No press conference. No trending hashtag. Just a dry memo announcing they won't enforce the 2024 mental health parity rules.

I was on a call with a healthcare VC (with institutional anchor LPs…so…big) discussing a potential direct contracting investment when I brought up the news.

"Yeah, I saw that, I think," he said dismissively.

When I explained what it actually meant for the entire mental health market, he went dead silent.

"Wait... walk me through that again," he finally said. And so I did.

That's the thing about healthcare's biggest opportunities: they often arrive disguised as boring regulatory updates that even smart investors miss.

With one bureaucratic memo, the feds just created an 18-month window where billions in healthcare market share are suddenly up for grabs.

And almost nobody realizes it yet.

The Golden Window That Just Opened

Let me translate what actually happened:

Read more

The GTM motion is (you guessed it): hit self-funded employers, get jumbos in the pipe this year, close one next year.

On paper? This, and many companies like them, are interesting. They check the box clinically. The better ones have ops that can support jumbos.

But in reality? This is the biggest GTM buzzsaw in #healthtech in 2025.

Look, that motion used to work. And technically…it still can. But only in very specific cases. And this? Wasn’t one of them.

What do I expect? At best, win for the VCs that they can flip to PE. For the founders and execs? Not so much. And at worst, LPs will be left holding the bag, too.

Let’s break it down.

Why the Direct-to-Employer Playbook Is a Trap (For Most)

It’s not that direct to employer (DTE) is impossible these days. It’s that the odds are stacked against you now, unless you fit a precise profile.

Self-funded employers TODAY:

• Are oversaturated with point solutions

• Have trusted incumbent vendors under multi-year contracts

• Have spent the implementation dollars and have some level of trust in the data they already have

In other words: your path in is blocked unless you’re frictionless and politically valuable. That means 10x better, not just different.

The real trap? Almost nobody tells startups this. Founders get encouraged to run the play because it worked two years ago. VCs nod because it looks scalable, and it’s how their healthcare LPs made THEIR money justa few years ago. CROs accept it because it feels familiar. It’s what our industry has been doing since 2015…2016.

But familiarity is not strategy. It’s just comfort.

When DTE Still Works (Rarely)

Now, to be fair: I’m not a purist about this. The play absolutely still works in specific conditions:

• Tech-enabled care delivery with narrow clinical scope? Maybe…but only if you’re wildly well-funded, hiring high-trust sellers, and moving fast. I’d name names but you can figure out who they are. Which teams have CCOs/CROs who are ex brokers? Ran national or regional books for the Blues? Already have two exits under their belts? If you’ve got the capital and real support for that, go nuts.

• Full-stack condition care (think metabolic, or something that rhymes with Spanscarent)? Possibly. But you’ll be competing on both price and ROI against entrenched solutions. If you’re set up for that (or your name is Glenn), yep. Green light DTE.

• Infrastructure-style plays. ICHRAs or direct contracting in a box type deals? Oh yeah: you’ve got room to run and high alignment.

• Large health systems or PE-backed aggregators with leverage? Yes, but I think those who have the most success will run it like a search fund, not the current chuck a couple of million in from the corp dev fund VC style innovation pilot plays we’ve seen for years.

But most startups in 2025? Still selling (or trying to sell) point solutions. And most advisors are still telling them to run this.

This is now a legacy GTM motion.

That’s the disconnect.

What I’d Run Instead (for This Company)

For this specific startup (a device paired with condition-based care) I would not touch direct-to-employer.

Here’s what I’d run:

1. Group MA (Medicare Advantage) with Taft-Hartley as the primary wedge

It’s structurally aligned, under-optimized, and built for bundled solutions. There’s budget, compliance pathways, and sales motion maturity. Plus, the care burden is high enough that there’s real appetite for enablement. Longer-term thinking than most employers. This condition HITS this market hard.

2. Supplemental carriers in Years 2-3 parallel motion

The under-the-radar gem. Supplemental life and ancillary insurance players are increasingly looking for differentiators and engagement tools. Given the sales cycle and calendar year planning, now (Q2) is the perfect time to get slotted for deals that activate in 2026–2027—just in time to get the data for….

3. Medicare Advantage in Year 4+
You’ve got solid data at population level by this point, enterprise readiness demonstrated, familiarity with a subsegment of MA, and now (because the device and tech literacy AND the boomers’ already declining health will have been a challenge) the earliest Gen X Medicare Advantage enrollees.

This motion gives you:

• Room to prove value

• Repeatable sales motion

• Path to margin and scale

And once you’ve earned leverage, then (and only then) do you push into employers, DTC, or other segments. Shoot, by 2030, I expect the most successful ICHRA companies to be as attractive a target, if not moreso, than UHC.

The Work Most Teams Skip (and Why They Flame Out)

If this were a client, not a friend, I’d walk her through the math. Show her the opportunity cost of chasing the wrong segment. Run the margin model. Map out the sales cycle economics.

But she already knows how I work. We did this before.

