bundled payments for hospital outpatient procedures and services.
Why it matters to founders Outpatient digital health solutions (imaging, surgical prep, wound care, diagnostics) must align to APC reimbursement or risk being unfunded.
DMEPOS▶
Durable Medical Equipment, Prosthetics, Orthotics, Supplies. A special reimbursement category for equipment-based products.
Why it matters to founders Device-based digital health often requires DMEPOS supplier enrollment and must meet strict coverage criteria. Failure to plan for this delays GTM by months.
Buy-and-Bill▶
Providers purchase a product (usually a drug or device), administer it, and then bill the payer using a HCPCS/J-code.
Why it matters to founders Cash flow, pricing strategy, and coding must be aligned. For complex drugs or devices, buy-and-bill economics determine whether providers can afford to adopt you.
Prior Authorization (PA)▶
Payer approval required before certain services or prescriptions are delivered.
Why it matters to founders PA is one of the biggest causes of delays and drop-offs in digital health adoption. Products that reduce PA burden (automation, documentation, guideline matching) add immediate value. Products that increase PA burden face resistance.
Step Therapy▶
A utilization rule requiring patients to try lower-cost or preferred treatments before accessing higher-cost ones.
Why it matters to founders If your product sits “upstream” of the preferred therapy, adoption becomes difficult; if it helps patients progress faster through steps, your value increases.
3.3 Remote Monitoring Codes
RPM and RTM are large sources of confusion and are crucial for many digital health billing models.
RPM – Remote Physiologic Monitoring▶
A set of CPT codes reimbursing for monitoring physiologic data collected via FDA-defined medical devices (blood pressure, weight, pulse ox, etc.).
Why it matters to founders ● Requires hardware
● Requires device transmission of physiologic data
● Requires 16+ days of readings per month for certain codes
● Requires “incident-to” supervision rules depending on state
RPM is often not a fit for software-only startups or apps without FDA-cleared devices.
● Requires device transmission of physiologic data
● Requires 16+ days of readings per month for certain codes
● Requires “incident-to” supervision rules depending on state
RPM is often not a fit for software-only startups or apps without FDA-cleared devices.
RTM – Remote Therapeutic Monitoring▶
A newer set of CPT codes (introduced 2022) that reimburse for monitoring non-physiologic data – such as adherence, therapy engagement, pain, respiratory effort, inhaler use, musculoskeletal activity. Software can qualify.
Why it matters to founders ● Does not require hardware
● Can rely on patient-reported or software-collected data
● Applies to behavioral, MSK, respiratory, and adherence solutions
● Great fit for many “digital therapeutic” or “app-first” models
RTM is one of the most important developments for digital health startups in the last 5 years.
● Can rely on patient-reported or software-collected data
● Applies to behavioral, MSK, respiratory, and adherence solutions
● Great fit for many “digital therapeutic” or “app-first” models
RTM is one of the most important developments for digital health startups in the last 5 years.
Code Stacking▶
Billing multiple CPT codes for the same patient in a given period (e.g., CCM + RPM; RTM + E/M visit).
Why it matters to founders Proper stacking is often what makes digital health reimbursement models financially viable for providers. Misalignment can destroy the economics. Policies vary by payer.
CPT Code Creation Cycle (Warning)▶
The 18–24 month AMA process to create or revise a new CPT code: evidence review, advisory committee, valuation, rulemaking.
Why it matters to founders ● High failure rate
● Expensive (studies + health economic evaluations)
● Slow
● Not appropriate for early-stage startups
Founders should build GTM around existing codes, not assume a new CPT code will be created.
● Expensive (studies + health economic evaluations)
● Slow
● Not appropriate for early-stage startups
Founders should build GTM around existing codes, not assume a new CPT code will be created.
3.4 Additional Risk / Documentation Concepts
Medical Necessity▶
The standard payers use to determine whether a service is appropriate and reimbursable.
Why it matters to founders If documentation does not demonstrate necessity, payers deny claims. Digital health tools must ensure their workflows support adequate documentation.
Risk Coding / Documentation Optimization▶
Processes that ensure all patient conditions are correctly documented (HCC capture).
Why it matters to founders MA plans derive significant revenue from risk adjustment; startups improving documentation accuracy can generate direct, quantifiable ROI.
Attribution▶
The method payers use to assign patients to providers for performance measurement.
Why it matters to founders Attribution determines whether your solution’s outcomes “count” toward performance bonuses or shared savings. If your product cannot be attributed, the value may not materialize financially.
Eligibility & Coverage Rules▶
Requirements determining who qualifies for certain benefits or reimbursement.
Why it matters to founders Solutions often fail because core populations aren’t eligible for the codes founders expect.
04
Providers & Buying Centers
Who delivers care, who holds budgets, who influences purchasing, and how provider organizations actually decide what to adopt.
Integrated Delivery Networks (IDNs)▶
Large, consolidated health systems combining hospitals, outpatient clinics, urgent care centers, labs, and physician groups under one organization (examples: Kaiser, Intermountain, Northwell).
Why it matters to founders One contract can unlock dozens or hundreds of sites – but IDNs have slow, complex buying processes involving IT, security, legal, clinical leadership, and finance. Startups must prepare for long sales cycles, heavy integration requirements, and multi-stakeholder alignment.
Service Line▶
How hospitals organize operational and financial ownership: Orthopedics, Cardiology, Oncology, ED, Maternal Health, etc. Each service line has its own leadership, outcomes, and P&L responsibility.
Why it matters to founders You never sell “to a hospital.” You sell to a specific service line leader whose metrics your product affects. Finding the correct service line – not the CIO or CFO – is often the difference between slow death and fast adoption.
Federally Qualified Health Centers (FQHCs)▶
Community-based clinics offering primary care for underserved populations, funded partly by the federal government.
Why it matters to founders FQHCs are early adopters of access-improving solutions (behavioral health, chronic disease management, remote monitoring, care navigation). They are budget-constrained but open to innovation that improves outcomes or reporting metrics. Evidence and reimbursement pathways matter greatly.
Rural Health Clinics (RHCs)▶
Clinics serving rural communities with unique Medicare/Medicaid reimbursement structures.
Why it matters to founders Strong fit for telehealth and remote monitoring because they struggle with staffing and specialist access. Solutions enabling provider efficiency and extended reach can have a large impact.
Ambulatory Surgery Centers (ASCs)▶
Outpatient surgical centers performing procedures traditionally done in hospitals.
Why it matters to founders Fast-growing sector with strong incentives for efficiency, reduced complications, workflow optimization, and better pre/post-op care. ASCs make quick decisions if a solution improves throughput or reduces cancellations.
Skilled Nursing Facilities (SNFs)▶
Facilities providing rehabilitation or long-term nursing care after hospital discharge.
