As healthcare costs continue to rise, employers are tightening the reins on digital health contracts to ensure real value and outcomes. Historically, many digital health solutions were bought with “per-member, per-month” contracts that paid vendors regardless of engagement or results. Today, the focus is shifting from broad availability to proven performance and ROI.
Primary drivers of increased scrutiny
- Containing rising costs: Cost is now the top factor for two-thirds of employers when evaluating digital health providers.
- Adoption of performance-based models: More than half of employers want contracts tied to key metrics like patient outcomes and ROI.
- Transparency: Demand for clear pricing models and data-use transparency; transparency in pricing is expanding beyond PBMs to digital health.
- Fiduciary duty: Regulations (e.g., Consolidated Appropriations Act 2021) heighten accountability for healthcare spending.
- Economic changes: A shifting labor market allows emphasis on solutions with a stronger bottom line.
What employers want from digital health vendors
Beyond cost reduction, there is a demand for solutions that demonstrably improve employee health and satisfaction.
Clinical and operational priorities
- Improved patient outcomes: Clear evidence of health improvements, especially for chronic conditions.
- Higher employee engagement: Easy-to-use solutions with strong uptake.
- Enhanced care navigation: Concierge-like guidance to high-quality, cost-effective providers.
- Integrated solutions: Moving toward platforms that offer whole-person care, including physical and mental health, with fewer point solutions.
Contractual and legal requirements
- Robust data security: Strong protections for PHI and clear data-security protocols.
- Clear IP and data rights: Explicit ownership and usage terms; de-identified data for product improvement where applicable.
- Liability and indemnification: Greater protection against data breaches or vendor failures.
- Interoperability: Seamless integration with existing benefits ecosystems and HR platforms.
Future outlook for digital health vendors
- Compete on performance, not features: Prove clinical and financial outcomes.
- Embrace risk-based contracts: Willingness to share risk makes vendors more attractive.
- Leverage data for insights: Provide aggregated, actionable population health insights.
- Focus on integration: Preference for comprehensive, integrated platforms over point solutions
If you’re a vendor or an employer, the name of the game is value, transparency, and measurable outcomes. Let’s align on contracts that reward real health improvements and sustainable savings.
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