How digital health programs can reduce employer medical costs

Employee health benefits play a crucial role in attracting and retaining talent, especially in today's tight labor market, but they are also taking an increasing bite out of benefits budgets. 

In 2022, according to a new Mercer survey of employer-sponsored health plans, average health benefit costs per employee rose to $15,013, up 3.2% compared to $14,542 in 2021. Costs are expected to climb 5.4% in 2023 and continue to rise beyond 2024, in part as multi-year contracts with healthcare providers expire and are renewed.

As companies attempt to balance the need for strong benefits packages with ongoing increases in healthcare costs, one strategy showing promise is the adoption of digital health programs addressing chronic diseases. Given that these conditions account for the majority of healthcare spending, well-designed programs have the potential to reduce employee medical claims by improving disease management, prevention and self-care. 

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One example is digestive disease, an issue that affects one in four Americans and typically ranks among an organization's top five healthcare expenses.

According to one study, a large employer that implemented Vivante Health's GIThrive digital digestive health program achieved a 15% reduction in digestive-related medical claims when comparing 470 program participants, versus 1,880 non-participants for the year before and the year after program adoption. Users were matched with non-users based on gender, age category, presence of any GI disease and healthcare cost. 

After removing outliers with a total medical spend above $50,000 from both groups, the analysis concluded that the average annualized spend for GIThrive users was $4,716 compared to $5,556 for non-users. Pharmacy spend actually increased because of improved medication adherence facilitated by the program's health coaches and dietitians, but that was offset by a drop in emergency room visits and inpatient admissions likely stemming from participants' better management of their digestive symptoms.

Better care management
Results like these are directly related to the ability of digital health programs to reach, monitor and support consumers in ways that are not possible with traditional healthcare delivery methods. With virtual health resources just a click away and live chat or phone assistance typically available almost as quickly, digital health platforms offer substantial opportunities for improving care through proactive strategies that also help control medical costs.

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Daily app-based symptom tracking, for example, captures information that is likely to be missed in an office visit or even a telehealth appointment because of reporting delays, time constraints and poor patient recall. It also provides a longitudinal view that can help both users and medical practitioners discern patterns, highlight possible root causes of acute disease exacerbations, and initiate early interventions that may avoid expensive complications, emergency room visits and/or hospitalizations. 

The personalized action plans generated by digital health platforms can add to the benefits, supplementing clinicians in a way that can significantly impact disease management. The platform essentially functions as a medical concierge, combining automated analysis of user symptoms and other information with on-demand support from program care teams to help users take control of their own health. 

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Other factors that can play a role in improved health outcomes and associated cost savings include the convenience of the digital platform, which enables users to engage with health resources on their own timelines; anonymity in data entry, which allows sensitive information that might not be shared in face-to-face encounters to be disclosed through online reporting tools; and 24/7 access to patient-centric services including live support that can help de-escalate potential crisis situations, guide users to their physicians when necessary, and eliminate unnecessary visits that raise healthcare costs.  

Ensuring ROI
Despite these benefits, not every digital health platform is able to demonstrate either clinical robustness or the ability to reduce medical spend. 

One recent study that I co-authored concluded that nearly 50% of the 224 digital health companies examined had a clinical robustness score of zero. This gap may be explained, in part, by varying levels of technology maturity and funding across clinical disciplines. For example, solutions in well-funded clinical areas such as diabetes may be able to provide better clinical validation than platforms in other areas. 

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As with clinical validation, the ability to prove savings on medical claims varies from platform to platform. Individual studies such as Vivante's average 15% per-person savings and one weight management platform's 12% per-person cost reduction can demonstrate financial benefits, but each program must be evaluated on its own merits.  

Nevertheless, benefits managers can determine the value of any given offering by asking questions such as:

• Does the solution track and report health outcomes that matter, and are those outcomes likely to reduce corporate medical spend?
• Can the solution provider supply evidence that other companies using their solution achieved cost reductions? 
• Is there any evidence of "soft" benefits such as reduced absenteeism or increased productivity that also indicate a positive return on investment? 
• Has the solution been tested in a population similar to your organization's?
• Is the provider willing to take on performance-based risk on reduction in medical claims over a specific period?

Questions like these will help separate the most effective digital health programs from those that have not yet proved their ability to rein in healthcare costs. While solutions will continue to evolve, benefits managers will always need to keep a close eye on which solutions ultimately support their employees' health needs.