Insurance Reimbursement Essentials for Healthcare Startups

In a recent MedStart workshop, speaker Thom Schilmeyer provided insightful guidance on navigating the complex ecosystem of medical startups, with a focus on strategy and reimbursement. His message resonated with entrepreneurs and medical professionals alike, offering a pragmatic approach to growing a business in the healthcare sector.

The Importance of Strategy

Schilmeyer emphasized the necessity of having a clear, well-defined strategy, rather than simply relying on hope or direction. He highlighted the importance of understanding the ecosystem in which your business operates—knowing the stakeholders, the environment, and the potential challenges that might arise. Drawing an analogy from survival shows like Survivor and Alone, Schilmeyer explained that just as survivalists must understand the terrain and resources available, entrepreneurs must be acutely aware of their business environment to succeed.

Know Your Ecosystem

A key theme of Schilmeyer’s talk was the concept of the ecosystem—understanding who the key players are and how they interact. In healthcare, this includes insurers, doctors, pharmacies, and patients, each with their own roles and interests. He stressed that without knowing the transactional relationships between these stakeholders, it’s impossible to create an effective business strategy.

Schilmeyer provided an in-depth look at the reimbursement process, which is central to any medical startup. Entrepreneurs need to understand that getting insurance companies to reimburse for new products or services is not immediate or guaranteed. Even the most groundbreaking products face challenges when navigating the reimbursement landscape, where insurance companies prioritize what works, what saves money, and whether there’s demand.

Financial Transactions in Healthcare

Schilmeyer used the example of a prescription to illustrate the complexity of financial transactions in healthcare. For a single prescription, there are multiple stakeholders involved in the payment process—employers, insurance companies, pharmacies, doctors, and the patient. This complexity can create hurdles, but understanding these layers is key to positioning a product or service within the ecosystem.

Real-World Example: Building Credibility and Scale

Schilmeyer shared his personal entrepreneurial journey, focusing on how he built a successful revenue cycle management company from the ground up. Starting with no experience in billing, he leveraged his network and identified unmet needs, particularly around medical supplies. By offering a 40% discount on sutures to dermatologists, he built credibility, gained market share, and grew his business exponentially within a year.

His approach demonstrated the power of networking, asking questions, and solving problems for stakeholders, showing that even small players can compete with giants like Johnson & Johnson by understanding and leveraging the ecosystem.

Navigating Reimbursement Challenges

One of the workshop’s key takeaways was the difficulty of securing reimbursement for new products. Schilmeyer noted that while reimbursement from insurers is often seen as the “gold standard,” it’s a lengthy and challenging process. He advised entrepreneurs to have phased revenue strategies and to explore alternative payment models such as fee-for-service, buy-and-bill, or direct-to-consumer sales while waiting for insurance approval.

Schilmeyer also emphasized the importance of building relationships with doctors, associations, and industry partners who can advocate for your product and help you navigate the complex world of reimbursement.

Conclusion

Thom Schilmeyer’s workshop was a masterclass in understanding the intricate web of stakeholders, transactions, and strategies that make up the healthcare ecosystem. His advice was clear: success in the medical field requires more than just a good product—it demands a deep understanding of the environment, a phased approach to revenue, and strong relationships with key players. Entrepreneurs who take the time to study their ecosystem and develop a robust strategy are far more likely to succeed.

For those interested in learning more about navigating medical reimbursement and strategy development, Thom’s experiences offer invaluable lessons that can be applied to any healthcare startup.

About Thom Schildmeyer

Thom is an accomplished executive and entrepreneur with nearly 30 years of experience in the healthcare industry. A trusted healthcare business consultant, coach, and advisor, he has a proven track record of delivering impactful results, with a focus on strategy and growth for businesses and their leaders.

Complementing his deep knowledge of business leadership, strategy, and growth, Thom has spent the majority of his career in the areas of healthcare technology, services, and programs, including revenue cycle management and insurance reimbursement. With an emphasis on the healthcare ecosystem and its various stakeholders (provider, payer, and patient).

In addition to his corporate healthcare leadership experience (Allergan, Inc., Vision Services Plan), Thom founded and successfully sold his own healthcare business, Aesyntix Health (now part of Modernizing Medicine), and has since launched TLS Strategy Solutions to help other entrepreneurs and leaders develop their businesses.