Navigating Regulatory Uncertainty: U.S. GTM Strategy and Legal Structure for International HealthTech Founders
Updated: Sep 3
Entering the U.S. Healthcare Market Is Not a Geography Decision. It Is a Business Model Decision.
The U.S. healthcare market is attractive for an obvious reason: there is a lot of money moving through it.
But access to that spending is fragmented across health plans, employers, health systems, government programs, consumers, providers, and other buyers, each operating under different incentives, reimbursement structures, regulations, and procurement requirements.
For international HealthTech companies, that creates the dangerous and wrong assumption that entering the U.S. is primarily about bringing an existing product into a larger market.
A company can have strong technology, evidence, funding, and commercial success abroad and still struggle in the U.S. if it chooses the wrong buyer, assumes its existing reimbursement model will translate, launches in the wrong market, or builds a corporate structure that does not support how it needs to operate.
The question “How do we enter the U.S.?” is therefore, too simple.
You should really be asking, "what combination of buyer, payment pathway, geography, operating model, and regulatory structure gives this product the strongest path to revenue?"
That contrast changes how companies should approach U.S. expansion.
The technology can work while the market strategy fails
Good technology does not protect a company from a poorly designed market entry strategy.
Babylon Health is an extreme example. The UK-based company entered the U.S. following a $4.2 billion SPAC transaction in 2021 and expanded aggressively. The company expanded without the right foundation in place and made acquisitions that did not always fit its core business. Within roughly two years, its valuation had collapsed and its shares were delisted.
But the problem went deeper than expansion speed.
Babylon also encountered the consequences of assuming a model developed elsewhere could transfer cleanly into a new healthcare environment. Technology designed around smartphone-based GP services did not necessarily fit populations with the same technology access, while its North American expansion also encountered jurisdiction-specific privacy requirements.
The lesson is not that international HealthTech companies should avoid the U.S. It is that product-market fit in one health system does not automatically become product-market fit in another.
One company had successfully sold to payers abroad, primarily within single-payer environments. But when it evaluated the U.S. market, accountable care organizations emerged as a better initial buyer because these provider organizations assume financial risk in ways that made the company’s value proposition more relevant.
The product did not necessarily need to change.
The definition of the customer did.
For an international company, that should happen before a sales team starts building a list of U.S. prospects.
“Who pays?” is more useful than “Who needs this?”
A HealthTech company may solve a clear clinical problem and still have several possible routes to revenue.
A patient might pay directly. A self-funded employer might purchase the solution as a benefit.
A health plan could deploy it to members. A provider organization could integrate it into care delivery. Medicare or Medicaid reimbursement could support it. In some cases, another intermediary may provide the most practical path into one of those markets.
Those buyers do not evaluate the same value proposition.
Employers, for example, may consider whether a benefit helps attract and retain employees or addresses issues such as absenteeism. A managed care organization is operating within a different set of financial and population-health incentives. Consumers can choose to bypass insurance entirely for products they are willing to purchase out of pocket.
Even within the category of “payer,” the target can vary dramatically.
National plans, regional plans, and local plans have different buying processes and levels of complexity. An early-stage company may find a regional or local payer more accessible than a national organization. And even when a national payer is interested, an enterprise-wide deployment is unlikely to be the starting point. The company may first need to prove that its technology works for a specific population in a specific market.
This is why “we sell to health plans” is not yet a go-to-market strategy.
A useful U.S. market entry plan identifies which buyer has the strongest economic reason to purchase the solution, how that buyer gets paid, and how the technology helps that buyer succeed within its own business model.
One useful rule for founders is to think about your customer’s customer. If your solution helps the buyer perform better for the entity that ultimately determines its revenue or requirements, the commercial case becomes much stronger.
Reimbursement strategy and payer strategy are not the same thing
International companies also need to distinguish between reimbursement and the broader path to revenue.
Reimbursement can be broken down into three components. Coding, payment, and coverage.
A company may need to determine whether an existing code applies to its technology, whether payment is associated with that code, and whether the relevant payer or market actually covers the service.
Having one does not guarantee the others.
And reimbursement can vary substantially by geography.
Doula services demonstrate the problem. The same category of service can have very different reimbursement levels across jurisdictions, while large employers can independently decide to provide their own doula benefits.
For a founder, that means a reimbursement pathway can exist without necessarily being the best commercial pathway.
One doula company found that the economics of using the existing coding and reimbursement system did not support its business model. That creates a strategic decision: continue trying to operate within traditional reimbursement, or find another buyer and payment structure.
Digital health companies have demonstrated the latter approach before. Livongo and Omada Health, for example, gained early traction through self-funded employers. That allowed for commercial arrangements outside a traditional CPT-code-dependent model.
Direct-to-consumer companies can go further. Hims & Hers was cited as an example of building around cash-pay telehealth without depending on broad traditional payer coverage.
So before investing heavily in a reimbursement strategy, founders should determine whether reimbursement is actually required for the model they want to build.
Payer strategy asks who will pay and what the path to revenue looks like. Reimbursement strategy asks how a product fits into existing mechanisms for coding, payment, and coverage.
Those questions overlap, but confusing them can unnecessarily constrain the business model.
