A few different articles have been published over the past month on the topic of employer priorities, and they all seem to be getting at a similar point: we’re entering the “prove it” era of health vendor partnerships.
Over the last decade, a hot labor market created an enthusiastic audience of employers looking to attract talent through new health benefits. Now, with premiums on the rise and a looming recession, these same employers are paring down their offerings with a heavy focus on integration and cost control.
Nearly 90% of employers are planning to make changes to their health vendor partnerships this year – only 46% did so in 2022 – and 55% intend to do the same with their wellbeing programs (per WTW survey results).
In a recent Modern Healthcare article, Andreessen Horowitz General Partner Julie Yoo said that “benefit managers are having a ‘come to Jesus’ moment around pricing.” If the last few years revolved around giving employees plenty of options, the next few will be “hyper-focused on return on investment.”
- Yoo made the point that companies that take on risk-based contracts will be looked upon more favorably to employers going forward.
- By delegating more risk to providers, employers can lower costs and will be incentivized to keep patients out of high-cost settings.
The other major trend that’s coming up in these conversations is vendor fatigue, with the term “point solution” quickly becoming derisive among benefits managers and investors.
- Even compelling one-off solutions are having their sustainability questioned if there isn’t an integration and navigation component backing them up.
- Business Group on Health CEO Ellen Kelsay said that “a lot of these companies come and talk about the merits of their own solution in a vacuum. They’re not paying attention to what success will look like for the patient and the employer.”
The Takeaway
There’s very little slack left in the system for nice-to-have offerings that aren’t driving quality or lowering costs. Point solutions in that bucket are going to have to start taking a close look at potential M&A partners or different distribution channels. The good news is that the flip side of that coin is also true. For companies that can demonstrate a healthy ROI with a comprehensive offering, this is shaping up to be a great time to get solutions in front of employers.