Why it matters to founders SNFs are enormous cost drivers for Medicare. Tools that prevent readmissions, improve rehab adherence, or support care transitions have immediate value.
Long-Term Acute Care (LTAC) Facilities▶
Hospitals for medically complex patients who need extended acute-level care.
Why it matters to founders Smaller market but high acuity; solutions that reduce complications or length of stay can succeed here.
Home Health Agencies▶
Organizations providing nursing and therapy services in the home.
Why it matters to founders Key players in reducing hospital readmissions. Strong fit for remote monitoring, treatment adherence, and care coordination tools.
Primary Care Providers (PCPs)▶
Physicians and clinicians who serve as the first point of contact for most patient needs and drive referrals and care coordination.
Why it matters to founders PCPs are central in VBC models, risk adjustment, and chronic care – meaning many digital health solutions depend on PCP workflow adoption. PCPs need time savings more than features.
Specialists▶
Clinicians focused on specific body systems or diseases (cardiology, oncology, neurology, etc.).
Why it matters to founders Specialists have different reimbursement models, quality metrics, and workflows. GTM strategies must reflect their unique incentives, not primary care’s.
Care Managers / Care Coordinators▶
Staff who track high-risk patients, coordinate across providers, and ensure follow-up and adherence.
Why it matters to founders For many digital health tools (chronic care, navigation, post-discharge support), these are the primary users. If the product does not reduce their workload, it will not be adopted.
Clinical Champions / KOLs▶
Influential clinicians who advocate for your solution internally and shape purchasing decisions.
Why it matters to founders Without a clinical champion, provider pilots rarely convert. Champions are essential for navigating internal politics, EHR integrations, and approval committees.
Credentialing▶
The process health plans and health systems use to verify a clinician’s qualifications to deliver and bill for services. It includes licensure, training, malpractice history, and background checks.
Why it matters to founders For startups that employ clinicians (telehealth, virtual care, hybrid models), credentialing delays can stall launch by 3–6 months. Multi-state telehealth models require coordinating dozens of credentialing processes and licensure rules. Startups consistently underestimate this bottleneck.
Utilization Review (UR)▶
Provider-side teams that ensure care is appropriate, documented, and aligned with payer requirements.
Why it matters to founders If your product improves documentation or reduces payer denials, UR becomes a powerful internal ally.
Committees (Yes, They Matter)▶
Health system decision-making bodies: IT Steering, Value Analysis, Pharmacy & Therapeutics, Clinical Ops, etc.
Why it matters to founders Even if the champion loves you, the committee must approve you. Each committee has distinct concerns: privacy, security, EHR integration, cost, workflow, and risk.
The Provider Decision-Making Principle▶
Providers adopt new tools only when:
1. It integrates smoothly into the workflow
2. It improves documentation or reimbursement
3. It reduces clinical or operational burden
4. It meaningfully affects quality metrics or financial outcomes
1. It integrates smoothly into the workflow
2. It improves documentation or reimbursement
3. It reduces clinical or operational burden
4. It meaningfully affects quality metrics or financial outcomes
Why it matters to founders If a solution adds burden or requires additional clicks, clinicians resist adoption – even if clinical results are excellent.
05
Regulation & Compliance
The rules that define what your product is allowed to do, how it must behave, and what evidence it needs before you can sell.
HIPAA▶
The foundational U.S. law governing the use, storage, transmission, and disclosure of protected health information (PHI). Includes the Privacy Rule, Security Rule, and Breach Notification Rule.
Why it matters to founders Any digital health startup handling PHI must comply with HIPAA. Healthcare buyers will not procure a product that lacks demonstrated HIPAA readiness. Noncompliance = deal-breaker + fines.
State Privacy Laws (CCPA, CPRA, etc.)▶
State-level privacy laws that expand consumer protections beyond HIPAA, especially for non-covered entities (e.g., direct-to-consumer health apps).
Why it matters to founders Many digital health startups incorrectly assume HIPAA is the only privacy obligation. Consumer-facing apps must comply with state laws too – especially regarding consent, deletion rights, data sale restrictions, and marketing limitations.
BAA (Business Associate Agreement)▶
A legally required agreement defining how a vendor (the Business Associate) will handle PHI on behalf of a healthcare entity.
Why it matters to founders No hospital or health plan will integrate or deploy your product until a BAA is executed. It is a gating requirement, not a formality.
SOC 2 Type II▶
A comprehensive independent audit demonstrating that a company has effective security controls – sustained over a 6–12 month observation period.
• Type I = “we have policies.”
• Type II = “we follow them consistently.”
• Type I = “we have policies.”
• Type II = “we follow them consistently.”
Why it matters to founders Enterprise healthcare buyers require Type II. Type I alone is rarely acceptable. Without SOC 2 Type II, procurements stall at the security review stage.
HITRUST▶
A certifiable security framework that aligns with HIPAA, NIST, ISO, and other standards.
Why it matters to founders Often required by payers or health plans. A HITRUST certification dramatically accelerates vendor risk review.
FDA Medical Device Classification▶
FDA categorizes devices based on risk:
● Class I: Low risk, general controls
● Class II: Moderate risk; requires 510(k) or special controls
● Class III: High risk; requires Premarket Approval (PMA) with clinical trials
● Class I: Low risk, general controls
● Class II: Moderate risk; requires 510(k) or special controls
● Class III: High risk; requires Premarket Approval (PMA) with clinical trials
Why it matters to founders Classification determines timeline, cost, evidence, and product claims. Many founders underestimate the operational burden of becoming a regulated medical device.
510(k) Pathway▶
FDA clearance showing your product is “substantially equivalent” to an existing device.
Why it matters to founders Faster and cheaper than De Novo or PMA, but requires a predicate device. Digital tools often cannot find appropriate predicates.
De Novo Pathway▶
A pathway for novel moderate-risk devices without a predicate.
Why it matters to founders Often used by AI/ML or software-based devices, but requires significant evidence and regulatory strategy.
PMA (Premarket Approval)▶
The most rigorous FDA pathway, requiring clinical trials and extensive review.
Why it matters to founders Usually reserved for high-risk devices – not typical for digital health apps, but relevant for combined hardware-software diagnostics or therapeutics.
SaMD (Software as a Medical Device)▶
Software that meets the FDA’s definition of a medical device independent of any hardware.
Why it matters to founders Requires validation, robust quality systems (IQ/OQ/PQ), post-market surveillance, and extensive documentation. Many founders incorrectly assume “software only” is exempt – it is not.
Non-Device CDS Exemption▶
A category defined by the 21st Century Cures Act: software that supports a clinician’s decision-making, allows the clinician to independently review the basis of the recommendation, and does not replace medical judgment.
