Case Studies

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  • Health Business Group report. March 2016.

  • Two leading Silicon Valley venture capital funds were incubating a seed stage telemedicine company that proposed to leverage nurse practitioners as an alternative for certain primary care conditions. The investors sought out Health Business Group to assist in understanding the market landscape and segmenting prospective customers. We were compensated with a combination of cash and equity in the new venture.

    We worked closely with the entrepreneurs and investors to:

    • Identify, profile, and estimate the size of target customer segments
    • Identify distribution partners and models, then evaluate the implications of channel partner choices by target customer segment
    • Lay out alternative pricing structures, estimate target fee ranges and variations by service type
    • Identify services, functionality and workflow components of interest to target customer segments
    • Identify criteria for conditions that could be diagnosed and treated
    • Predict the timing and rate of uptake for the offering

    We developed a set of personas corresponding to the customer segments and used these to help the entrepreneurs tell the story of the market opportunity. Our work formed a key part of the business plan that was pitched to prospective Series A investors.

    Ultimately the company determined that regulatory barriers were too high to proceed and the venture was dissolved.


  • A health information technology company had achieved strong market penetration with hospitals, health systems and individual health care professionals. However, advances in technology and computer networks, consolidation of the provider market, and the company’s lack of a comprehensive pricing strategy had created challenges. The client realized that it was time to develop a more rational approach to the market and turned to Health Business Group to assist.

    We developed a robust customer segmentation model based on extensive quantitative analysis of customer usage patterns, created a cross-segment pricing formula based on value realization, supported development of a plan to communicate the new approach to customers, and devised a migration path to smooth the transition for customers.

    The client rolled out the model with its salesforce over a two-year period and achieved real-world success. In addition, the customer segmentation model has been used as a guide for product development, which was an unexpected but welcome byproduct of the original work.

  • Passage of the Affordable Care Act (ACA) has created attractive opportunities for private equity firms to invest in companies that serve newly insured segments of the population and contain costs. But investing in the sector requires insight into the details of how health reform is rolling out and how different players in the market are likely to react to new incentives, rules and opportunities.

    A middle market private equity firm asked Health Business Group for guidance on an investment in a health IT company that focused primarily on the Medicaid market. Key questions included: How would Medicaid expansion impact different customer segments and different states? To what extent would Medicaid shift new entrants into managed care? Would Medicaid managed care companies be interested in working with the company? Could the company’s offerings be expanded to the Medicare and commercial markets?

    Health Business Group leveraged its deep understanding of health care reform to refine and sharpen they key questions and to develop hypotheses for validation. Our team then conducted interviews with the target company’s existing customers, prospective customers in new market segments, industry experts and competitors. To increase our sample size we also developed and conducted an electronic survey of prospective customers across several segments.

    We worked seamlessly as part of the private equity firm's deal team and used our diligence findings to provide coaching and business development leads to the company to add additional value once the deal was consummated. 

  • The client began as a contract sales organization serving large pharmaceutical companies. Market dynamics had been deteriorating as the pharmaceutical industry as a whole began to reduce the size of its sales force and as large customers started negotiating more aggressively. We worked with the client to develop and execute an acquisition and diversification strategy that resulted in a 30-fold increase in stock price over the course of our five-year engagement.

    The strategy had three main thrusts: (1) assembling a broader portfolio of outsourced sales, marketing, and product development offerings, (2) focusing business development efforts on mid-sized and smaller customers who viewed outsourcing as a strategic imperative rather than a necessary evil, and (3) becoming an attractive acquirer for private company owners seeking a strategic buyer and the opportunity to continue their career growth. We helped identify acquisition candidates and performed commercial due diligence on companies in medication adherence, data mining, predictive modeling, pharmacovigilance, professional staffing, cost containment, sales force automation, advertising and market research.

  • A biomedical research institute within a large clinical organization had encountered difficulties in developing and communicating a strategic plan. An initial plan had been developed internally, but key members of the parent organization’s board and senior management were skeptical of the value of research and were concerned about the costs of the institute and of the proposed strategy.

    Health Business Group supported a strategic planning committee comprising parent organization board members, researchers, senior management and outside experts in the development and selection of strategic options and the creation of a model to project the financial implications of the different choices. We prepared for committee meetings by researching the funding environment (including NIH priorities and the emergence of new federal sources as part of the Affordable Care Act), benchmarking comparable organizations, and preparing discussion materials that could be comprehended well by a committee with very diverse backgrounds and outlooks. Initial interactions of the committee members were sometimes awkward and uncomfortable, but over time we were able to facilitate a common understanding of the strategic situation and to produce a robust plan.

    The final product was a strategic plan and financial model that were strongly endorsed by institute researchers, senior management, and the board of the parent organization. 

  • The company had developed a robust business managing advanced wound care services in the hospital setting and was seeking to accelerate its growth by opening freestanding hyperbaric oxygen (HBO) centers for wound care and other indications.

