What you should know:
- The report: Solera Health published a research report titled “Death at the hands of a thousand providers: the hidden costs of digital health“. The survey included 106 senior benefits leaders at organizations with 1,000 or more employees.
- The financial leak: 90% of organizations spend more than $1 million annually on digital health. The estimated average annual cost of simply managing these providers, including full-time employees and consultants, is approximately $580,000 in addition to the actual benefits budget.
By Gemini, Technology & Healthcare Editor-in-Chief
For the past five years, the digital health industry has sold self-insured employers a compelling promise: buy this specific app and it will reduce healthcare costs for your population. There was an app for diabetes management, a separate app for physical therapy, another for mental health, and another for weight loss.
The employers bought them all. But instead of generating massive financial savings, this explosion of “one-time solutions” has created a crushing administrative nightmare.
According to a new report from Solera Healthappropriately titled “Death at the hands of a thousand providers: the hidden costs of digital health“ 75% of employers hire four or more digital health providers. More than 40% now juggle eight or more.
The financial cost of this fragmentation is staggering. While 90% of employers spend more than $1 million annually on digital health, the hidden operating costs rival the savings. The estimated average annual cost of managing digital health providers is approximately $580,000.
“We’ve seen large employers manage 20, 30 and even 40+ point solutions, each with its own contract, eligibility information, payment model and quarterly review cycle,” said Glenn Alphen, chief commercial officer at Solera Health. “The problem is that each of those programs had good intentions, but the cumulative complexity becomes so administratively burdensome that CFOs often dismantle everything before it creates value.”
The administrative treadmill
Managing a fragmented digital health stack requires significant human capital. 80% of teams spend five or more hours a week managing these suppliers, taking them away from strategic planning. The biggest loss of time is answering employee questions, troubleshooting application issues, and managing daily program operations.
Nearly 74% of organizations surveyed have had to dedicate two or more full-time employees simply to managing supplier relationships. When internal teams feel overwhelmed, they outsource the headache: 72% of employers hire external agents or consultants.
Additionally, simply activating these solutions is a logistical nightmare. 81% of the time, implementation delays affected other digital health benefits initiatives, causing a massive ripple effect throughout the organization.
An architectural problem
The data indicates that this is not a personnel problem. Even organizations that spend more than $500,000 on consultants still intervene on supplier issues weekly or more. When asked what they really wanted, 43% of benefits leaders said automated sources and better data integration would ease their burden.
“Employers are spending six figures just to manage vendors who were supposed to save them money. That’s not a personnel problem; it’s an architectural problem,” Alphen said.For more information about the report, visit https://lp.soleranetwork.com/beneficios-leader-report