Why it matters to founders If a tool qualifies as Non-Device CDS, it is not regulated as a medical device – meaning no FDA clearance, no 510(k), no De Novo. This is the “regulatory safe harbor” for many AI tools that explain how they reached conclusions (transparent logic) rather than outputting prescriptive decisions.
PCCP▶
FDA framework allowing AI/ML devices to update their algorithms post-clearance, using predefined, FDA-approved guardrails.
Why it matters to founders Critical for adaptive AI models. Without a PCCP, every algorithm update could require a new clearance. Startups must architect their ML pipelines with PCCP in mind.
ONC Certification (CEHRT)▶
Certification criteria for EHR systems and modules to comply with interoperability and quality reporting standards.
Why it matters to founders Startups integrating deeply with EHR workflows must understand ONC requirements, as large IDNs expect new vendors to align with CEHRT-compatible data standards.
21st Century Cures Act (Info Blocking)▶
Federal mandate prohibiting EHR vendors and providers from unreasonably restricting access to electronic health information.
Why it matters to founders A powerful legal tool for startups. If a hospital or EHR blocks your integration, you may be able to compel data access under this rule. Few founders realize they can use it to overcome integration resistance.
CDR / Auditability Requirements▶
Requirements ensuring your product maintains data logs, traceability, and explainability – particularly for AI.
Why it matters to founders Digital health buyers will demand audit logs for clinical safety, billing compliance, and medico-legal protection.
Telehealth Licensure Requirements▶
Telehealth providers must be licensed in the state where the patient is physically located; credentialing within health systems is also required.
Why it matters to founders Multi-state care models often underestimate the complexity and cost of cross-state licensure, credentialing, supervision rules, and telehealth parity laws.
HITECH Act▶
Legislation that expanded HIPAA enforcement and incentivized EHR adoption.
Why it matters to founders Triggered the EHR ecosystem that startups must integrate with; also strengthened privacy enforcement.
OIG & Anti-Kickback Statute (AKS)▶
Laws preventing improper financial relationships between providers and vendors.
Why it matters to founders Impacts how you structure discounts, incentives, referral programs, and revenue-sharing. Failure here = legal risk and audit exposure.
06
Interoperability & Data
How data moves (or doesn’t) in U.S. healthcare – and what founders must understand to integrate successfully.
FHIR▶
The modern API-based standard for structuring and exchanging healthcare data in a consistent, machine-readable format.
Why it matters to founders FHIR is the basis of modern interoperability – but FHIR endpoints differ dramatically between systems. Not all FHIR APIs expose all necessary data. Many startups overestimate what “we have a FHIR integration” means. Always validate which FHIR resources are available and their quality.
USCDI▶
A federally mandated minimum set of patient data that must be accessible for exchange (e.g., allergies, vitals, problems list, medications, labs). Updated regularly (USCDI v2, v3…).
Why it matters to founders USCDI defines what data you can reliably get across EHRs. If your product depends on data outside USCDI (e.g., claims, imaging, device data), the integration effort and variability increase significantly.
SMART on FHIR▶
A framework allowing third-party apps to launch securely inside an EHR using OAuth2, with access to FHIR APIs.
Why it matters to founders SMART on FHIR enables:
● embedded workflows inside the clinician’s EHR
● single sign-on
● reduced friction during clinical use
Embedding into the EHR is one of the strongest adoption drivers. But only a subset of EHRs fully support SMART.
● embedded workflows inside the clinician’s EHR
● single sign-on
● reduced friction during clinical use
Embedding into the EHR is one of the strongest adoption drivers. But only a subset of EHRs fully support SMART.
HL7 v2▶
The legacy messaging standard used by hospitals for events like labs, ADTs, orders, and results.
Why it matters to founders Despite FHIR’s rise, HL7 v2 still powers the majority of hospital integrations. Many startups must support both FHIR (modern API workflows) and HL7 v2 (event-driven workflows) to be deployable.
C-CDA▶
A document-based standard for exchanging structured clinical summaries.
Why it matters to founders Hospitals often share discharge summaries, care plans, and encounter notes using C-CDA. It is not as developer-friendly as FHIR, but still required in many workflows.
ADT Feeds▶
Real-time hospital event notifications (HL7 v2 messages) indicating patient movement across care settings.
Why it matters to founders ADTs are essential for products involving care transitions, readmission reduction, navigation, or staffing. They are also often the first integration touchpoint with a hospital.
QHIN (Qualified Health Information Network)▶
Under TEFCA, QHINs are national-level data exchange hubs that connect many health systems, payers, and networks. Examples may include Epic’s Carequality, CommonWell, eHealth Exchange.
Why it matters to founders Instead of integrating with dozens of hospitals individually, founders may be able to connect to one QHIN and gain nationwide exchange capabilities. QHINs dramatically change the integration landscape and can make or break scale.
TEFCA▶
A national interoperability framework designed to standardize and expand data exchange across the U.S.
Why it matters to founders TEFCA reduces the need for one-off integrations and creates consistent rules for data exchange. Long-term, every digital health company will rely on TEFCA-compliant networks.
Information Blocking Rule▶
A regulation prohibiting healthcare entities (EHR vendors, providers, payers) from unreasonably restricting access to electronic health information.
Why it matters to founders This rule gives startups legal leverage when hospitals or EHR vendors “stonewall,” claiming they cannot share data. If your solution’s data needs fit within allowable purposes, you can challenge refusals.
De-Identified Data (HIPAA Safe Harbor)▶
Data stripped of all 18 HIPAA identifiers, making it not considered PHI.
Why it matters to founders Can be stored, analyzed, and shared with far fewer restrictions. Useful for AI/ML model training, but limits personalization.
Limited Data Set (LDS)▶
Data that excludes direct identifiers but still includes dates, geography, and other elements not allowed in de-identified data. Requires a Data Use Agreement (DUA).
Why it matters to founders LDS is often the sweet spot for healthcare analytics – enough detail for modeling but still HIPAA-compliant.
Data Use Agreement (DUA)▶
A contract defining how an LDS may be used and protected.
Why it matters to founders Essential for any digital health startup performing analytics, AI modeling, or research partnerships.
Encryption & Security Requirements▶
Standards like AES-256 encryption, secure key management, audit logging, vulnerability monitoring.
Why it matters to founders Healthcare IT and security teams will block deployment if these controls are not demonstrated clearly.
Patient Access APIs▶
CMS-regulated APIs that require payers to provide patient data in FHIR format to authorized apps.
Why it matters to founders Allows startups to build consumer-facing apps that pull claims data directly from payers – a growing opportunity for navigation, transparency, and affordability products.
Common Founder Mistakes in Interoperability▶
• “FHIR = full access.” It does not. Vendors selectively expose resources.
• Assuming EHR vendors want to integrate. They often don’t; business models may conflict.
• Underestimating testing + certification steps. Even small integrations undergo weeks of validation.