    Health Business Group team performed a systematic review of the evidence base for each non-wound care indication for HBO, characterized patient demographics and market size by indication, and mapped out the reimbursement environment by geography and indication. Primary sources included interviews with competitors, equipment suppliers, trade associations, health plans, financial analysts and medical researchers. We also utilized independent evidence based clinical review publications and health plan policies to map out the scientific evidence by indication.

    We developed a report card for each indication, presented an assessment of the market dynamics, and mapped out alterative market entry strategies including acquisition and greenfield development. Senior management and the board ultimately concluded that it was more promising to continue investing in the core business than to diversify into the freestanding market.


  • Health Business Group has provided technical assistance in sustainable business model development and strategic planning under the auspices of a major philanthropic foundation. Since 2009 we have worked with grantee organizations in California, Maine, Massachusetts, Michigan, Minnesota, New Mexico, Ohio, Pennsylvania, Tennessee, Washington, and Wisconsin.

    We employ a six-step approach, which we customize based on the needs of individual alliances:

    1. Characterize stakeholders –by conducting in-person interviews with 20-50 current and potential stakeholders to understand their motivation for participating in the alliance, determine how the alliance fits into their overall objectives, generate suggestions for areas of focus, and to obtain initial buy-in to support sustainability
    2. Develop value proposition –by determining the value that each stakeholder group assigns to each current and potential activity, using best practice findings from the Health Business Group knowledge base, and developing a map of value creation potential by stakeholder
    3. Determine scope –by identifying the key dimensions for strategic decision making, specifying the discrete choices that can be made on each dimension, documenting the advantages and disadvantages inherent in each choice, and deciding which choices to make. The deliverable is a one-page summary of strategic alternatives with more detailed rationale pages for each choice
    4. Define the business model –by specifying the service offerings to be delivered, defining ways those offerings could be paid for, and identifying who is likely to pay and how much. The deliverable is a simple business model schematic
    5. Identity risks –by probing for potential weaknesses in the business model and considering the macroeconomic and political context. The deliverable for this step is a risk assessment and mitigation plan
    6. Prepare transition plan. Most alliances can expect to continue to receive funding from the foundation for three or four years beyond our engagement. This provides the opportunity to develop a transition plan, which includes identifying gaps between the future sustainable state and the current state, developing a plan to close key gaps, outlining a process for monitoring and making course corrections


  • A leading pharmacy benefit management (PBM) company had achieved a robust growth trajectory via organic growth and acquisitions. Health Business Group was asked to evaluate the attractiveness of other medical benefits markets including oncology, radiology, orthopedics, and medical devices and to develop an entry strategy for the more promising ones.

    We developed a baseline market size estimate for each opportunity, using secondary sources to segment the market by key characteristics.  We also researched pricing levels and market growth along the same dimensions.

    We assessed the impact of ongoing and anticipated industry changes on the attractiveness of the market.  Benefits management is a dynamic field, with significant changes underway in payment methodologies and reimbursement levels, evolution in evidence-based guidelines, concerns about patient safety, new technologies, and changes in patient mix.

    We investigated the competitive landscape to understand current capabilities of the main players, and to assess the value of our client’s technology, knowhow and relationships in these fields

    We worked to create a rigorous fact base built upon primary and secondary research.   We provided a refined assessment of the attractiveness of the opportunity as well as market entry options with advantages and disadvantages of each. For the most promising segment we conducted acquisition screening and performed commercial due diligence on two companies.


  • A large private equity firm asked Health Business Group to assist in the commercial due diligence of a core information technology provider for health plans.

    The target was a leading player with smaller health plans and was aggressively trying to gain ground with larger customers but encountering entrenched competitors. The target had a compelling offering that matched up well with competitors along the areas of benefit administration, care management and member engagement.  In addition the target offered a more modern, modular system design that provided superiority in terms of performance, flexibility and cost.  Health Business Group was asked to focus efforts on validating the aggressive revenue plan necessary to justify the deal terms and valuation.

    We provided input into key questions upon which valuation would depend:

    • From the customer perspective, how does the target’s offering compare to other direct and indirect competitors?
    • How satisfied are existing customers? What are the key sources of satisfaction and dissatisfaction?
    • What industry trends will drive new product requirements (e.g., ICD-10, new HEDIS reporting requirements, new payment models)?
    • How do prospective customers view the target? How well-positioned is the company to move up market?
    • What is the decision-making and contracting process? Who are the decision makers and influencers? How is the process conducted? What is the timeline?
    • What are typical budgets and price points?

    Based upon management meetings, industry conferences, and discussions with health plan management across marketing, operations, IT, and provider services domains, the due diligence findings showed significant upside revenue potential but a longer sales cycle than projected.  The transaction was ultimately completed but at a lower valuation.