As a seller, you want to sell to an organization with a single decision-maker who’s free from regulatory constraints, has high margins, a risk-taking mindset, plenty of cash, and no legacy systems in place to slow things down. This is the exact opposite of a typical health system.

Many salespeople claim their market segment is the toughest. But those who sell to health systems might just take the prize. Health systems are notoriously challenging to sell into. To sell to these organizations more effectively, it’s helpful to consider why that is.

1. Complex Organizational Structure

Health systems have very complex ownership and decision-making structures. There are multiple layers of authority, often with competing interests, incentives, and priorities: executive leadership, service line leadership (orthopedics, cardiology, nephrology, etc.), procurement leadership, and technology leadership, all of whom can veto a decision. Clinical needs can also quickly shift priorities, sometimes sidelining other initiatives. And then there’s the troublesome “innovation” team, often connected to a venture investment fund with its own set of disjointed incentives. Selling a product to a health system often requires buy-in, alignment, and approval from all of these stakeholders. A key part of the job for a salesperson is to help the buyer navigate their own internal processes to enable a purchase.

2. Regulatory and Compliance Constraints

Health systems face numerous layers of regulatory oversight that can significantly slow down procurements. Requirements include HIPAA, accreditation standards, state licensing, anti-kickback laws, and CMS guidelines, to name a few. On the technology side alone, there are the HITECH Act, EHR incentive programs, FDA software regulations, FISMA, and interoperability standards. Vendors must undergo rigorous vetting and compliance processes, which can radically slow and often end a sales cycle. It’s crucial that sellers have a deep understanding of the regulatory and compliance issues that overlap with their products.

3. The Dominance of the EHR

Few industries have a software vendor that wields as much influence over internal decision-making as EHR vendors do in healthcare. These are giant, long-term contracts, and depending on where a health system is in its EHR implementation, dozens to hundreds of EHR employees can be embedded within the health system. Often, if you’re selling a software product, someone in the health system will consult their EHR vendor before even considering a conversation. These EHR vendors frequently have ancillary or directly competing products, and there’s a saying among health tech salespeople that the large EHR Account Managers are trained to respond to any new software procurement by saying, “We already do that.” And often, once you get approval to move ahead, a lengthy integration conversation must be waded through, both in terms of feasibility and timing.

4. Low Risk Tolerance

Given the life-and-death nature of their work, inherent low margins, litigious concerns, mostly not-for-profit structures, and heavy regulatory burdens, health systems rightfully prioritize avoiding mistakes over taking risks. This makes selling a new, unproven product quite challenging. They want free trials, extensive case studies, flexible contract terms, and numerous customer references. Their ROI standards are stringent, and they rely heavily on evidence-based data before making a decision. Also consultants are often brought into the process as well to help reduce risk and add rigor, adding further scrutiny and potentially misaligned incentives. A healthy cautiousness is a key part of the culture of a health system.

5. Health Systems Are (Mostly) Local

Over time, most industries will consolidate down to a few national or global players. This isn’t true in healthcare. There are 2 to 4 dominant health systems in each large metropolitan area in the country. There is some overlap via large regional players or national health systems, but not a ton; it’s a highly fragmented space. There are a bunch of very large health systems businesses scattered across the US. There are 5 US airlines whose annual revenue exceeds $5 billion. There are nearly 10 times as many US health systems that meet that threshold. These factors make selling more difficult for a variety of reasons. You don't have a consistent set of priorities across markets to sell into. There's often allegiance to local or regional vendors. It's hard to leverage competition because a New York health system doesn’t care much about that big account you won in Houston. More broadly, the lack of scale in these local health systems trims margins and makes budgets much tighter than they might be on a national scale.

6. Supply & Demand Mismatch

Over the last decade, more than $100 billion in venture capital has poured into health tech startups, creating a vast supply of vendors that need to show a return on that capital by selling their products to health systems. The supply of products far exceeds the demand, leading to vendor overload for health systems. There’s a lot of noise out there that buyers are forced to wade through. Many health systems have responded by launching innovation teams, some with venture funds attached, which attract vendors to test products using health system staff and provide the fund with deal flow. These innovation teams often wield outsized influence, creating incentive misalignment and internal conflict. Even when these aren't in place, you can bet that the health system you're selling to is pretty sophisticated at sidestepping salespeople.