• Ignoring HL7 v2. It’s still mandatory in many workflows.
• Not budgeting for interface fees. Some EHRs charge per interface, per site, per data type.
• Forgetting operational integration. Technical integration is only half; workflow integration is often harder.
• Assuming EHR vendors want to integrate. They often don’t; business models may conflict.
• Underestimating testing + certification steps. Even small integrations undergo weeks of validation.
• Ignoring HL7 v2. It’s still mandatory in many workflows.
• Not budgeting for interface fees. Some EHRs charge per interface, per site, per data type.
• Forgetting operational integration. Technical integration is only half; workflow integration is often harder.
07
Clinical Evidence & Validation
What proof you need, who you need it for, and how to avoid common evidence traps.
Real-World Data (RWD)▶
Data collected from routine clinical practice (EHR data, claims data, device data, remote monitoring data, patient-reported data) rather than controlled clinical trials.
Why it matters to founders Digital health solutions succeed or fail based on real-world usability and outcomes. Payers increasingly prefer RWD over small pilots because RWD reflects operational reality – not an idealized study environment.
Real-World Evidence (RWE)▶
Clinical or economic insights derived from analyzing RWD, used to evaluate safety, effectiveness, or value.
Why it matters to founders RWE is becoming the primary evidence format for digital health reimbursement and contracting. Payers use RWE to decide whether your solution reduces cost. Health systems use it to evaluate quality and operational impact.
Pragmatic Trials▶
Studies embedded in real clinical workflows, testing interventions in routine care rather than controlled conditions.
Why it matters to founders For digital health tools, pragmatic trials are far more relevant than traditional RCTs because they measure real clinician behavior, adoption barriers, and operational friction. Payers trust pragmatic evidence over lab-style trials.
Comparative Effectiveness Research▶
Studies comparing your solution against standard of care or alternative interventions to determine which performs better.
Why it matters to founders Payers demand comparative data. They won’t pay simply because your product is “good” – it must be better or cheaper than what exists today.
Coverage with Evidence Development (CED)▶
A CMS pathway allowing conditional Medicare coverage while additional evidence is collected through registries or studies.
Why it matters to founders Allows innovative technologies to get paid earlier, while building the evidence needed for long-term adoption. For new digital diagnostics or remote monitoring technologies, CED can bridge the gap between pilot and reimbursement.
Phases 1-4 Clinical Trials▶
● Phase 1: Safety
● Phase 2: Preliminary efficacy
● Phase 3: Confirmatory trials for approval
● Phase 4: Post-marketing evidence
● Phase 2: Preliminary efficacy
● Phase 3: Confirmatory trials for approval
● Phase 4: Post-marketing evidence
Why it matters to founders Relevant when digital health intersects with therapeutics (e.g., companion diagnostics, dosing algorithms, digital biomarkers). Understanding the clinical evidence lifecycle helps founders align partnerships with pharma.
ROI vs VOI▶
● ROI: Hard-dollar savings (e.g., 12% fewer readmissions = $X saved).
● VOI: Soft value (e.g., patient satisfaction, clinical champion engagement, staff workload reduction).
● VOI: Soft value (e.g., patient satisfaction, clinical champion engagement, staff workload reduction).
Why it matters to founders ● Champions love VOI → helps you get into pilots.
● CFOs only sign for ROI → determines whether a pilot turns into a contract.
Founders must articulate both – VOI to get inside the door, ROI to get paid.
● CFOs only sign for ROI → determines whether a pilot turns into a contract.
Founders must articulate both – VOI to get inside the door, ROI to get paid.
The J-Curve of Validation▶
The typical pattern where early VOI signals appear quickly (engagement, satisfaction, workflow benefits), but hard ROI takes longer (reduced ED visits, fewer readmissions).
Why it matters to founders Founders often fail because they assume VOI will convert to revenue. In reality, buyers expect a delayed but measurable ROI curve. You must set expectations, define decision thresholds, and align pilot design to capture ROI early enough.
Pilot Design▶
The structure of your initial deployment with a payer or provider, including success metrics, duration, and data capture.
Why it matters to founders Poorly designed pilots lead to Pilotitis – endless pilots that never convert because they were not set up to measure ROI or operational impact. Successful pilots require:
● Clear success criteria
● Pre-defined conversion triggers
● Assigned champion
● Data access commitments
● End-of-pilot decision deadline
● Clear success criteria
● Pre-defined conversion triggers
● Assigned champion
● Data access commitments
● End-of-pilot decision deadline
Pilotitis▶
The trap of running endless unpaid or low-value pilots that fail to convert into commercial contracts. This is the #1 killer of foreign startups entering the U.S. healthcare market.
Why it matters to founders U.S. buyers love pilots – they reduce risk for them, but consume the runway for you. To avoid Pilotitis, founders must:
● Require defined success metrics
● Require pre-agreed conversion criteria
● Require data access to measure ROI
● Limit pilots to short, time-bound windows
● Only pilot with organizations who have a budget owner committed
Without these terms, pilots rarely convert.
● Require defined success metrics
● Require pre-agreed conversion criteria
● Require data access to measure ROI
● Limit pilots to short, time-bound windows
● Only pilot with organizations who have a budget owner committed
Without these terms, pilots rarely convert.
Evidence Requirements by Stakeholder▶
• Providers: Want workflow fit, clinician satisfaction, documentation improvements, reduced burden.
• Payers: Want cost reduction, clinical outcomes, and quality improvements tied to measures.
• Employers: Want utilization improvement (ED/urgent care avoidance), absenteeism reduction, and patient experience.
• Pharma: Wants adherence, real-world outcomes, or disease insights.
Founders often fail because they collect the wrong type of evidence for the buyer they are selling to.
• Payers: Want cost reduction, clinical outcomes, and quality improvements tied to measures.
• Employers: Want utilization improvement (ED/urgent care avoidance), absenteeism reduction, and patient experience.
• Pharma: Wants adherence, real-world outcomes, or disease insights.
Founders often fail because they collect the wrong type of evidence for the buyer they are selling to.
Attribution (Who Gets Credit)▶
The method payers use to assign a patient to a provider for quality measurement and cost-of-care calculations.
Why it matters to founders A startup’s outcomes only “count” if attribution rules allow it. Example: A digital MSK solution reduces surgeries, but the savings don’t count toward the provider’s VBC contract because the patients weren’t attributed to them → the provider will not pay.
Regression to the Mean▶
When extreme values naturally move toward the average over time, giving the illusion of improvement.
Why it matters to founders Many startups misinterpret early engagement spikes as impact. Sophisticated payers will ask whether your results survive statistical correction. Founders must design evidence carefully.
