How to Win Patients and Influence Payors and Providers

Our last article highlighted how patient preferences, often overlooked, significantly shape their care choices, and plays a role in driving healthcare costs.

But there’s more to healthcare decisions than clinical outcomes alone; personal, financial, and practical factors are constantly at play. These influences vary across the major stakeholders—patients, doctors, and insurers—each with unique priorities and pressures. So, what are these key motivators, and how do they drive decision-making in healthcare?

Let’s explore what makes each group tick and what investors should look for in companies catering to them.

What Influences Patient Decisions?

• Aggressive/Conservative Treatment Preference: Patients’ preferences can vary. Some seek aggressive, innovative solutions, while others prefer to stay on the safe side with conservative approaches. This often depends on their comfort with risk and their confidence in new treatments.

• Urgency in Their Daily Lives: Many patients have competing priorities. Those who rank their health issue high in importance are more likely to pursue solutions quickly, whereas others may delay seeking care until it becomes absolutely necessary. To illustrate this point with a non-clinical example, 75% of people fear speaking in public, more than the surveyed percentage that fear death. Admittedly comparing apples to orange, but it seems getting better at speaking in public has a higher priority than staying healthy and avoiding death.

• Depth of Knowledge Around the Disease: Patients often don’t fully understand their diagnosis or its implications. Consider the experience of Parkinson’s patients who face "OFF" episodes—periods when their physical symptoms reappear between doses of medication. Despite the serious impact of these episodes, many patients don’t fully understand their condition or the options available to manage it. A study shows a major gap in patient (and caretaker!) education around OFF episodes, leaving them struggling with symptoms they don’t fully understand and the inability to identify when to treat OFF episodes despite effective medication available.

• Social Influence: Friends, family, or communities that share similar health challenges can shape patient choices. Strong recommendations from their social circle may motivate patients to adopt certain treatments, or, conversely, avoid them.

Another way to look at decision making is to look at what keeps patients from diving into the latest healthcare innovation, which we’ve written before.

What Influences Physician Decisions?

• Adherence to Evidence-Based Practices: Like patients, some doctors are forward-thinking and open to trying new approaches if they believe it will result in better outcomes. However, many physicians remain cautious, hesitant to stray from established guidelines without strong, proven data backing the innovation.

• Robust Data Doesn’t Always Lead to Behavior Change: Even with ample evidence, doctors might not change their behavior. Clinical decisions carry responsibility, and convincing doctors often requires more than just logic—it requires an emotional shift. They need to feel confident in both the data and its real-world application.

• Revenue Incentives: In many healthcare settings, financial incentives play a significant role in treatment decisions. Depending on their business model (Fee-for-Service or Value-Based Care) and where they practice (as an “employee” at a large healthcare organization, or running their own private clinic), doctors are often influenced by what brings in sufficient revenue for their practice, for better or worse. This can sway whether they adopt a new product or continue using an established one.

• Physicians rely on patient cooperation: Physicians don’t make clinical decisions in a vacuum. A patient’s openness to learning about new treatments significantly impacts whether a doctor can successfully introduce innovations. The ability to easily explain new products and treatments plays a key role. Even if a product is novel or highly effective, if it’s too complicated for a physician to convey its benefits, it may not gain traction with patients. Balancing innovation with the ease of communication is essential for widespread adoption.

Physicians aren’t just emotionless robots (Hello AI Doctors?) doling out treatment based on clinical guidelines. We need to recognize the human side of healthcare and realities of operating a healthcare business to truly understand how doctors make decision.

What Influences Healthcare Insurance Company Decisions?

Health Insurance companies are behemoths of organizations which would require several articles to fully dissect their decision making process, so we’ll focus on understanding their financial incentives, which drives any modern day organization.

Here's a super oversimplified description we found useful: collect premiums, delay payouts.

While there are many different models, lets look into one specific model in Medicare Advantage (MA), which has driven tremendous revenue growth in many of the major healthcare insurers, and where any reduction in payment from MA would cause the largest healthcare payor in the US to sue the US government.

So from a high level business perspective, what influences payor behavior in MA?

Increasing Premiums Collected:

• Risk Adjustment Optimization: By accurately documenting enrollees’ health statuses, insurers qualify for higher risk-adjusted payments, effectively increasing revenue.

• Enrollment of Higher-Risk Beneficiaries: Attracting enrollees with manageable but chronic conditions (like diabetes) can lead to higher risk payments without overwhelming costs.

Delaying Payouts:

• Prior Authorization Management: By requiring extra approvals for expensive treatments, insurers can delay payouts and avoid some costs if the authorization is denied or altered.

• Encouraging Preventive Care: Promoting regular screenings and chronic disease management can delay the need for costlier interventions by keeping patients healthier, reducing payouts over time.

To make it more relatable, lets make the perfect Frankenstein MA patient:

• Risk-Adjusted High Premiums: This patient has multiple manageable chronic conditions, like diabetes and high blood pressure, which qualify for higher risk-adjusted payments. These conditions are stable enough to keep costs predictable but serious enough to increase premium revenue.

• Controlled Health Needs to Delay Payouts: They actively engage in preventive care (like regular screenings) and follow disease management programs. This reduces the need for sudden, high-cost interventions, allowing insurers to delay significant payouts while maintaining a steady stream of manageable care needs.

We’re not here to paint insurance companies as evil corporations, but notice something weird? Saving costs by taking people out of the high risk patient pool doesn’t help the insurance companies involved in MA. Hmm….

Key Takeaways for Investors:

Most, if not all healthcare startups, interact with patients, doctors, and insurers, and these groups ultimately determine the success of new treatments.

Patient preferences, from treatment aggressiveness to knowledge levels, influence their likelihood of trying innovations. Physicians require both data and tools that fit within their practice and financial incentives. Insurers, especially in Medicare Advantage, prioritize financial structures that maximize revenue and control payouts.

By understanding these motivators, investors can better identify companies likely to achieve adoption and sustainable profitability in the complex healthcare market.

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