Data-Driven Tech Firms Target Consumer Engagement

Large employers and healthcare payers are turning to nontraditional partners in their quest to contain health costs.

Data-driven, technology savvy, consumer friendly new entrants to the healthcare industry appear to be filling a gap in the shift from a fee-for-service healthcare system to value-based delivery of services.

"We bring engineering depth from the consumer world," Scott Matthews, VP of product marketing at San Francisco-based Castlight Health, said Monday in an interview. "We're bringing modern consumer technology to healthcare."

Founded in 2008, Castlight reported 2014 first-quarter total revenue of $8.38 million, with $1.79 million gross profit. Matthews says the consumer-driven technology company is geared to steer the healthcare industry in a new direction. "Castlight's mission is to fundamentally transform the healthcare system with market forces," he said. "We're working with 35 of the Fortune 500."

Castlight is helping several large self-insured employers optimize their health and wellness benefits with cloud-based, cost-controlling technology. Matthews says U.S. employers spend more than $600 billion annually on healthcare costs associated with their workers, adding "30 percent of that is wasted, and the costs rise 8 to 10 percent annually."

Castlight's Enterprise Healthcare Cloud features four "solution centers," he says. "It's a holistic system that works together."

One of those four pillars is Castlight Connect, which helps employers optimize the impact of their suite of health and wellness programs, Matthews says, noting that large employers often have more than a dozen programs that offer services beyond traditional medical and dental insurance policies.

"All these programs are very expensive, but have the potential to drive tremendous gains for both employers and employees," he said of worker benefits such as prenatal care, nurse hotlines, employee assistance programs, second opinion services, wellness programs and preventive care.

"The fundamental problem is the employees don't use them. Typically, they are not aware of them in their time of need."

As employees face higher out-of-pocket expenses for healthcare including deductibles and co-pays, the consumer's need for information has increased exponentially, Matthews said. "You have to reach the employees at their point of need. Employers have to step up with how they do their communication," he said. "We live in a world of immediacy… They want what they want very quickly."

Matthews says Castlight uses cloud-based technology to give employees their companies' pertinent healthcare information instantaneously as the workers use the Enterprise Healthcare Cloud's platform.

"We know what employees are talking about. We know what they are typing in," he says, citing an employee entering the word "pregnancy" into the platform's search engine as an example. "Right then and there is the time to tell what programs the employer has for you."

Castlight recognizes the necessity to avoid appearing intrusive, Matthews says, explaining that the Enterprise Healthcare Cloud search engine would display a company's pregnancy-related programs off to the side of the search results for "pregnancy."

"To the user, it feels very natural," he said. "It's very subtle."

Guarding privacy and establishing trust is an essential element of Castlight's consumer-friendly business model, Matthews said. "Employees go to Castlight and set up their account. It has an initial registration piece [and] first-time user experience.

Large employers thoroughly vet Castlight's privacy safeguards, "They don't mess around with this stuff," Matthews says.

'Guiding Consumers to Optimal Health'
Denver-based Welltok is another new entrant to the healthcare industry seeking to combine technology, data analytics and retail strategies to deliver a higher level of value for healthcare consumers and payers.

About 10 million consumers were using Welltok's CaféWell platform last year, according to Built In Colorado, which has reported that Welltok raised more than $21 million in investor funding during the first quarter of this year.

Welltok enables health insurers and other population health managers to guide and incentivize consumers to achieve their optimal health," Scott Rotermund, Welltok's co-founder and chief growth officer, said via email last week. 

"Welltok’s CaféWell health optimization platform organizes the growing spectrum of health and condition management programs, apps, communities and tracking devices. CaféWell's unique integration platform then drives engagement through the creation of personalized, adaptive plans for each consumer based on his or her health status, benefits and goals… The platform leverages social, gaming and cognitive technologies to provide a fun, rewarding experience for consumers. Currently, CaféWell is sponsored for consumers by health plans, which may distribute it through an employer group or community health systems."

Rotermund says new entrants with technical and retail skills are equipped to tackle the consumer engagement challenge in the evolving healthcare industry.

"We need to elevate the discussion away from the fitness and nutrition basics that the industry has been harping on for over a decade and more towards optimal health. Wellness and prevention are important components, but incomplete." Rotermund says.

"We need to be drilling down to an individual level and guiding consumers to optimal health given their health status, conditions, benefits and goals. For example, telling a pre-diabetic, middle-aged man to eat healthy and exercise more isn't working. We need to tap into his unique circumstances, motivations and then provide the actions – aligned with incentives – that will drive engagement and outcomes."

Integrative approaches are crucial when utilizing technology to help organizations and consumers clear healthcare hurdles, he says. "There's great buzz about wearable devices … and other neat solutions coming to market."

"However, the risk is that all of these great innovations are trying to elbow their way onto the market and not getting to the consumers who could really benefit from them. Comparable to the digital entertainment industry, a platform is crucial to bring all of these assets together and provide recommendations or 'playlists' for consumers."

Matthews says tech-savvy and consumer-centric new entrants have an opportunity to upend the healthcare industry.

"Our intention is to move the market, improve the quality of care. That's going to benefit everybody. We envision a world where the entire healthcare system benefits from this."