So, here’s a takeaway:

• Do market selection first

• Align the revenue model to your buyer’s P&L and incentives/buying process

• Design the ops model to actually deliver what you’re selling

This is what separates repeatable success from companies that get stuck. Companies where the founding team walks away with peanuts, or a torched reputation.

Don’t reenact. Model the market architecture.

If this hit, subscribe and forward to a friend.

Because there’s a difference between getting covered and getting distributed through.
And most of you are building for the wrong one, particularly if you have clinical experience.

For the sake of understanding, I want to define two key terms:

Coverage means being baked into the major medical plan design. You’re getting paid out of highly regulated dollars, whether that’s ERISA plans or CMS.

Distribution means your product is in front of members, employers, and/or brokers, and they can say yes without having to rewire their ops. Your product can be purchased by these folks, but it does not have to sit directly under major medical, nor does it have to collect those regulated dollars.

Why is this so important?

Well, one requires multi-year data, actuarial validation, and several layers of clinical sign-off. Plus ops.
The other? Requires you to be the least painful yes on the table.

If you’re building for plan design, fine.
Hire actuaries. Chase MLR. Prepare for 18 months of meetings and a brutal sales cycle.

But most of you aren’t building for that.
You’re building carve-outs. Point solution style products. Member-directed add-ons.
And in that world?

Payors and employers will 100000% distribute your product without a lot of clinical evidence.
They do it all the time.
How? Make their job easier.

Here’s what actually move the needle to revenue in those conversations:

• Pricing that’s simple, credible, and doesn’t spark a finance review

• Implementation that takes weeks and one or two employees, not months (if it’s even less, even better)

• No messy integrations: you work with the systems they already have in place

• Compliance story that doesn’t introduce new oversight, audits, or downstream obligations (if you have an opinion letter, you’re miles ahead, but if you can explain it in a 30 minute meeting, that’ll do)

• A way to roll out the product that doesn’t overload internal teams (read: you do it for them)

The thing is, in healthcare sales, it’s not necessarily a push. You’re not trying to win an argument.
A lot of times, you’re trying to avoid becoming a project. And if you can do that, you can get to yes.

When buyers say “no,” it’s rarely because they hate your product. or the evidence is insufficient.

It’s because someone in ops said, “We don’t have capacity for this right now.” IT said, “We don’t think they know what they’re doing.” Compliance said, “I don’t trust this if the regulators come sniffing.” Finance said, “There’s too much open-ended financial risk here.” And that’s true across payors, providers, and employers. If you’re in D2C? Well, a family member (or even the consumer themselves) said that.

So yes, evidence matters.
But it’s NOT the unlock.
The unlock is designing your model to be slotted in. EASY to buy.

The buyer’s real question isn’t:

“Is this clinically meaningful?”
It’s:
“Can I turn this on without making mine, and 3 other people’s lives harder?”

I’ve been in rooms where compliance leads scanned a product one-pager and said,

“Can you remove this piece? We’d like to slot this under ERISA.” The founder said, “yep, done.”
And the deal closed/won right there.

I’ve been in procurement loops where the entire question boiled down to:

“Can you accept our enrollment standard file with no custom fields?”
And if the answer was no? The buyer walked.

That’s what distribution actually looks like.

So no, you don’t need to be the lead author in JAMA.
You don’t need an FDA-cleared badge to start your motion.
And you definitely don’t need to wait until the data is perfect.

But if you can’t answer:

• What’s your implementation pathway?

• What team owns this once live?

• What does customer service look like?

• What are the top three compliance risks, and how are you mitigating them?

…you’re not ready. Not because your product isn’t good.
Because it’s not safe to buy.

The stuff people say on panels?
That’s what gets said when everyone’s watching.

What actually moves behind the scenes is quieter, and far, FAR more operational.

This market isn’t won with evidence.
It’s won with clean narratives, tight packaging, and being the lowest-friction yes.

If you found this helpful, subscribe for more insights like this one. If you know someone who would benefit from reading this, share it.

Subscribe now

Share

“We’re interested.”
You just reached step 1 of 27.

Here’s what no one tells you:

• Your buyer champion still has to defend you to Finance, Medical Management, Legal, Compliance, and Operations.

• Medicare Advantage? You need statistically significant outcomes.

• Administrative solution? ROI must be guaranteed. With penalties.

• Security reviews? Binary. One miss, start over. 3+ months, 300+ questions.

• Delegation? You’re triggering audits, documentation, and fiduciary review.

• Budgeting cycles are locked 14–18 months out. Miss MLR season? Wait a year.

• Implementation queues can run 6+ months even after the deal’s signed.

• RFPs? Annual. Miss the window, wait again.

If you’ve never seen this play out, it feels like chaos. It’s not. It’s the system working as designed.

TL;DR: The problem isn’t interest. It’s what you didn’t know to prepare for.

Most post-raise GTM teams don’t fail on intent.
They fail because no one taught them what “yes” actually means in healthcare.

This newsletter is where I’ll lay that bare. Deal by deal, system by system. Across all of it: payors, providers, D2C. Enterprises, startups. If you’re trying to sell, raise, innovate or scale in this space, you need to understand what you’re up against.

Let’s get way sharper.

Subscribe now