Geography can change the economics of the same product
The U.S. is not one healthcare market.
State differences can affect coverage, reimbursement, corporate requirements, taxes, privacy rules, and the practice of medicine. For some products, choosing where to launch is therefore part of the business model itself.
The doula example makes the economic implication particularly clear. The same service can produce materially different reimbursement depending on the jurisdiction. A company entering a lower-paying state first may be testing its business model under economics that are fundamentally less attractive than those available elsewhere.
The same principle applies to corporate structure.
A company can begin selling into the U.S. without immediately establishing a significant physical presence. Depending on its product and operating model, it might later form an LLC or establish a Delaware C Corporation as financing and scaling requirements change.
Establishing an entity can be relatively straightforward in a state such as Nevada and more administratively complex in a jurisdiction such as New York. Delaware, meanwhile, is often attractive to companies anticipating institutional investment and greater corporate complexity.
There is no universally correct state or structure.
The correct choice follows from what the company is trying to accomplish.
That is why deciding “where to incorporate” in isolation misses the larger strategic question. Corporate structure, target geography, reimbursement economics, fundraising plans, and the services the company intends to deliver should be considered together.
Sometimes the best U.S. opportunity is a very small slice of a very large market
The complexity of U.S. healthcare can look like a barrier. It can also create highly specific commercial opportunities.
One UK medical imaging company established a significant U.S. presence, ultimately growing to approximately 250 employees. One of its opportunities came from a payer category that international founders might easily overlook: automobile insurance.
For this company, imaging associated with car accidents generated roughly $1,000 per MRI compared with approximately $300 through Medicare or Medicaid.
That difference illustrates an important market-entry principle.
A company does not need to solve the entire U.S. healthcare system. It needs to find the part of the system where its economics work.
A narrow segment can still represent a substantial opportunity in a country of this scale.
The same logic applies to population selection.
A maternal and infant health company may need to understand Medicaid because roughly half of U.S. births are covered by the program. A technology designed for older adults may have a more natural Medicare pathway. Companies targeting populations eligible for both Medicare and Medicaid may find significant clinical need, but also greater difficulty attributing outcomes because patients can have multiple conditions, medications, devices, and interventions operating simultaneously.
Choosing the market therefore means choosing the environment in which the product can most clearly demonstrate value.
That is much more precise than choosing “the U.S.”
Enterprise buyers introduce another gate: operational readiness
Finding a buyer with the right economics still does not guarantee adoption.
The more clinically sophisticated the buyer, the more important security, compliance, workflow integration, and evidence become.
The tension between startups and healthcare buyers can be surprisingly simple. Startups prioritize speed and scale, while providers prioritize safety and safety.
A pilot with a health plan might allow a company to be in the process of completing a particular security certification. A larger deployment with a national managed care organization may require certifications to already be completed.
The same applies to legal structure.
Sober Sidekick, a digital substance-use-disorder platform, illustrates how corporate practice of medicine requirements can shape operations. If a company’s model crosses into practicing medicine, simply establishing a standard business entity may not be sufficient. Its structure has to accommodate the rules governing who can provide clinical services.
Referral and compensation arrangements create another layer. A business model that assumes physicians can simply be paid to refer patients toward a product can collide with federal and state restrictions.
These are not legal details to bolt onto a finished go-to-market plan.
They can determine whether the plan works.
Build the U.S. entry strategy backward from revenue
The temptation when entering a market as large as the U.S. is to begin broadly: establish an entity, hire a team, pursue major health plans, and expand across states.
A stronger approach starts narrower.
First, identify the population and problem for which the product creates the clearest value. Then determine which U.S. buyer has both an incentive and a mechanism to pay for that value.
From there, work backward.
Does that path require traditional reimbursement? If so, what coding, payment, and coverage conditions apply? If traditional reimbursement produces weak economics, is there an employer, consumer, provider, or strategic-partnership route that works better?
Which states offer the strongest combination of market need, reimbursement, regulation, and operating feasibility?
What evidence will the first buyer require? What security and compliance requirements need to be in place before procurement? Does the company need a U.S. entity at all at the beginning, and if it does, what structure supports its fundraising and operating plans?
Only then does “entering the U.S.” become a useful objective.
The size and complexity of American healthcare mean there are many ways to get the market wrong. They also mean a company does not have to win everywhere.
It has to identify where its technology, buyer incentives, economics, regulatory requirements, and operating model align strongly enough to create a repeatable path to revenue.
That is the real U.S. market-entry decision.
About the Speakers
Dennis M. Sponer, JD, LLM, TRIUM MBA
Founder of SRX Advisors
Dennis is an attorney, healthcare entrepreneur, and founder of SRX Advisors. He co-founded ScripNet, a pharmacy benefit manager later acquired by Healthcare Solutions, now Optum Healthcare Solutions, and later founded and sold HSARx. Connect with Dennis on LinkedIn.
Demi Radeva, MSc
Founder and Chief Strategist at Akros Advisory
Demi has more than a decade of experience across Medicaid, Medicare, and Commercial health plans, including leadership roles at UnitedHealthcare and Optum. She now advises HealthTech companies on reimbursement, payer strategy, market access, and commercialization. Connect with Demi on LinkedIn.
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