Driving change in small business healthcare with Will Young

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Welcome to the SMB Tech Innovators podcast, powered by Gusto, where we explore the intersection of financial services and vertical SaaS strategy and discuss how software combats the rising complexity of running a business. We aim to share stories, advice, and best practices from the leaders and investors behind today’s cutting-edge platforms. Navigating the maze of health insurance can be a daunting challenge for small businesses, but it’s a critical cornerstone for their growth and employee well-being. This episode features an informative conversation with Will Young, CEO and Co-Founder of Sana Benefits. He breaks down the intricacies of reshaping health plans to be more accessible and effective for small enterprises.

Podcast Highlights

• Addressing health insurance as a major pain point for small businesses was the motivation behind starting Sana.
• Building a virtual primary care practice to enhance the healthcare experience.
• The shift toward value-based care models in healthcare is worthy of discussion.
• Trends in the health insurance market, including the rise in healthcare’s share of GDP.
• Sana’s focus is on small businesses and their unique needs.
• Efforts to transform patient experience through exceptional customer service and virtual care.
• A strategy for treating any provider as in-network to simplify processes for members.
• The role of brokers in the health insurance market and Sana’s relationship with them.
• Insight into Sana’s product strategy, focusing on healthcare.
• Will shares advice for starting a business in regulated industries.

Sana Benefits: Revolutionizing Small Business Healthcare

Small businesses often struggle to provide their employees with affordable and efficient health plans. On this recent SMB Tech Innovators Podcast episode, Brian Busch had an insightful conversation with Will Young, the CEO and Co-founder of Sana Benefits. Sana Benefits mission is to transform the healthcare experience for small business employers and their employees. In this blog, we’ll recap the key points from the podcast, exploring Sana’s journey, the changing dynamics in the healthcare market, and the innovative approaches they are taking.

Sana Benefits was founded by Will and Nathan Hackley six years ago. They both previously worked at Justworks, a PEO (Professional Employer Organization) that provided payroll and benefits software. They identified health insurance as a significant pain point for small businesses and set out to build understandable, accessible, and affordable options for small business employers and their employees.

Key Takeaways:

1. Solving the Health Insurance Conundrum: Sana Benefits focuses on making health plans work better for small businesses. Recognizing health insurance as a crucial but frustrating expense, they built a full-stack health plan from the ground up, centered around the specific needs of small business customers.
2. Virtual Primary Care Practice: What sets Sana apart is not just offering a financial product but also creating a mediation layer between the member and the healthcare system. Sana introduced a virtual primary care practice that comes bundled with their health plans, offering members access to a concierge doctor and resolving a wide range of medical issues virtually.
3. Navigating the Complexity: Addressing the complexity of the US healthcare system, emphasizing the need for a shift from the traditional fee-for-service model to value-based care that provides high-quality healthcare while keeping costs down. Sana’s approach involves offering a virtual care practice for free and incentivizing doctors to focus on patient outcomes rather than maximizing the number of visits.

Trends and Challenges in the Healthcare Market

Rising costs, regulatory barriers, and complexities in the US healthcare system pose significant challenges. The industry’s inefficiencies are perpetuated by a fee-for-service model that needs streamlining. Coordinating disparate specialties and reducing barriers to innovation could mitigate costs and improve care delivery.

Key Insights:

1. Rising Healthcare Costs: Will highlights the alarming trend of healthcare consuming an increasing share of the US economy, surpassing 20% of the total GDP. He attributes this rise to high regulatory barriers, consolidation among insurers and providers, and the growing complexity of healthcare.
2. Regulatory Barriers and Lack of Competition: Will points out that regulatory barriers, particularly those established since World War II, have made it challenging to start new health insurers like Sana. The lack of competition contributes to higher prices for customers. Additionally, consolidation among insurers and providers at the local level further limits options and drives up costs.
3. Complexity and Lack of Solutions: The complexity of healthcare, combined with the fee-for-service model, has resulted in a lack of solutions that drive costs lower. Advances in specialized domains have made care more complex, and the existing model does not effectively coordinate different specialties.

Sana’s Differentiators in the Market

Sana Benefits provides a comprehensive solution tailored to small businesses’ unique needs. They treat any provider as in-network, revolutionizing the traditional healthcare delivery process. Sana streamlines the process of getting reasonable rates for out-of-network providers, making it easier for them to become in-network partners. Will believes that Sana’s unique attributes make it a standout option for small businesses in the complex healthcare market.

