It was a day every entrepreneur dreams of. One of the largest health plans in the country, just completed its RFP process and had informed us that we were the winner. Normally when you win an RFP, it’s an acceptance of both the solution and the price you have provided. There is, of course, always the normal contract negotiations that has its challenges, but generally once you “win” deal has been accepted. In this case there was a wrinkle. The health plan communicated that while we had “won” the RFP, they were not going to pay us anything for our service. They said “we think you have the best solution, but at our stage, to have the opportunity to offer your solution to our members, it is worth it for you to invest the money to implement and support the solution to garner that opportunity.” Imagine that. They were a multi-billion organization with no shortage of cash and they thought we should invest. They lose more money in its couch every day than we had in our bank account.

As we discussed earlier, it was pleasure and pain. While I was raising my hands in the air celebrating, someone took the opportunity to punch me in the stomach. I got off the phone with the health plan and reached out to a few healthcare colleagues. They said this was not uncommon. Large insurers working with earlier stage companies would ask (and sometimes demand) them to invest in the relationship to have access to their business. It didn’t matter that CIGNA had virtually unlimited financial resources while we had the minimal resources of an early stage company. It was par for the course.

I understood their perspective but thought there could be another way. I reached out to other colleagues in healthcare and asked the question “What makes a health plan do something?” In other words, what influences makes a large health plan take action? My colleagues informed me that large health insurers were responsive to the demands of the large companies for which they provided insurance. One of my colleagues informed me that this health plan had an advisory group of employers that consisted of their top twenty-five largest customers—companies like Federal Express, MassMutual, and Safeway. My colleague told me that when these employers talked, they listened.

I reached out to the employers on this advisory board. Safeway, who was on the advisory board, was also one of our customers. Other than Safeway, we did not have relationships with any of the other companies on the board. It’s likely they had never heard of IncentOne. This was in 2007 when many employers and health plans were just becoming aware of the concept of using incentives to drive health behaviors. I started with Safeway. I reached out to them and asked them two questions. First, would they be interested in learning more about incentives for healthy behavior? Second, did they expect their health plan to offer this solution?

Their answer was a resounding yes and yes. They were encouraged that we were pushing the envelope and without asking, they suggested that other companies on their advisory board would be interested in talking with us. Bingo! They offered to introduce us to other companies on the advisory board and provided me with contact information of every member. I assured them that I would not in in any way represent that Safeway was endorsing us, but only that they thought we should talk. I drafted an email for the approval of Safeway. They thanked me for running it past them and made introductions to everyone on the advisory board.

I reached out to all twenty-five companies and asked them those same two questions. The response was overwhelming. Every one of them said yes to both questions. We offered to hold a session to educate them on how incentives were evolving in healthcare. We did not try to sell them anything and wanted them to know the lay of the land and that we were there as a resource if they needed us.

Despite us not trying to offer them any services, of the twenty-five employers, ten asked for proposals, another ten took us up on the offer to hold a conference call to talk more about incentives and the last five said that they would like us to keep in touch and provide them with information periodically. At the end of the conversation, I also asked each of them that if we happen to be working with one of their health plans, could we have that health plan reach out to them and collaborate with us on the opportunity. All twenty-five said absolutely.

I made a phone call I thought I would never make. I called the procurement manager and communicated that while it was an honor to be selected by them, we would have to decline. Prior to IncentOne, I was a mergers and acquisitions lawyer and had a lot of experience negotiating but never before for my own company with my own money. Nonetheless, telling one of the largest insurance companies in the world to effectively “screw off” when you are in early stages is an unnatural act.

We communicated that we believed that we provided a fair proposal, that our pricing was reasonable and that asking a company like ours to bear the financial burden would not lead to a productive partnership. The procurement lead said to me “but what if no one uses incentives.” I responded with two answers. First, I assumed that CIGNA would not go to the trouble of running a six month RFP process for shits and giggles. Second, I said, that with all due respect, when an individual pays their insurance premium but never uses a doctor, they don’t give them the money back. We laughed (or maybe I laughed and he grunted and I thought it sounded like a laugh). We instructed them that we would be happy to be there for them as a resource and continue to dialogue with them about incentives but would respectfully decline.

They were stunned. They asked us if we thought through our decision and its implications. I said that we had. They recommended that we reconsider and suggested a conference call later in the week to discuss. I told him that I appreciated the advice and would do so but it was unlikely we would change our view. As the conversation ended, I added one more thing. I told them if we ended up not doing business together, we would still like to collaborate with them if we happened to come across an employer of theirs that was interested in incentives. While I couldn’t see the procurement manager on the other end of the phone, I could hear the steam coming out of his ears. He said “what are you talking about? Why are you talking to our employers?” I told him that we offered our solutions directly to employers and we come across employers all the time that had them as their heath plan. I reminded him, that we currently ran some of Safeway’s programs. I preceded to list off ten companies that we had relationships with—a few of which were the companies on theirs advisory board. He said, “you have no right to talk to our employers!” I said “we don’t have a relationship yet and this is why I’d like us to collaborate if the circumstance arises.”

He instructed me to be at their offices in Connecticut the next day. I said, with all due respect, you just told me to “go screw” and I don’t need to sit in hours of traffic on Route 95 to come to Connecticut to be told “go screw” in person.

I reluctantly agreed. I went to Connecticut and sat in front of twenty of their team members including lawyers, procurement team members, product people, operations people and finance folks. After they communicated their shock about our response and their concern about us talking to employer groups, we gave our view. We communicated that we understood and respected their view but that we would decline. We also instructed them that we already sold directly to employers, that we would like to collaborate with them and that we had discussions with multiple groups who used them as their insurer that had requested proposals from IncentOne. I offered to let them talk to some of these employers. I wanted them to understand that these were not empty claims, but rather that they should talk to their customers who had told us that they could reach out. We wanted this to not only influence the discussions with them, but also to allow them to get a win with its customers if we were not involved. A few days later, after they talked to some of their customers that we’d been in contact with, they agreed to our price.

Easier said than done.