Don’t Fear the Start-Up, Engage with It Instead

How employers can leverage the innovation early-stage vendors are bringing to market.
By: | November 8, 2018 • 5 min read

Every facet of HR is being disrupted by technology—and benefits is hardly an exception.

If you have any doubt, just ask Dave Kerrigan, a self-described “geek” who has worked in the healthcare space for the past 20 years. Kerrigan is the principal and managing director of Sante Nasc LLC, an advisory firm that is in the process of building a database of early-stage, mid-stage and established vendors that sell products and services to self-funded employers, benefit brokers and consultants.

At next year’s Health & Benefits Leadership Conference, which will be held April 24 through 26 in Las Vegas, Kerrigan will lead a breakout panel titled “Don’t Fear the Start-Ups: Engaging Early-Stage Companies to Impact Your Health and Benefits Efforts.”

So, where are these start-ups targeting their efforts? Kerrigan believes that engagement and enrollment are at or near the top of the list.

“I’m seeing technology increasingly being used to drive more engagement,” Kerrigan explains. “In the past, I signed up for a wellness program and the wellness coach would call my house and, inevitably, it would be right during dinnertime. I’d say, ‘Sorry, can’t talk right now.’ And then I wouldn’t really feel compelled or motivated to call them back. I’d tell them to call me back at another time—and I might not answer the call.”

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But today, Kerrigan continues, people can open an app on their phones and have a video chat with someone for just a couple minutes when they’re on the train. “It makes it a lot easier to engage people,” he says.

Another example, Kerrigan says, is a wellness app that recognizes that you’ve entered a restaurant and suggests what foods you might want to consider eating because of certain dietary concerns.

Kerrigan also cites several new tools aimed at addressing the challenge of elder care. Until now, he says, employees with elderly parents have been forced to take a leave of absence to manage their care. But with the help of caregiver-support programs, those employees now have access to a network of geriatric-care managers who can do a full assessment of the situation and help to create “an infrastructure of support,” whether it be a ride-sharing program for a medical appointment, food delivery or something else.

The critical question start-ups need to address for their clients, Kerrigan says, is whether employees are truly engaged in the tool or service.

An Influx of Dollars

Recognizing these and other opportunities, private-equity firms have lately opened their wallets in a serious way.

According to Rock Health’s 2017 Year-End Funding Report: The End of the Beginning of Digital Health, there were 345 deals in 2017, up from 324 in 2016. Investments topped more than $588 million in 2017, compared to $424 million a year earlier.

The pace of investment isn’t likely to slow anytime soon, Kerrigan predicts.

As new tools and technologies continue to emerge, Kerrigan says, companies are going to have to address the inevitable problem of “point-of-service fatigue.”

“If you have a separate vendor for every condition under the sun, you are going to be in a tough spot because you’re going to have to hire people just to manage the 20, 30 or 40 vendors that are managing digestive health, heart health, diabetes, asthma and more,” he says.

Both platforms and partnerships have a major part to play in tackling this problem, Kerrigan says.

In the case of the first, he says, “You’ve got a platform that has a bunch of vendors that are impacting a bunch of different areas. They are hand-selected, vetted in advance. That makes it easier because the integration is built in and the employer and benefits professional can select the platform and solve 70 percent of the challenges they may face.”

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In contrast, Kerrigan says, the partnership play is a little different in that it’s not a platform, but a way for an organization to potentially choose two or three vendors that have partnered together and potentially offer rate relief or connection points among them.

Together, he says, the two approaches (platforms and partnerships) should go a long way to providing some relief.

Risk Mitigation

Of course, employers are taking a risk when they hitch their wagon to early-stage vendors that have yet to prove themselves.

Before jumping in, Kerrigan says, HR and benefit leaders need to explore what their leadership team has done before, what sort of funding they have and what growth they’ve experienced since launching their start-up. “All are key indicators of future success,” he says.

Kerrigan cautions that start-ups aren’t for everyone. “If you’ve got an employer that’s typically a slow follower versus a fast follower, if it doesn’t embrace innovation, if it isn’t willing to try new things, then it’s probably not going to be a good idea to dive into the early-stage company space to solve healthcare cost or shopping problems.”

Historically, Kerrigan says, HR departments have been a cost center, not a revenue center. So, it’s only natural many may be risk-averse. He also points out that buy-in from the organization’s top leaders can often make the difference between success and failure.

“You need leaders who understand that the way things are being done isn’t working—or at least may not be working well enough—and are no longer comfortable sticking their heads in the sand.”

The 2019 Health & Benefits Leadership Conference will be held April 24 through 26 at the ARIA Resort in Las Vegas.

David Shadovitz is editor of HRE. He is also co-chair of the HR Tech Conference and chair of the Health & Benefits Leadership Conference. He can be reached at [email protected]

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