Clinical KPIs vs Financial KPIs▶
● Clinical KPIs: A1c, blood pressure, PHQ-9, mobility improvements
● Financial KPIs: ED visits, readmissions, hospitalizations, medication adherence, risk adjustment accuracy
● Financial KPIs: ED visits, readmissions, hospitalizations, medication adherence, risk adjustment accuracy
Why it matters to founders Clinical improvement without financial impact rarely closes deals. You must link clinical KPIs to an actual P&L line item.
Digital Health Evidence Maturity Curve▶
Typical progression:
● Stage 1: Engagement
● Stage 2: Behavioral change
● Stage 3: Clinical outcome
● Stage 4: Cost reduction
● Stage 1: Engagement
● Stage 2: Behavioral change
● Stage 3: Clinical outcome
● Stage 4: Cost reduction
Why it matters to founders Buyers expect founders to know which stage they’re in – and not overpromise results from later stages before they exist.
08
Pharma, PBMs & Drug Channels
How drugs are priced, approved, distributed, reimbursed – and how digital health solutions fit into the ecosystem.
PBMs (Pharmacy Benefit Managers)▶
CVS Caremark, OptumRx, Express Scripts, Prime Therapeutics
Intermediaries managing the pharmacy benefit for health plans and employers. PBMs control formularies, negotiate drug prices, extract rebates from manufacturers, determine member cost-sharing, and manage pharmacy networks and utilization rules.
Intermediaries managing the pharmacy benefit for health plans and employers. PBMs control formularies, negotiate drug prices, extract rebates from manufacturers, determine member cost-sharing, and manage pharmacy networks and utilization rules.
Why it matters to founders for digital health founders PBMs are the gatekeepers of medication access. If your solution affects medication adherence, prescribing, or specialty drug workflows, PBMs will likely determine whether your product is used, reimbursed, or integrated. PBM alignment can unlock enormous scale – PBM resistance can kill a business model.
Formularies & Tiers▶
Structured lists of approved medications organized into tiers (e.g., Tier 1 = generics, Tier 2 = preferred brands, Tier 3 = non-preferred brands, Tier 4 = specialty).
Why it matters to founders Tier placement determines a drug’s out-of-pocket cost and practical access. Digital health solutions that improve adherence or cost transparency must understand formulary tiers and how patients experience them (e.g., $10 vs $150 copays).
Rebates (Manufacturer → PBM)▶
Negotiated payments from drug manufacturers to PBMs in exchange for favorable formulary placement.
Why it matters to founders Rebates distort true drug prices. A drug with a high list price but large rebate may be “preferred” over a cheaper competitor. If your product influences prescribing, affordability, or formulary navigation, you must understand rebate incentives – they heavily influence PBM behavior.
Specialty Pharmacy▶
A pharmacy channel focused on expensive, high-touch medications requiring special storage, administration, monitoring, or prior authorization (e.g., biologics, injectables).
Why it matters to founders Many high-cost chronic conditions (oncology, autoimmune, metabolic) use specialty pharmacies. If your product supports these populations, specialty pharmacy workflows and medication access barriers (shipping delays, PA, step therapy) will shape your GTM.
White Bagging▶
A process in which a specialty pharmacy ships a medication directly to the provider for administration.
Why it matters to founders Reduces provider revenue from buy-and-bill but simplifies payer control of drug spend.
Brown Bagging▶
Medication is shipped to the patient, who brings it to the provider.
Why it matters to founders Providers dislike this because it raises safety, storage, and liability issues. Founders must know if their clinical model interacts with brown-bag practices.
Clear Bagging▶
Medication is dispensed through the health system’s own specialty pharmacy for administration onsite.
Why it matters to founders Preferred by hospitals – keeps revenue internal and reduces safety concerns. Relevant for any solution interacting with in-hospital treatment workflows.
Medical vs. Pharmacy Benefit▶
● Pharmacy benefit: Covers prescription drugs picked up at pharmacies
● Medical benefit: Covers drugs administered by clinicians (infusions, injections)
● Medical benefit: Covers drugs administered by clinicians (infusions, injections)
Why it matters to founders ● Your product may depend on one benefit category more than the other
● Medical benefit drugs require provider billing (J-codes, buy-and-bill)
● Pharmacy benefit drugs require PBM alignment
Digital health tools must understand which benefit applies to the medications they influence.
● Medical benefit drugs require provider billing (J-codes, buy-and-bill)
● Pharmacy benefit drugs require PBM alignment
Digital health tools must understand which benefit applies to the medications they influence.
Utilization Management (UM)▶
Payer rules determining which medications require prior authorization, step therapy, quantity limits, or adherence checks.
Why it matters to founders UM is the #1 source of medication access friction. If your solution reduces UM burden (auto-populating PA forms, validating clinical criteria), it becomes immediately valuable.
Specialty Drug Prior Authorization▶
Enhanced PA workflows for complex, expensive therapies requiring extensive documentation.
Why it matters to founders Opportunity for tech-enabled PA automation or advanced clinical pathways – an area where digital health can generate massive administrative savings.
Pharma Commercial Teams▶
Groups within pharma companies responsible for marketing, patient support, digital engagement, and HCP education.
Why it matters to founders Pharma is increasingly partnering with digital health startups for:
● Adherence support
● Patient identification
● Real-world evidence generation
● Patient onboarding/coaching
Understanding how pharma evaluates partnerships unlocks new revenue channels.
● Adherence support
● Patient identification
● Real-world evidence generation
● Patient onboarding/coaching
Understanding how pharma evaluates partnerships unlocks new revenue channels.
Hub Services▶
Vendor-operated services that help patients navigate insurance, prior authorization, copay assistance, and specialty pharmacy coordination.
Why it matters to founders If your digital health product touches specialty drug access, hubs will define the experience patients have. Integrating or partnering with hubs can accelerate adoption.
Copay & Affordability Programs▶
Manufacturer-funded programs reducing patient OOP costs for brand-name therapies.
Why it matters to founders If your product impacts medication adherence, cost savings from copay cards may influence adherence patterns.
Patient Support Programs (PSPs)▶
Services provided by pharma to help patients adhere to medications through coaching, reminders, education, and financial support.
Why it matters to founders Digital health products may compete with or augment PSPs. Some startups become PSP partners to pharma companies.
Where Digital Health Fits Into the Drug Channel▶
Digital health can influence:
● Adherence (behavioral, reminders, coaching)
● Prior authorization automation
● Patient onboarding for complex therapies
● Remote monitoring of safety/efficacy
● Real-world evidence generation
● Adherence (behavioral, reminders, coaching)
● Prior authorization automation
● Patient onboarding for complex therapies
● Remote monitoring of safety/efficacy
● Real-world evidence generation
Why it matters to founders Pharma-related partnerships often provide early revenue and predictable growth – but you must understand benefit design, PBMs, UM, and specialty pharmacies to speak the buyer’s language.
