Wednesday, June 7, 2023
HomeHealth & FitnessChanging employer market has digital health companies rethink strategy

Changing employer market has digital health companies rethink strategy

From the mid-2010s until recently, digital health companies selling to employers found an enthusiastic audience eager to differentiate themselves in a tight labor market by offering a variety of digital health solutions.

But as health insurance premiums rise, employee benefits managers are cutting digital health options, forcing digital health companies to adapt and focus primarily on integration and cost savings.

“Over the past few years, a major task for employers has been to innovate through virtual health solutions and provide employees with options to increase access to healthcare,” said General Partner of venture capital firm Andreessen Horowitz According to Julie Yoo, the company funds digital health companies in the employer space. “For employers, the next few years will be about cost savings…everyone is very focused on return on investment.”

Not a Modern Healthcare Subscriber? Sign up now.

With the high cost of health benefits, employers have no choice but to focus on getting the most benefit. A December 2022 survey of employers by consulting firm Mercer found that they expect the average cost per employee of employer-sponsored health insurance to increase by 5.4% by 2023. As employers pay more in premiums, benefits managers will look for more financially viable contracts, says experts at digital health companies.

“Benefits managers are having a ‘come to Jesus’ moment when it comes to pricing,” Yoo said. “A lot of these digital health companies get these lucrative per-member monthly contracts where they get paid no matter who’s using the product … Now employers are like, ‘Why are we doing that? ‘”

Yoo says future employers will place more value on companies that take on risk-based contracts. By delegating risk to providers, employers save costs and will be incentivized to keep patients out of high-cost environments, she said.

Prateesh Maheshwari is an investor in San Francisco-based Maverick Ventures, working with digital health companies in the employer space. The changing labor market is also affecting employers’ relationship with digital wellbeing, he said. As more companies lay off workers, the need to stand out among potential employees by offering more digital health benefits solutions is less obvious.

“As unemployment starts to rise … it changes the priorities of the benefits that managers want to buy,” Maheshwari said. “Buying every [solution] is not about making sure employees are happy to make sure that whatever you buy will make a difference to the bottom line.”

Download Modern Healthcare’s app to stay updated with industry news as it breaks.

Not one more time Sexual Digital Health Solutions

Cost savings are not the only metric employers consider when choosing a digital health solution. Ellen Kelsay, CEO of Business Group on Health, an employer-focused nonprofit advocacy group, said large employer members in her organization are looking for digital health solutions that can be integrated with each other and with traditional care providers.

“Many virtual health solutions are offered as a one-off,” Kelsay said. “They are a well-intentioned and compelling one-off solution, but without more comprehensive integration of these systems there is no sustainability.”

Sales to employers Companies have taken note of changing priorities. At the JPMorgan Healthcare Conference earlier this month, Teladoc Health CEO Jason Gorevic touted the company’s whole-person telehealth efforts, including primary care, mental health and specialty visits. The company recently consolidated all of its virtual wellness offerings into one app.

single [software] solution,” Gorevic said. There is a reshuffle in the market, with the company formed from the merger of Castlight Health and Vera Whole Health.

“There are some macro tailwinds there around cost, and COVID’s interest in delivering integrated solutions is in line with The blizzard of point solutions we’ve seen over the past few years is different,” Trigg said.

Omada Health, a long-term care digital health company, has begun selling products to health systems, Including a partnership with Intermountain announced earlier this month. Omada Health CEO Sean Duffy says employers are getting tired of having too many digital health solutions.

Need to consolidate my point solutions,” Duffy said. What employers look for in digital health solutions.

“The more they can demonstrate over time that they actually improve patient experience and outcomes, that will bode well for their sustainability in the market,” Kelsay said. “But a lot of these companies talk about the merits of their own solutions in a vacuum. They don’t focus on what success looks like for patients and employers.”

This story first appeared on Digital Health Business & Technology.



Please enter your comment!
Please enter your name here


Featured NEWS