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Why navigation has become the next big thing in digital health
Healthcare is so complex that employers are paying for dedicated health advocates
With Michael Yang
The U.S. healthcare system is so complicated that even the experts struggle to make sense of it. Studies have found that only 12 percent of people have sufficient literacy to navigate the system, and even those individuals can struggle when they’re feeling sick and vulnerable.
I’ll be the first to admit that I can’t manage the health care system at times. Even the most well-trained health policy experts and doctors say they can’t either, particularly when faced with a complex billing issue.
Enter a crop of companies that have emerged in the past few decades to help us find the right doctors, manage health plan complexities and get second opinions about treatment. Some of these businesses have recently exited into the public markets, including Accolade. Others, like Grand Rounds, are not likely too far behind. And an emerging bunch like Included Health are just getting started.
As Grand Rounds’ CEO Owen Tripp wrote me this week, his company exists because: “Every single person in America — even the most healthcare savvy — feels outmatched and overwhelmed by its complexity.”
But depending on who you ask, navigation tools - which we define as solutions that provide patient advocacy, member engagement, utilization management and care coordination in one - are the future of digital health or they’re already on route to becoming a commodity.
Fortunately for me, I have a navigation expert on my team and can pick his brain anytime. Our fund’s managing partner Michael Yang has been involved as an investor and board-member with Accolade for a decade. Given that he just stepped down from the board, we thought we’d take the moment to reflect on where the space is going. For this piece, we also tapped the perspectives of benefits leaders as well as execs from WithMe Health, Grand Rounds, Included Health and HealthJoy.
Human advocates are expensive: Do we need them in the loop?
Most of the navigation tools we see on the market today are targeted to the large self-insured employers (HealthJoy and Rightway are an exception for catering to the mid-market). That’s simply because these companies are willing to pay for them. These offerings don’t typically come cheap because the navigation providers need to hire, train and manage teams of advocates who can work with employees to access optimal care.
That means doing more than providing a better provider search tool and a chatbot.
It doesn’t mean that employers that invest in navigation won’t save money in the long-run. One landmark study recently found that navigation can actually decrease the total cost of care to an employer. We’re talking hundreds of dollars per employee, per year. But it requires some degree of conviction to get on board.
Some of the earliest customers in navigation were more motivated by other factors, like keeping employees happy. As Christine Tozzi, a benefits expert currently with Electronic Arts and formerly of Zendesk, told us this week, many employers also view navigation tools as a path to increased productivity. There’s also the opportunity to use navigation to direct people to existing benefits that might otherwise be under-utilized, whether it’s Livongo/ Teladoc or Lyra or Omada Health. This is really critical. Most health benefits solutions garner single percentage point utilization. As a result, we’re seeing more of a shift to “per engagement” business models, versus per member per month (PMPM). So the revenue opportunity here could be impacted in the long-run if digital health vendors don’t figure out a way to get more employees engaged.
That doesn’t mean there’s no room for tech. Chatbots, for instance, can certainly play a role in managing lower-level problems, such as triage and symptom checking. And it’s possible to use machine learning in the background to help the human advocates be more efficient. These tech tools can also be used to remind and nudge employees to perform specific tasks, or determine the next best action for a human coach.
But the experts I spoke to agreed that tech is no replacement for human empathy.
Many of the leading companies in the space spent many years figuring out the ideal personality type for a coach. For Accolade, it’s often someone with a background in education or social work. Michael and I talked about a family of four he encountered through Accolade who went to the emergency room over 20 times in the space of a single year. That drove up a huge bill for the employer. This family was operating on a closely-held misconception that they’d get the highest quality care at the hospital. They didn’t know where to start when it came to finding a great family doctor covered by their insurance. So the Accolade advocate helped them understand that making the shift to primary care wasn’t a sacrifice. They also went a step further in booking the member an appointment and helping them figure out public transportation options.
Likewise, we spoke with Colin Quinn from Included Health, a company that specifically provides navigation tools to LGBTQ employees, who shared that a lot of folks just need a little extra help and comfort. Too often, he stresses, patients have had to self advocate in this system. “Finding culturally competent, affirming providers isn’t impossible, but it is exhausting,” he told us. So the Included team personally vets these providers, books appointments, and manages insurance coverage to make it easier.
For Quinn, navigation is a “re-entry point” into the health care system for some patients. As he explained: “We know from various studies, including our own expansive dataset, that 40% of our LGBTQ+ members have been discriminated against and 35% have decided to postpone or avoid care altogether.” That’s 3x greater than the broader U.S. population, according to Quinn.
So after talking to these experts, the big question in our minds isn’t whether tech can replace humans in solving these problems. It’s whether navigation tools can find their way to other payers, including Medicaid.
That could start to happen. Tripp from Grand Rounds says he’s found that insurers are realizing that working with navigation companies is a mutually beneficial exercise. Rajeev Singh from Accolade agrees, noting that most health plans haven’t viewed navigation companies as a threat in quite some time. “The most enlightened health plans have realized that in a competitive health care world, we all need to focus on what our core competencies are,” he told us. The exception might be the startup health plans, including Oscar Health, which pride themselves on their navigation capabilities.