09
Business Models & Contracting
How healthcare organizations buy, who signs the contract, how long it takes, and how startups should structure pricing and pilots to avoid common traps.
SaaS (Software as a Service)▶
A recurring subscription model (monthly or annual) for software usage. Can be priced per user, per site, per patient, or enterprise-wide.
Why it matters to founders Healthcare buyers require SaaS models to demonstrate clear operational value – time saved, errors prevented, documentation improved. SaaS alone rarely works unless paired with measurable financial or workflow outcomes. Buyers scrutinize renewals heavily.
PMPM (Per Member Per Month Pricing)▶
A population-based pricing model common in payer and employer deals. Startups are paid a flat monthly fee based on the number of eligible members.
Why it matters to founders PMPM is attractive when your solution affects a broad population (e.g., chronic disease, navigation, behavioral health). But it requires a strong ROI story, flawless actuarial logic, and alignment with purchaser incentives. Weak PMPM pitches die fast.
Shared Savings▶
A contract model where the startup earns a percentage of the cost savings it helps generate (e.g., reduced hospitalizations, improved adherence).
Why it matters to founders Attractive to payers and providers in VBC arrangements but requires:
● Clear baselines
● Data sharing
● Attribution logic
● Agreement on measurement methods
Founders often underestimate how hard it is to validate savings rigorously.
● Clear baselines
● Data sharing
● Attribution logic
● Agreement on measurement methods
Founders often underestimate how hard it is to validate savings rigorously.
Direct-to-Consumer (D2C)▶
Consumers pay directly for the product or service (subscription, one-time fee).
Why it matters to founders Offers fast early revenue but is highly sensitive to price, churn, and marketing costs. Most digital health D2C companies eventually migrate to employer or payer models due to more stable economics.
Hybrid Clinical + SaaS Model▶
Combining software with clinical services (telehealth, monitoring, coaching).
Why it matters to founders Enables higher pricing and deeper outcomes – but increases regulatory burden (credentialing, licensure, documentation, medical oversight). Complex to scale across states.
Results-Based or Performance-Based Contracts▶
Payment tied to metrics such as reduced readmissions, improved adherence, better risk adjustment, or higher screening rates.
Why it matters to founders Extremely attractive to buyers – but only if the startup has strong evidence and reliable access to data. Without data, you cannot prove results or get paid.
10
The Most Critical Entries for Startups
These entries catch 80% of Israeli startups off guard – and often determine survival.
Pilotitis▶
The trap of running endless unpaid or low-value pilots that fail to convert into commercial contracts. The #1 failure mode of non-U.S. healthcare startups.
Why it matters to founders ● Pilots are easy for buyers to say “yes” to
● But without strict success criteria, they rarely turn into paid deals
● Pilots consume engineering resources, product time, and credibility
To avoid Pilotitis, founders must insist on:
● Pre-agreed success metrics
● Conversion triggers (what turns pilot → contract)
● Clear budget owner
● Defined timeline and decision date
If a buyer will not define success criteria or budget path, the pilot is a dead end.
● But without strict success criteria, they rarely turn into paid deals
● Pilots consume engineering resources, product time, and credibility
To avoid Pilotitis, founders must insist on:
● Pre-agreed success metrics
● Conversion triggers (what turns pilot → contract)
● Clear budget owner
● Defined timeline and decision date
If a buyer will not define success criteria or budget path, the pilot is a dead end.
Sales Cycle▶
The time from first meaningful meeting to signed contract.
Why it matters to founders In U.S. healthcare, sales cycles are:
● Providers: 12–18 months (longer for IDNs)
● Health plans: 18–24 months
● Employers: 3–9 months
Underestimating sales cycle length is a leading cause of startup failure. Your fundraising must accommodate at least one full cycle.
● Providers: 12–18 months (longer for IDNs)
● Health plans: 18–24 months
● Employers: 3–9 months
Underestimating sales cycle length is a leading cause of startup failure. Your fundraising must accommodate at least one full cycle.
Procurement (IT + Security Review)▶
The formal review process assessing privacy, security, risk, and technical fit before a contract is approved.
Why it matters to founders Procurement can take months even when the champion loves your solution. SOC 2 Type II, HITRUST, and strong documentation shorten this dramatically.
Budget Owner vs. Influencer vs. User▶
Healthcare organizations have misaligned roles:
● User = clinician, care manager, patient
● Influencer = medical directors, quality leaders
● Buyer = CFO, benefits director, service line administrator
● User = clinician, care manager, patient
● Influencer = medical directors, quality leaders
● Buyer = CFO, benefits director, service line administrator
Why it matters to founders The person who loves your product is rarely the one who signs the check. Your GTM must identify the buyer, not just the champion.
Buyer / User / Beneficiary Triangle▶
In healthcare, the person who pays is often not the person who uses – and not the person who benefits. Example:
● Buyer: employer
● User: employee
● Beneficiary: the health plan (cost savings)
● Buyer: employer
● User: employee
● Beneficiary: the health plan (cost savings)
Why it matters to founders This triangle creates structural friction. Founders must show value to all three, but especially to the one who pays.
MSA, BAA, SLA (Contract Bundle)▶
● MSA: Legal terms governing the vendor relationship
● BAA: Defines PHI handling responsibilities
● SLA: Defines uptime, performance, support standards
● BAA: Defines PHI handling responsibilities
● SLA: Defines uptime, performance, support standards
Why it matters to founders Procurement will not proceed until all three are negotiated. Weak SLAs or incomplete BAAs stall deals.
Benefits Consultants (as a Contracting Layer)▶
Consultants who design employer benefits and recommend vendors.
Why it matters to founders Employers rarely sign contracts without consultant endorsement. You are, in practice, selling to the consultant, not the employer.
GPO Contracts (Hospitals)▶
Group purchasing agreements enabling negotiated pricing across systems.
Why it matters to founders Simplifies contracting but does not generate demand. Still need champions and budget owners.
Utilization Management Integration▶
Automating prior authorization, eligibility verification, documentation submission.
Why it matters to founders UM automation is a high-value wedge – it reduces administrative burden and accelerates adoption.
Risk Contracting Alignment▶
Aligning your ROI story to a buyer’s risk model (downside risk, capitation, shared savings).
Why it matters to founders Solutions that directly reduce downside exposure or improve shared savings potential become “must haves.”
Pricing Strategy Mistakes (Common Founder Pitfalls)▶
• Pricing by “feature count” instead of cost savings
• A PMPM price that exceeds the actuarial value delivered
• Assuming clinicians will pay out-of-pocket for software
• Charging providers for solutions that reduce FFS revenue
• Forgetting to include integration costs
• Underestimating procurement friction
Healthcare pricing must map to economic impact, not product cost.
