Centivo Strategic Growth Leader Gillian Printon

Digital Health

Think Twice Before Targeting Employers?

Second Opinion published an absolute opus on why digital health startups starting out today should think twice before targeting employers, with a few notable exceptions included for the brave founders among us.

Self-funded employers have long been a fan-favorite of digital health startups. They’re often faster moving than payors, with not only their own large populations and healthcare budgets, but also an added incentive to pick up exciting new benefits to attract the best talent.

Why wouldn’t you target them? OMERS Ventures Principal Christina Farr and Big Health Co-Founder Peter Hames make the case that the tried-and-true playbook of signing a critical mass of employers before leveraging it to get into health plans doesn’t work like it used to.

• The competition is intense. A decade ago, you could count the number of solutions in any given space on your fingers, and benefits leaders had the bandwidth to interface with startups directly. Over $100B has since poured into digital health startups, and middlemen groups like EHIR have popped up to filter vendors before they reach employers. It’s hard to break out from all that noise (but not impossible).

• Vendors are now expected to share risk. The days of fixed “per employee, per month” contracts are behind us, and most vendors are now expected to bring some form of performance guarantee. Although this trend is great for vendors that can deliver, it isn’t ideal for new entrants that now need more overhead to track outcomes and have less visibility into forward business.

• Point solution fatigue. An abundance of point solutions has caused employers to narrow their focus toward platforms with broad offerings that focus on high cost, high prevalence problem areas. Again, not great for companies getting their start with a specialized offering. Potential exceptions include startups focusing on areas that receive a sudden boost in public attention, such as weight loss or menopause.

• The market now has mature incumbents. Even if you’re addressing a real need, the likelihood that an employer already has an established solution is far higher. That doesn’t mean you can’t compete, but the bar is definitely higher.

When should you target them? There’s a whole section dedicated to this question that’s worth checking out if you’re playing in this sandbox, but the overarching message is clear: “the solution itself – and the impact it delivers – need to be articulated as powerfully and simply as possible.”

The Takeaway

Employers have kickstarted plenty of success stories over the years, including names that are easy to look up to like Omada, Hinge Health, and Maven Clinic. Just because top tier articles are now getting published on why you shouldn’t target employers, doesn’t mean it isn’t still a good strategy. It’s just more important than ever to make sure you’re asking yourself the right questions before going down that path.

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• First OTC Continuous Glucose Monitor: A landmark FDA approval was just cleared for Dexcom’s Stelo, making it the first continuous glucose monitor that consumers can pick up over-the-counter. The Stelo not only allows diabetics to continuously monitor their blood glucose through the companion app, but will now also enable fitness-optimizers without preexisting conditions to track how diet and exercise impact their performance. We’re all-for expanding access, but early reactions are mixed on whether this could lead to consumer confusion without appropriate medical oversight.

• Women’s Health Investment: A Deloitte report brought the good news that investment in women’s health companies grew 5% between 2022 and 2023 as the overall health tech market contracted by 27%. The bad news? Women’s health still represents just 2% of overall health tech venture capital investment. The full report gives a robust breakdown on the women’s health market, covering everything from investor trends and transaction volume to potential roadblocks and systemic challenges.

• Memora + Intermountain: Memora Health’s intelligent care enablement platform will now support Intermountain Health in delivering high-quality care to more patients across the system. The Memora platform uses AI to automate basic tasks for healthcare teams while proactively guiding patients through their care plans, such as by instantly addressing questions about treatment or medications. The multi-year partnership will initially focus on cancer care, with plans to expand across additional clinical areas over the next several years.

• Limbic Lands $14M: Limbic AI landed $14M in Series A funding to build out its AI-guided mental health triage and support solution. The Limbic platform has already been used by over 260k patients through the NHS, improving patient onboarding, wait times, and quality of care enough to publish the results. The fresh funds will accelerate US commercialization, and the press release makes it seem like we could hear about the first wave of US health system adoption in the coming months.

• Healthcare Workers Lack AI Fluency: Amazon Web Services released new findings around the state of AI fluency among healthcare leadership and employees, based on survey results from over 4,600 respondents. Healthcare execs expect AI to boost productivity up to 44%, and just over half believe improving workflow and outcomes will be the top AI productivity benefit. That said, 78% of healthcare employers said they lack knowledge on how to provide AI training to employees and only 9% of healthcare employees reported having “advanced” AI fluency.

• Pager No-App Engagement: Virtual care and navigation platform Pager is rolling out a no-app engagement solution for payors and its 28M members across the US and Latin America. The new solution features both inbound and outbound secure text-based chat, enabling seamless transfers to care teams that include a conversational health assessment and a member’s case history to expedite treatment. It sounds particularly helpful for members on Medicaid and Medicare, and should make it easier to engage high-risk members.

• HHS Statement On Change Cyberattack: The US Department of Health and Human Services is taking steps to mitigate the impact on healthcare providers of the ongoing cyberattack on Change Healthcare. HHS announced a number of recommendations designed to speed up claims, such as relaxing prior authorization and utilization management requirements, and offering advance funding to providers.

• Consumers Want Virtual Second Opinions: Nearly 8 in 10 patients would use a virtual second opinion tool if their employer or health plan offered it, according to a new report from Cleveland Clinic and Amwell. Further, 71% of patients who have experienced a serious health condition have considered obtaining a second opinion, yet only half have done so. The report’s overall takeaway is that health plans and employers interested in adding high-demand services to their benefits portfolio should consider expanding access to high-quality specialty care.

• Samsung Galaxy Ring First Look: Here’s a first look at Samsung’s new Galaxy Ring, a tiny wearable equipped with sensors that compile data on heart rate, sleep, and activity into an overall Vitality Score. Outside of a Samsung teaser video and a hands-on with the Galaxy Ring from The Verge, there isn’t too much detail on the product yet, other than a launch date later this year. Samsung envisions the product as one part of a “holistic system that supports individual health goals rather than a single gadget bombarding users with contextless data.”

• Healthcare Burnout Edges Down: A new provider survey found that burnout levels have actually edged down compared to last year. Apollo Intelligence surveyed 253 US physicians in January 2024, finding that fewer reported feeling frustrated by work pressure compared to 2022 (64% vs. 70%), but the numbers are still higher than in 2021 (47%). While Medscape’s recent survey also found burnout levels to be easing, only 28% said they thought AI could help alleviate burnout by taking over administrative tasks.

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