Health insurance companies are increasingly investing in, acquiring, and partnering with digital health companies to increase access to care, improve engagement and decrease costs for members.
According to Digital Health Business and Technology’s quarterly data, investment arms for Cigna and Blue Cross Blue Shield separately invested in eight companies in the past 12 months. And an investment arm for Optum, a subsidiary of UnitedHealth Group has already made 11 digital health investments in 2022.
Earlier this week two regional insurance companies got into the act when GuideWell, the parent company for Florida Blue, and Highmark Health, a Pittsburgh-based health insurer, led a $35 million investment round for Healthmap Solutions, a kidney population health management company.
For GuideWell, it’s another strategic play in its quest transform itself to be more than just a health insurance company, said Chuck Divita, vice president for commercial markets. The company has been an active investor, whether it’s through funding rounds like the one for Healthmap or as a shareholder in other digital health companies like Availity. It’s also partnered with digital health companies, such as Olive, where it will use the company’s AI to automate prior authorization.
Divita spoke with Digital Health Business and Technology about the company’s digital health investment and partnership strategy, what made certain companies stand out among the pack, and more. This interview had been edited for length and clarity.
When GuideWell decides to invest in and work with these companies, what qualities are you looking at?
Does this company have something unique that can scale? We serve a lot of people. We don't have the time, energy or money to have a gazillion point solutions everywhere. Then we want to know if we can scale it? And does the company have the talent and the expertise to add value to the equation? And finally, will they collaborate? None of these problems are solved yet. It takes the right mindset and collaboration to pivot and learn. That’s from a business standpoint. From an investment standpoint, we want to be good stewards of our capital. There must be an economic opportunity there. If we're right about the business part, then we can help drive stronger financial outcomes for all involved.
What made you interested in investing in Vim?
I met their CEO, Oron Afek, around 2018. I was impressed with his background and story for why he got into the business. More impressive, though, was his ability to understand the challenges that we saw and how he could use emerging technologies to improve the provider experience. So from early on, there was a lot of synergy around that. As we started to use their platform for appointment scheduling and other use cases, we realized there was an opportunity for us to have a bigger role in this company’s development. So, we made a strategic investment and I joined the board.
What can you tell me about your partnership with Prime Therapeutics?
Prime is an interesting company. It’s owned by several of the Blues and serves many of those companies. It’s the fourth largest pharmacy benefit management (PBM). The Blues really want to use it to drive down costs. Prime’s objective is not to drive earnings for the health plans, it’s to drive the lowest net drug cost and create a great experience for the people using it. That's different from the other PBMs. I’m not saying that’s what other PBMs should be doing, it’s their business model, but Prime is different. The opportunity with Prime, particularly with the growth in drug spending, is how do you take these mission-driven Blues combined with the expertise of Prime and solve these problems differently? And how do you work with a health system that’s prescribing medicine and get incentives more aligned so that it improves costs for everyone and helps patients get the care they need.
When you look at Vim, Prime and other companies you’ve invested in and partnered with, what’s the connecting thread?
The healthcare system is very fragmented and that’s been built up over a long time. To change that is very difficult because the current system is so well established. So what we look for from stakeholders is to A) acknowledge that challenge B) not be satisfied with the status quo and C) be a company that will stick their neck out to help drive change. We need that cultural alignment and we’re looking for companies that will be a part of the change. We don’t want someone who is looking for a quick buck.
How does your evaluation process work?
First of all, can you explain how your technology works in a way that I can understand? Even if it’s new, you should be able to explain it easily. Two, be transparent about where you are and where you’re not. You can have a great PowerPoint (presentation) and a great starting point technology, but at the end of the day, it will be revealed whether everything you're saying you can do. Unfortunately, I've found in many circumstances that there's not as much behind the PowerPoint other than deception. Three, you need to acknowledge that there is still gravity on Earth. You can invent an electric car and your own rocket, and you can blast that electric car into space with your own rocket, but you still must deal with gravity. In healthcare, there's still gravity.
What I love about the Silicon Valley mindset is they aren’t wedded to the way it currently works. They want to find out how something should work, which I think is great. The focus on user experience has brought great value to the country and to the world. They also understand how to bring something to scale. But what they need to understand is this is a big, complex and highly regulated environment. If you can marry that disruptive mindset with knowhow on the regulation, something special can happen. If you ignore one or the other, that’s where you’ll run into trouble.
