TPAs are bombarded by vendors saying they have the "perfect" or “first-ever” product or service, but it soon becomes clear that the vendor has no real idea what a TPA or its type of client employers & plans do or need. Therefore, TPAs tend to be a bit skeptical at first. So....the formula of success for vendors is that if you make a few TPAs happy, the grapevine works extremely well, because though TPAs are each unique, if they hear a friend/competitor say that it works....they are interested.
The most effective way to start is to gather a small informal focus group of TPAs. Tell them that you want their wisdom & input, and, obviously, they would be in the inside track with the product/service. Explain the product or service...but (VERY important) also leave lots of time for step-by-step during the explanation to LISTEN to and solicit their candid thoughts. The reason is that there are all sorts of pressures and legal requirements on TPAs or their client plans as well as some dramatic new opportunities/changes in the coming years. So, something the vendor may not know may make the product/service illegal or useless in its present format. You need to hear those nuggets of insight. Starting with a small focus group allows the vendor to fine-tune and also avoid looking stupid in an initial industry-wide solicitation. It is a win for the vendor and if the product gets a good review from the focus group, it is a win for TPAs and their clients. The grapevine begins and the business picks up.
On the other hand, if the TPAs give practical reasons why the product/service will not work or is unneeded, don’t let ego lead you to keep pushing. Instead, ask them if the idea is salvageable in the TPA market and client plans…or just be glad to have learned before more money & time had been devoted to a dead-end market.
One of the biggest lessons for vendors is that TPAs provide a service, and are paid as such. Thus, unlike an insurance company, HMO or other types of businesses, if the vendor’s product or service saves thousands of dollars for the plan, the TPA does not make or save a penny more. Thus, for most products or services, if it is priced for the TPA to purchase or pay from its own assets, it is a money loser. It is usually better to have the pricing geared to a per-person-per-month cost which the TPA can present to clients as an extra option for their plan, and TPAs can discuss with you the method in which they can best be compensated within the ERISA fiduciary situation of each TPA & plan for their role in presenting & doing any administration of your product/service in the client plans.
Candid advice from SPBA Active Past President Fred Hunt