shortening sales cycle

Why Selling To Healthcare Takes So Long

Last week, I posted about what’s different about selling to healthcare. One of the biggest differences is the sale cycle and one of the biggest questions is why selling to healthcare takes so long. 

In this post, we analyze why selling hospitals takes longer than other industries.

This is based on insights from our mentors and our team’s decades of experience in the healthcare industry.

The 6-Year Healthcare Sales Cycle

One of the longest sales cycles I experienced was six years. I founded a healthtech firm in 2012. In 2014, we had a half-a-dozen customers and a growing pipeline.  We started selling our solution to two major competing healthcare systems in the same state. We ran through 12-month sales cycles with both prospects but were not able to close either deal. We lost touch with both.

Three years later, the two competing systems merged and the new leadership was interested in what we had to offer. The whole process started again. It then took another 20 months from the first meeting to the contract. It was worth the wait as they were an important win and they became our largest customer.

Average Sales Cycles

Here are some examples of average sales cycles for various healthcare software solutions. Selling:

  • $10,000 software to physician’s office – 60-90 days
  • Secure messaging to a hospital -9 months
  • VOIP-based workflow solution to a healthcare system – 18 months
  • New EHR to a healthcare system – 2 years

Why Does The Healthcare Sales Cycle Take So Long

These are multiple times longer than software sales cycles in other industries.

Why is that? It’s the combination of many different factors.

1. Required Purchasing Process

Most organizations have a legal or board-mandated requirement to go through a competitive process. This often involves a Request for Proposal (RFP) and all the steps. 

If you are early on in the process, you can help steer the direction the RFP takes

2. Too many people involved.

There are many stakeholders: IT, clinical, financial, business, security, and purchasing. All have their say, and most healthcare organizations make decisions by committee. Building consensus is critical. In a future post, I will go into this cast of characters in more detail.

3. Proving an ROI is hard.

One of the toughest challenges is having a compelling value proposition with a credible ROI. It’s hard to prove that your solution increases sales or decreases costs when so many variables exist.

Even if you can prove it, often, a buyer won’t believe it because they have been burned before.

This is even worse if the ROI you are trying to prove is related to patient health. Proving positive clinical outcomes is hard, time-consuming, and expensive.

4. It’s all about managing risk.

This is the biggest issue why selling to healthcare takes so long. Any large purchase involves financial risk for the organization and personal risk for the decision-maker. For the organization, the financial risk can be ruinous.

There have been many stories about hospitals blaming the bankruptcy on poor EMR implementation, and many CIOs have been fired for the same reason.

In an industry that is going through so much consolidation, getting a new job is harder, so the personal stakes are very high.

The last risk is unique to healthcare. In most industries, a bad technology decision can hurt the bottom line. In healthcare, a bad technology decision can affect patients. People can die if they make a bad decision wrong.

5. Other priorities.

Often, there are other priorities that delay the process. For example, an upgrade to the EHR. This can delay a decision by months. If your prospect is under threat of being absorbed by another organization, your sale could delay indefinitely.

6. Changing decision-making criteria.

Because the sales cycle takes so long, it increases the chances that new people and new issues will get introduced. This can shift the way the decision is made.

In one situation, a healthcare organization’s CEO and Chief Medical Officer bought into our solution. Then IT got involved, and this initiated a comprehensive selection process. This brought in other stakeholders, including nursing. The nursing department wanted a different solution, and after 9 months, the decision criteria changed by 180 degrees, and we lost the deal.

7. 800 lb. Gorillas.

In every industry, there is an 800-lb gorilla. In healthcare, the two leading EHR companies, Epic and Cerner, can significantly slow the sale down of your solution.

Even if neither Epic nor Cerner offer a competitive solution to yours, they may tell your prospects that “it’s on the roadmap,” and that can kill or delay the sale by months.

Divide and Conquer

There is little that you can do to shorten the sales cycle but there are things you can do to control the sale better. In a future post, I will go into this in more detail. One key thing! If you are a sales executive, you will need to split your sales and marketing team into three – Hunters, Closers and Farmers.

  • Hunters are hard to find and retain, but someone with a network of relationships that can open new doors, pinpoint opportunities and turn them into qualified opportunities is worth their weight in gold.

  • Great Closers are experts in controlling the sale. Often they are the sales execs in charge of the hunters. They know when to take over from the hunters and how to manage the process so that it converts.

  • Farmers are easier to find, and if you have a business with many solutions, they are critical to growing your revenues with new clients. Healthcare clients are often more loyal than nonhealthcare clients, so a well-managed relationship can grow over time.

I am always keen to hear what other people in the industry have experienced. Why do you think selling to healthcare takes so long? Let me know your best and worst stories of selling into healthcare.

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Photo by Aron Visuals on Unsplash

Adam Turinas

Hi, I am Adam Turinas, Healthlaunchpad's founder. I am passionate about helping healthtech firms succeed through better sales and marketing. I have hard-earned experience in healthcare technolgy as I started two healthcare businesses in the US, the first with zero healthcare experience. We sold the second business to a strategic buyer seven years later. Over 9 years building a healhtech businesses, I have learned how to sell and market effectively to healthcare organizations. Prior to this, I spent two decades in digital marketing across healthcare and other consumer industries where I sold over $100 million in products and services to corporations and healthcare orgs. I would love to talk with you. You can book a call with me on the right hand side. Best Adam

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