What employers should look for in digital health partners
Selecting digital health partners will always be a rigorous, tedious process. Here are 4 criteria to consider.
I’ve been tracking Amazon’s entrance into health care and wanted to revisit the topic now that rumors are abuzz about the possibility that its telehealth service, Amazon Care, could be expanded beyond Amazon’s own employee base and sold to regional employers in Washington.
This is big news for incumbent insurers because it validates the supposition that Amazon may one day disintermediate health plans and sell its services directly to employers. Perhaps every insurer’s worst fear is that Amazon will eventually launch its own health plan, and the company has given one indication after another that this, too, is a very real possibility.
Related: The Amazon trap
Having now worked at CVS, several Blue Cross plans, and UnitedHealth Group’s Optum, I can definitively conclude these disintermediation fears are not unfounded. Driven by the digital revolution, consumer expectations of a seamless health care experience that is both transparent and affordable have finally caught up with the industry. If it can be this easy to shop and purchase products and services on Amazon’s marketplace, why should health care be any different?
Health care consumerism is inevitably on the rise, but the health care industry has been slow to catch up with the rapid digitization of its user base (which isn’t to say no one’s been paying attention: In light of growing employee demand, employers have pushed heavily on health plans and PBMs to make a swath of shiny digital health tools available – everything from app-based wellness programs to virtual chronic condition management for complex therapeutic areas).
In 2020 digital health offerings have exploded, with plenty of partners to pick from – how should employers prioritize which digital partnerships they choose to pursue in the age of Amazon-led health care consumerism? Several considerations are explored below:
1. Know what to look for when purchasing “the consumer experience”
Selecting digital health partners will always be a rigorous, tedious process, but one key evaluation criteria should be whether the vendor has built a meaningful relationship with their existing user base.
Has the digital health company cultivated a ground-up consumer following with a strong willingness to pay? If a vendor has had success convincing consumers to purchase its services out-of-pocket, for example, this suggests the user experience is strong enough for consumers to commit a share of their wallet to the vendor (no easy feat!)
If a digital health partner can solve for a significant patient abrasion point that is costly from a user experience perspective (i.e., a critical health or wellness offering that has previously been either inconvenient or inaccessible is now neither), it can help employers with retention – and, as employers are well aware, employee turnover costs can be significant. So, a digital health vendor that can meaningfully help employees with their health care needs can also help employers save on the operating costs of human capital.
2. Create transparency – and build it into the DNA of your partnership model
Consumers expect upfront knowledge on critical care purchase drivers. “How likely am I to need this service, how much will it cost me, and is the price commensurate with the value I would get?”
As we think about why Amazon “matters” in this context, it’s because it offers comprehensive (and comprehensible) product overviews, a robust pricing comparison tool, and a user review system that sheds light on all dark corners of a purchasing experience.
What does this mean for employers? To start, they might wish to partner with companies who are upfront with customers on payment options, prices, subscription models, and so forth. Even if employers are paying for the health benefits, they should still seek partners whose modus operandi is to be transparent with the market because the partner’s transparency will translate into the market’s perception of the employers themselves.
3. Seek new ways to offer more affordability
NYU Stern’s marketing professor Scott Galloway puts it plainly: “For the most part of Amazon’s history, as a consumer you’re getting products for near cost or sometimes even below cost and that has just been an incredible boon for consumers…”
Amazon is committed to eliminating unnecessary mark-ups in the supply chain and has experimented with many innovative direct-to-consumer products – case in point, its recent prescription drug discount card. Consumers trust Amazon to be affordable, and are more likely to buy from Amazon thanks to its brand equity.
Employers looking at digital health partners should ask, is this company increasing access to generic medications? Are they working to make new treatments more affordable? Is there true value in the offering even without us (in other words, if the patient was paying on their own, could they still afford this?)
Partners who check the box on such questions are much more likely to help employers build the brand equity with the market that they seek to create.
4. Offer enough choices that meet consumers where they are
Employers can have a fairly transactional view of the world given the number of contractual obligations they manage day to day. But setting those aside, they need to embrace the fact that in the world of health care consumerism, choice is a good thing.
Consumers reward companies that offer them choice with loyalty, and employers need loyalty both for retention and to better underwrite their health care cost obligations. It may seem basic, but creating choice is the fundamental retention and population risk management tool.
Aligning to digital health companies that enable consumers to interact with health care on their own terms – through self-directed tools, different payment models, a rich portfolio of products or brands, or wrap-around offerings that are both compelling and optional – will provide employees with multiple points of potential satisfaction.
Make no mistake: there will come a day when digital health will fully disrupt the health care delivery model. Led by Amazon and others, who are infusing the market with an abundance of choice, it’s becoming clear that a differentiated and thought-out digital health partnership strategy is now table stakes.
Lara Rosenblum is a health care strategy professional with a background in venture, product, and business development. Lara spent several years in management consulting before moving into roles with pharmacy, PBM, health plans, and direct-to-consumer brands. She is an active member in the health care philanthropy community, where she advocates for autism acceptance, and advises early-stage start-ups that are transforming health care delivery.
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