Over time, we expect that navigation companies will likely provide more and more compelling evidence to convince government-run payers that there’s a cost savings at the end of the tunnel. Accolade, for example, recently started integrating their navigation capabilities with a population of active duty military. That could lead to a major expansion of these tools. But for now, we can understand starting somewhere.
Navigation and “point solutions”
In digital health, the so-called point solutions are exploding.
Our research found that navigation companies are already playing a role in helping employers manage these existing benefits and figure out who to work with in the future. Accolade, for instance, has a “Trusted Supplier” program, which involves vetting vendors clinically, financially and technically. That makes sense. Employers don’t have the bandwidth to evaluate all of the different solutions on the market for sleep, women’s health, diabetes care and more. And these partnerships also can result in more data integration, which is critical given the sheer quantity of vendors.
For navigation players, it’ll be a big question whether they become brokers or consultants of sorts, which would involve striking deals to share revenue with specific point solutions. Will these companies start to compete with the current suite of brokers, replacing them as the middlemen in the ecosystem? It’s a similar question that the pharmacy benefits managers like CVS Caremark and Express Scripts will have to face, as they expand into so-called “digital health” formularies.
Tripp from Grand Rounds says he would personally view that as a conflict of interest. We agree. But Michael and I discussed a hypothetical path forward where an employer looking to promote a new benefit - say it’s a pregnancy app or weight loss program - could carve out benchmarks or performance goals for the navigator and the point solution to jointly hit. If they achieve a certain number of activations or enrolees and/or prove a certain health outcome, there’s a performance bonus for the navigator. In this hypothetical, that’s funded by the employer. The key here is transparency.
Will navigation companies move into telemedicine?
Within the employer space, our thesis is that everything is starting to merge together because human health needs to be treated more holistically. Plus, it’s confusing for benefits teams and employees to manage so many vendor relationships.
That’s why the largest companies in the space are strategically expanding their capabilities. Grand Rounds moved from medical second opinions to navigation. Accolade did the opposite. It started off in navigation but recently acquired a second opinion-focused startup called 2nd.MD.
Telemedicine could be next. Advocates as they advise members could tightly integrate with clinicians to provide virtual visits by phone, video or SMS. The key question for these companies will whether they build, buy or partner. In Tripp’s view, navigation players will use their tools to route members to a telemedicine vendor. Or they’ll merge telemedicine and navigation together. Some navigation companies that subcontract today with third-party telemedicine vendors may end up rolling out their own solutions.
As he put it: “We spent a lot of time researching the pros and cons of building telemedicine integrating it into our navigation products and determined that doing this was a win-win-win — better for our telemedicine providers because it gives them more info about the member and better tools to navigate them; better for our members because now they can get navigational support and receive treatment in the same place; and better for our customers because it simplifies their benefits program.”
Tripp said last April the company launched 24/7 telemedicine with specialty eConsults. “This is just the beginning for us.”
Are navigation tools becoming more specialized?
Short answer: Yes.
Included Health is paving the way with LGBTQ employees by marketing to them through Pride groups. That’s a super smart strategy because these employees have already stepped forward to join a community.
Our fund - OMERS Ventures - backed another player, WithMe Health, to specifically take on the problem of medication, which is notoriously tricky for people to manage on their own. As Joe Murad, the company’s CEO, explained it: “We consistently see people overpaying for their medications and on medication regimens that aren’t working for their underlying health problem.”
Medications are a huge driver of spend, he notes, and employers are throwing money down the drain when their members are taking medicines that don’t work for them. As an example, Murad pointed to Humira, a specialty drug for rheumatoid arthritis, noting that clinical trials have shown that 1 in 4 patients will receive the stated benefit in 6 months. But WithMe’s data shows that 50% of employees prescribed the drug will stay on it after 12 months. Human guides can identify those members and help them find alternatives, where it makes sense to do so.
Grand Rounds’ Tripp believes this is a big and important trend. “There’s no question that specialty navigators will drive important considerations around how to take care of specific populations,” he told me. But he did warn that there needs to be continuity of care: “We do need to be careful about making the fragmentation of benefits worse.”
Singh from Accolade put it similarly: “My job is to identify players in a space and enable them in a way that makes sense to the consumer and is valuable to my customer,” he shared. “Ultimately, we think there’s a big opportunity in vertical slices of navigation for distinct populations on distinct journeys.”
Categorizing the various navigation tools
There’s a bunch of these tools on the market, so here’s our nifty guide on how to bucket them.
If you agree/disagree, reach out to myself (@chrissyfarr) or Michael Yang (@yangbness1) on Twitter because we’d love to hear your thoughts.