• A PMPM price that exceeds the actuarial value delivered
• Assuming clinicians will pay out-of-pocket for software
• Charging providers for solutions that reduce FFS revenue
• Forgetting to include integration costs
• Underestimating procurement friction
Healthcare pricing must map to economic impact, not product cost.
J-Curve of Commercial Traction▶
A common adoption pattern where engagement and VOI show early promise, but financial ROI appears later, resulting in an initial dip before payoff.
Why it matters to founders Buyers expect slow early ROI. Founders must set expectations and design pilots that reveal early leading indicators before full financial impact appears.
Contracting “Triggers” (What Buyers Need Before Signing)▶
• Demonstrated ROI or strong VOI
• Champion buy-in
• Security approval
• Integration feasibility
• Clear budget line
• Demonstrated patient adoption
Missing even one can kill deals.
• Champion buy-in
• Security approval
• Integration feasibility
• Clear budget line
• Demonstrated patient adoption
Missing even one can kill deals.
11
Common Acronyms
A fast, founder-friendly reference for the most important U.S. healthcare acronyms.
ACO: Accountable Care Organization▶
A group of providers jointly responsible for cost and quality of a defined patient population, often under shared savings or downside risk.
Relevance: Strong buyer for solutions reducing avoidable utilization or improving chronic care.
Relevance: Strong buyer for solutions reducing avoidable utilization or improving chronic care.
ADT: Admission, Discharge, Transfer▶
A set of HL7 v2 messages that track patient movement across care settings.
Relevance: Essential for solutions involving care transitions, follow-up, or readmission reduction.
Relevance: Essential for solutions involving care transitions, follow-up, or readmission reduction.
APC: Ambulatory Payment Classification▶
Medicare’s outpatient payment grouping for hospital-based services.
Relevance: Determines how outpatient products are reimbursed.
Relevance: Determines how outpatient products are reimbursed.
ASC: Ambulatory Surgery Center▶
Outpatient facility for surgical procedures.
Relevance: Fast adopters of tools improving throughput, cancellations, and post-op outcomes.
Relevance: Fast adopters of tools improving throughput, cancellations, and post-op outcomes.
ASO: Administrative Services Only▶
Arrangement where employers self-insure and insurers only process claims.
Relevance: Defines who carries financial risk : critical for ROI-based pitches.
Relevance: Defines who carries financial risk : critical for ROI-based pitches.
BAA : Business Associate Agreement▶
Contract defining how a vendor handles PHI for a covered entity.
Relevance: Cannot sell to providers/payers without it.
Relevance: Cannot sell to providers/payers without it.
C-CDA : Consolidated Clinical Document Architecture▶
A document standard for sharing clinical summaries.
Relevance: Still widely used in hospital integrations.
Relevance: Still widely used in hospital integrations.
CCM : Chronic Care Management▶
A CPT code set reimbursing for ongoing care coordination of chronic patients.
Relevance: Often used in digital health reimbursement models.
Relevance: Often used in digital health reimbursement models.
CCPA / CPRA – California Privacy Laws▶
State laws expanding patient data rights beyond HIPAA.
Relevance: Applies to many D2C health apps.
Relevance: Applies to many D2C health apps.
CED : Coverage with Evidence Development▶
CMS pathway allowing coverage while collecting evidence.
Relevance: Useful for innovative diagnostics or remote monitoring.
Relevance: Useful for innovative diagnostics or remote monitoring.
CEHRT : Certified EHR Technology▶
ONC certification for EHR modules.
Relevance: Ensures compatibility for deep integrations.
Relevance: Ensures compatibility for deep integrations.
CHIP : Children’s Health Insurance Program▶
Provides health insurance for children in low-income families.
Relevance: Important if your solution serves pediatrics.
Relevance: Important if your solution serves pediatrics.
CMMI : Center for Medicare and Medicaid Innovation▶
Designs new payment and delivery models.
Relevance: CMMI pilots often shape commercial opportunities.
Relevance: CMMI pilots often shape commercial opportunities.
CMS : Centers for Medicare & Medicaid Services▶
The federal agency running Medicare, Medicaid, and ACA rules.
Relevance: CMS policy sets national norms for reimbursement.
Relevance: CMS policy sets national norms for reimbursement.
CPT : Current Procedural Terminology▶
Codes describing medical procedures and services.
Relevance: Determines if/how your product gets reimbursed.
Relevance: Determines if/how your product gets reimbursed.
DMEPOS : Durable Medical Equipment, Prosthetics, Orthotics & Supplies▶
Category of reimbursable medical equipment.
Relevance: Impacts device-based digital health business models.
Relevance: Impacts device-based digital health business models.
DRG : Diagnosis-Related Group▶
Fixed inpatient payment based on expected resource use.
Relevance: Aligns solutions to LOS reduction, complications, and readmissions.
Relevance: Aligns solutions to LOS reduction, complications, and readmissions.
DUA : Data Use Agreement▶
Contract governing the use of Limited Data Sets.
Relevance: Required for most advanced analytics or AI development.
Relevance: Required for most advanced analytics or AI development.
E&M : Evaluation and Management▶
CPT code family for clinician visits.
Relevance: Affects documentation and billing for clinical workflows.
Relevance: Affects documentation and billing for clinical workflows.
EHR : Electronic Health Record▶
Clinical system-of-record used by providers.
Relevance: Your product must complement, integrate with, or work around it.
Relevance: Your product must complement, integrate with, or work around it.
EOB : Explanation of Benefits▶
Statement explaining how a claim was processed.
Relevance: Important for patient-facing transparency tools.
Relevance: Important for patient-facing transparency tools.
FFS : Fee-for-Service▶
Payment model paying per visit/procedure.
Relevance: Impacts incentives; solutions reducing utilization face resistance.
Relevance: Impacts incentives; solutions reducing utilization face resistance.
FHIR : Fast Healthcare Interoperability Resources▶
Modern API standard for healthcare data exchange.
Relevance: Core integration method for digital health.
Relevance: Core integration method for digital health.
FQHC : Federally Qualified Health Center▶
Community clinics serving underserved populations.
Relevance: High-need customers for access-focused solutions.
Relevance: High-need customers for access-focused solutions.
GPO : Group Purchasing Organization▶
Aggregates hospital purchasing power.
Relevance: Speeds procurement but doesn’t guarantee demand.
Relevance: Speeds procurement but doesn’t guarantee demand.
HCC : Hierarchical Condition Category▶
CMS risk adjustment categories used to adjust MA payments.
Relevance: Solutions improving diagnosis capture generate direct financial ROI.
Relevance: Solutions improving diagnosis capture generate direct financial ROI.
HIE : Health Information Exchange▶
Regional networks for exchanging health data.
Relevance: Important for interoperability.
Relevance: Important for interoperability.
HITRUST▶
Security framework mapping to HIPAA and NIST.