Key Features:

1. Focus on Small Businesses: Sana’s focus on small businesses is its primary differentiator. Recognizing the unique needs of this segment, Sana tailors its health plan to be a one-stop-shop solution, understanding the different dynamics compared to large businesses.
2. Enhanced Customer Service: Sana prioritizes providing exceptional customer service, a crucial element given the dissatisfaction with incumbent health insurers. Investing in high-quality customer support, the company aims to create a seamless experience for members, moving beyond reactive support to actively delivering care virtually.
3. Treating Any Provider as In-Network: One standout feature is Sana’s approach to treating any provider as if they are in-network. Will explains that they assume the risk and internalize the task of ensuring reasonable rates for out-of-network providers. The rapid contracting process helps convert many out-of-network providers into in-network providers.

Navigating the Broker Channel and Broader Ecosystem Dynamics

Brokers play a critical role in navigating the complex healthcare ecosystem alongside Sana, offering expert guidance and security to customers. While technology has streamlined processes, a human touch remains essential, particularly for small business owners. As consumer preferences shift towards self-service and direct-to-consumer models, brokers are adapting their strategies to cater to an evolving market landscape.

Strategies:

1. Broker Value: Will acknowledges the value brokers provide in terms of expert advice and psychological safety for customers. While technology can streamline some processes, the human touch remains essential, especially for small business owners who prefer personal interactions.
2. Generational Shift: Recognizing the generational shift in buying preferences, Will anticipates that, over time, there will be a transition from people buying through brokers to more self-serve and direct-to-consumer models. However, the traditional broker channel is likely to evolve and adapt to serve a broader market.

Product Strategy: Balancing Complexity and Differentiation

Sana offers a comprehensive solution for small businesses focusing on healthcare as its core differentiator. They have integrated additional benefits like dental, vision, and life insurance while prioritizing investment in healthcare and health insurance. Sana recognizes the specialized expertise of companies like Gusto and Justworks in areas like payroll, which offer additional value and experiences to their customers.

Key Considerations:

1. Small Business One-Stop Shop: Small businesses often seek a one-stop-shop solution and Sana is adding ancillary benefits and services to their platform to meet this need. However, the company remains committed to focusing on healthcare as its core differentiator.
2. Dialing in Differentiation: Will emphasizes the importance of understanding what the company excels at and where its differentiation lies. While Sana offers a platform that works for small businesses, the primary investment in product and engineering goes into transforming the healthcare and health insurance components.
3. Complementing Other Players: Sana aims to complement other players in the ecosystem, recognizing that companies like Gusto and Justworks excel in areas like payroll. By concentrating on healthcare, Sana seeks to provide its customers with a unique and valuable experience.

Advice for Entrepreneurs in Regulated Industries

Will advises entrepreneurs to adopt a beginner’s mindset when navigating heavily regulated sectors like healthcare. He suggests challenging established norms while embracing complexity as an opportunity for innovation and emphasizes continuous learning and gaining an understanding of the regulatory landscape.

Key Takeaways:

1. Beginner’s Mindset: Entering a regulated space with a beginner’s mindset can be an advantage in heavily regulated industries such as healthcare. It allows entrepreneurs to reason from first principles and challenge existing norms.
2. Don’t Fear Complexity: Entrepreneurs should not be intimidated by the complexity of regulations. Will suggests tackling daunting and esoteric problems, as this approach can lead to innovative solutions.
3. Invest in Learning: While maintaining a beginner’s mindset, investing time in learning is crucial. Will highlights the importance of reading regulations, attending conferences, and gaining a deep understanding of the industry.

The Road Ahead: Value-based Healthcare for Small Businesses

Will’s insights provide a glimpse into the innovative business model of Sana Benefits and its mission to revolutionize healthcare for small businesses. By simplifying the healthcare experience, embracing value-based care, and strategically focusing on their unique strengths, Sana Benefits is paving the way for a brighter and more accessible future in small business healthcare. As entrepreneurs navigate the complexities of regulated industries, Will’s advice guides them to challenge conventions, stay focused, and bring transformative solutions to market.

 

Listen to the entire podcast with Will Young on Spotify or Apple.

To learn more about Sana Benefits, visit Sanabenefits.com and connect with Will on LinkedIn. And, to get notified when new podcasts are available and stay in the know about embedded payroll, subscribe to the Gusto Embedded Newsletter.