How we would define the categories:
General navigation offers the broadest set of capabilities and is the largest segment of navigation. It started in the employer domain but has moved to the health plans (Pager) and health systems (Docent Health). It covers everything from benefits assistance to utilization management to care coordination. Typically, it’s a tech enabled service as notable for its people power as its software and analytics skills. If done right on the people side, it can bring in real context and social determinants of health into the picture.
Verticalized navigation is the newest kid on the block and is applying similar tenets from general navigation but for a more specific patient journey where complexity is heightened and requires specialization (e.g., financial wellness, musculoskeletal, medication, LGBTQ populations, children with disabilities, senior care)
Embedded navigation involves navigation capabilities embedded as a capability into another line of business (e.g. navigation as a feature in the offerings of an insurance company or provider). These are not standalone navigation businesses. It’s navigation that enhances another underlying core business.
Front door navigation is how the cohort of AI chatbots have recast themselves from symptom checkers and triage tools. These tech-only solutions are finding success working with health plans and routing members to other relevant and appropriate solutions that the insurer offers (e.g., telehealth, urgent care, labs and testing). They are really member engagement and data collection tools, as much as they are medical apps.
Advocacy is the historic origins of the entire navigation category. Decades ago, these standalone call center businesses emerged as patient advocates for members. But this segment was less successful in evolving - and as a result, newer, tech-enabled navigation players sprung up and expanded the scope of services and the overall market.
An existential question: Should these businesses exist in the first place?
If healthcare were less complicated - and it should be - would navigation tools cease to exist? In other words, with meaningful government reform, would they simply disappear?
We asked Justin Holland, the CEO of HealthJoy that question at the end of a recent conversation. As he noted, even in the best health care systems in the world, patients could use the extra help. It’s a vulnerable time and there will still be myriad questions: “Am I getting the best care possible?” “Am I doing the right thing by a loved one?”
So in his view, yes, there’s always going to be a need for navigation.
To leave you with some predictions…
We think that more verticalized navigators will emerge: As the market evolves and we all realize that healthcare is even more personalized and more complicated than ever, arguably the general navigators won’t be able to cover the entire waterfront. This allows for newer - potentially niche - players to fill the gaps for underserved populations. This could be by condition, by demographic or by topic. We could see a lot of founders look at the success of more established navigators and see that as inspiration or a path forward.
We expect to see more exits in this category: Late-stage private companies like GrandRounds and Quantum Health just raised substantial amounts of capital and their investors will be looking for a return on that capital soon. Both companies have been around for a decade - longer in Quantum’s case - so it stands to reason that both could have successful IPOs. We should also expect consolidation of the smaller navigators too. The verticalized navigators may get gobbled up by the generalist ones. The front door navigators are also possible targets for their health plan customers. And let’s not forget the mid market/SMB-centric navigators like HealthJoy, Rightway, where we see a lot of potential for growth.
There will be an indoctrination of navigation principles into the core healthcare fabric: We think we’ll see a world where health plans and health systems incorporate navigation as a feature, product or service. If these companies did so, we’d be in a better place from a health literacy standpoint. We’re already seeing this with the new venture-backed health plans for Medicare Advantage, as well as the newer telehealth primary care providers.
But… We do not anticipate a fundamental change to our healthcare system. It would be surprising to see a nationalized, single payer construct so we’re saying all this with the status quo in mind.
So the net: We’re keeping a close eye on verticalized navigators - and as we look at the next generation of telehealth providers, we are also looking to see navigation as a capability incorporated into their stack.
And now for COOL JOBS
Care about primary care? Aledade is hiring a vice president of data management and infrastructure products. This person will be responsible for mentoring a team of technical product managers and program managers. Apply here.
Want to work in navigation? Our portfolio company WithMe Health is hiring a Director of Customer Success to help clients onboard successfully to lower spend, improve outcomes and change members’ medication experience for the better.
Fascinated by consumer experience? Our portfolio company League is looking for a VP of Platform Sales to lead its go-to-market strategy and revenue for a new service business. This person will work with payers, pharmacy retailers and digital health innovators.
Got a knack for storytelling? Microsoft is on the hunt for a senior manager of strategy and operations to develop a narrative around its Next business in health-tech. This person should be a great communicator with a mind for strategy.
Keen to relocate to Berlin? Vara, one of our portfolio companies, has an opening for a machine learning engineer to apply technology on medical imaging. The ultimate goal is to help detect breast cancer as early as possible. Apply here.
Passionate about pharmacy? Walgreens is looking for a senior director of strategic partnerships to explore new business opportunities and partnerships. The ideal candidate has spent at least four years in business development, and two years contributing to financial business decisions.
Rockstar at sales? Signify Health is looking for a VP, Client Sales executive to grow new business with health plans and self-insured employers. The right person could be located anywhere across the U.S., but must be open to travel in a post Covid-19 world.
Passionate about deep learning? Medical imaging startup Subtle Medical is looking for a Business Development and International Sales lead to grow its footprint around the world. One of the best perks? Uber Eats at every All Hands.