Relevance: Required by many payers.
Relevance: Required by many payers.
HMO : Health Maintenance Organization▶
Insurance model with strict networks and referrals.
Relevance: Affects access and prior auth rules.
Relevance: Affects access and prior auth rules.
ICD-10-CM : International Classification of Diseases (10th Edition)▶
Diagnosis coding system supporting medical necessity and risk adjustment.
Relevance: Required for all reimbursement logic.
Relevance: Required for all reimbursement logic.
IDN : Integrated Delivery Network▶
Health system combining hospitals, clinics, and providers.
Relevance: High-value but slow-moving buyer.
Relevance: High-value but slow-moving buyer.
J-Codes▶
HCPCS codes for clinician-administered drugs.
Relevance: Essential for buy-and-bill workflows.
Relevance: Essential for buy-and-bill workflows.
KOL : Key Opinion Leader▶
Influential clinician advocating internally.
Relevance: Required to drive adoption and pilot conversion.
Relevance: Required to drive adoption and pilot conversion.
LDS : Limited Data Set▶
HIPAA data type excluding identifiers but allowing dates/geography.
Relevance: Useful for analytics and modeling.
Relevance: Useful for analytics and modeling.
MA : Medicare Advantage▶
Privately run Medicare plans with risk adjustment incentives.
Relevance: Ideal buyers for solutions improving Star Ratings or HCC capture.
Relevance: Ideal buyers for solutions improving Star Ratings or HCC capture.
MCO : Managed Care Organization▶
Entities administering Medicaid or MA benefits.
Relevance: Complex but high-need buyer.
Relevance: Complex but high-need buyer.
MSA : Master Services Agreement▶
Core legal contract governing vendor relationship.
Relevance: Required before deployment.
Relevance: Required before deployment.
NCD / LCD : National & Local Coverage Determinations▶
CMS policies defining what Medicare will cover.
Relevance: Affects reimbursement eligibility nationwide or regionally.
Relevance: Affects reimbursement eligibility nationwide or regionally.
NDC : National Drug Code▶
Identifier for medications.
Relevance: Essential for pharmacy and specialty drug workflows.
Relevance: Essential for pharmacy and specialty drug workflows.
NPI : National Provider Identifier▶
Unique ID for clinicians and organizations.
Relevance: Required for billing and credentialing.
Relevance: Required for billing and credentialing.
OIG : Office of Inspector General▶
Enforces healthcare fraud laws (e.g., Anti-Kickback).
Relevance: Affects incentive structures and contracting.
Relevance: Affects incentive structures and contracting.
ONC : Office of the National Coordinator for Health IT▶
Regulates interoperability standards.
Relevance: Sets rules for EHR integrations.
Relevance: Sets rules for EHR integrations.
PCCP : Predetermined Change Control Plan▶
Framework allowing FDA-cleared AI models to update algorithmically.
Relevance: Critical for adaptive ML products.
Relevance: Critical for adaptive ML products.
PCP : Primary Care Provider▶
Frontline clinician managing general care and referrals.
Relevance: Key stakeholders in VBC and chronic disease.
Relevance: Key stakeholders in VBC and chronic disease.
PBM : Pharmacy Benefit Manager▶
Intermediary controlling formularies, drug pricing, and UM.
Relevance: Gatekeeper for any medication-related solution.
Relevance: Gatekeeper for any medication-related solution.
PMPM : Per Member Per Month▶
Population-based pricing model.
Relevance: Used in payer/employer contracting.
Relevance: Used in payer/employer contracting.
POS : Place of Service▶
Code indicating care setting.
Relevance: Impacts reimbursement and eligibility.
Relevance: Impacts reimbursement and eligibility.
PRO : Patient-Reported Outcome▶
Outcome data reported directly by patients.
Relevance: Increasingly required in VBC and for payer decisions.
Relevance: Increasingly required in VBC and for payer decisions.
QHIN : Qualified Health Information Network▶
TEFCA-certified networks enabling nationwide data exchange.
Relevance: Potentially replaces dozens of point-to-point integrations.
Relevance: Potentially replaces dozens of point-to-point integrations.
RAC : Recovery Audit Contractor▶
Auditors checking improper billing.
Relevance: Drives documentation requirements.
Relevance: Drives documentation requirements.
RWD : Real-World Data▶
Data from routine clinical workflows.
Relevance: Key input for evidence generation.
Relevance: Key input for evidence generation.
RWE : Real-World Evidence▶
Insights derived from RWD.
Relevance: Critical for payer contracts.
Relevance: Critical for payer contracts.
RPM : Remote Physiologic Monitoring▶
Reimburses for monitoring physiological data via medical devices.
Relevance: Hardware-dependent; not ideal for software-only startups.
Relevance: Hardware-dependent; not ideal for software-only startups.
RTM : Remote Therapeutic Monitoring▶
Reimburses for tracking non-physiologic data (adherence, pain, therapy engagement).
Relevance: Major opportunity for software-first digital health products.
Relevance: Major opportunity for software-first digital health products.
SaMD : Software as a Medical Device▶
Software regulated as a medical device under FDA rules.
Relevance: Requires validation and regulatory strategy.
Relevance: Requires validation and regulatory strategy.
SLA : Service Level Agreement▶
Defines uptime, support, and performance obligations.
Relevance: Required in enterprise contracts.
Relevance: Required in enterprise contracts.
SOC 2 (Type II)▶
Security certification demonstrating sustained compliance with controls.
Relevance: Required for most enterprise healthcare buyers.
Relevance: Required for most enterprise healthcare buyers.
SNF : Skilled Nursing Facility▶
Provides rehab and long-term care.
Relevance: Strong fit for solutions improving transitions and reducing readmissions.
Relevance: Strong fit for solutions improving transitions and reducing readmissions.
TEFCA : Trusted Exchange Framework & Common Agreement▶
National interoperability framework.
Relevance: Will standardize data exchange pathways.
Relevance: Will standardize data exchange pathways.
TPA : Third-Party Administrator▶
Processes claims for self-insured employers.
Relevance: Critical operational gatekeeper for employer GTM.
Relevance: Critical operational gatekeeper for employer GTM.
UM : Utilization Management▶
Rules governing prior authorization, step therapy, and quantity limits.
Relevance: Major barrier or opportunity for digital health automation tools.
Relevance: Major barrier or opportunity for digital health automation tools.
USCDI : U.S. Core Data for Interoperability▶
Defines essential data elements required for exchange.
Relevance: Predicts what data your integration will reliably retrieve.
Relevance: Predicts what data your integration will reliably retrieve.
VBC : Value-Based Care▶
Payment model focused on outcomes and cost rather than volume.
Relevance: Aligns strongly with digital health ROI.
Relevance: Aligns strongly with digital health ROI.