Issue 060

Welcome back to E&O’s Selling to Employers, the enrollment-focused digital health newsletter from Exits & Outcomes — for paying subscribers only. This newsletter digs into digital health companies that sell to self-insured employers, fully insured plans, and other payers. It’s digital health as an employee benefit.

E&O: Selling to Employers

 

This edition of E&O: Employers does not include a breakdown of a big company’s digital health-related benefits because the Omada-Amazon story below was a bit too long. If you’d like a quick summary of what E&O found in its analysis of the first 50+ BigCo benefits it has dug into, check out this searchable, sortable database right here. Here are a few quick notes before we dig into the big Omada-Amazon news:

• Digital MSK company Sword Health posted a handful of new growth metrics this week. One sentence that caught my eye: “In 2023, Sword members completed over 15 million minutes of AI therapy, with 64% of members becoming low risk for surgery by the end of their program and saving their clients $129 million in unnecessary healthcare costs.” That’s puzzling because Sword has previously said it had $200 million in 2023 revenue. Did it save its customers less than that? Sword’s ROI studies claim a 2.47x return or $2,472 per member. That suggests that in 2023 Sword saw ($129 million / $2,472) about 52,185 participants become low risk for surgery at the end of the program in 2023. Remember: That was just 64 percent of program participants last year. So the total was more like (52,185 / .64) 81,539 program participants. If they all paid the full price of the Sword program, which is around $950, that gives us about $77 million in revenue for 2023. I believe that is the most generous interpretation of the figures they provided, but that’s also a lot lower than the more than $200 million in 2023 revenue that the company’s lead investor Vinod Khosla said it would hit in 2023. E&O included that figure in The Sword Health Report last year, but the company told me in a later email that the $200 million figure is actually “contracted annual recurring revenue” or “cARR”. I haven’t used cARR for revenue in previous reports about other companies. I believe the $77 million figure for 2023 is closer to actual revenue for 2023. Thoughts?
• Here’s a quicker question: In 2022 AliveCor announced plans to launch KardiaComplete — a PEPM-billed, employer-facing heart health and hypertension management program that included its ECG device and a BP cuff from AliveCor minority owner Omron. In all my searching of employee benefits documents, I’ve never seen this program offered. Have you ever come across it in the wild? Do any employers offer it? AliveCor has a big DTC business and other more promising B2B initiatives — not to mention a massive, years-long series of court cases against Apple. I wonder how they do it all.

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More details on Omada-Amazon enrollment marketing deal. Scales excluded? Buried ads?

A few years ago I downloaded a free Chrome extension that automatically searches my local library network for whichever book I am searching for on Amazon. I see the results of the library search in the same browser window as my Amazon search. Its bright yellow background ensures I can’t miss it. It lets me know if that same book I’m about to pay $20 for is available (right now — for free) and within walking distance at the library down the street. Or not. It’s great. And it’s saved me a few hundred bucks at least.

Amazon’s partnership news with Omada Health — probably the biggest health tech-related news that came out of the JP Morgan event this week — reminded me of my money-saving don’t-forget-the-library setup.

But if you take a closer look at how Amazon and Omada set up the new Health Conditions Program, it’s pretty clear this won’t work as well as my free Chrome extension.

Let’s back up and run through the basics of this program before we dig in some more.

The problem: Omada Health (and every other digital health company that sells digital health programs as an employee benefit) is only able to enroll a small percentage of the people who are eligible for their cardiometabolic programs. Perhaps the biggest reason is that people don’t realize they have this benefit already paid for by their employer or covered by their health plan. Omada has long considered its enrollment capabilities as “crucial” to its business and also as one of its “strategic differentiators” so it shouldn’t be a surprise that it managed to position itself as Amazon’s launch partner for this.

(Read E&O’s Digital Health Enrollment Report from 2020 for a deep dive into Omada’s enrollment tactics.)

How Amazon will help Omada enroll participants: As far as I can tell, Yahoo Finance was the first to write up the story from JP Morgan earlier this week. Here’s how that site described the program’s mechanics:

There are a few issues with that description. For one, this isn’t happening after a purchase but before one occurs. And two, surprisingly, I don’t think searches for weight scales are included in this deal.

The basic idea is if you search for certain health-related devices (or even just medical conditions) on Amazon now, you will see a small advertisement that invites you to “Check coverage for smart devices” or to “Get help managing health conditions.” So, instead of buying that device yourself on Amazon, you click on this button and it takes you to a page where you can check to see if your health plan includes coverage for Omada Health’s cardiometabolic health programs, which include that device as part of the program. (And I’m sure Amazon collects a referral fee from Omada that is equal to or greater than the money it would have made on that DTC device purchase they just lost.)

This is Amazon.com as a new top-of-the-funnel for Omada’s enrollment marketing. And that’s huge… potentially.

As always, however, the details here matter. How huge it will be for Omada’s enrollment rate is wholly dependent on the execution of this program, and after digging in it’s clear to me that these early press reports oversell it.

Remember: Omada’s programs typically include a weight scale, a blood pressure cuff, a glucose meter, and sometimes a pedometer. Based on the reports, you would assume that Amazon is now going to make it clear to shoppers looking to buy those devices that they should check to see if they can get them for free from their health plans instead.

The Yahoo Finance article included an image that seemed to come from Amazon’s PR department. (Seattle address: I think it may be a mock-up?) After trying several searches for devices on Amazon, I can’t re-create a header ad like the one they show in that image. Here’s what Yahoo Finance said the user experience looks like:

This program is big for Omada if it intercepts people before they make that purchase. That header ad in the mock-up image above probably would intercept a significant number of shoppers. You almost can’t miss it. (If it was golden yellow like the “Complete on Omada” button on the next page, you really wouldn’t miss it!)

But I don’t believe this Amazon program will intercept a significant percentage of shoppers for these devices. Here’s why:

(Disclaimer: Amazon may be running any number of A/B tests with different iterations of how this program works, but after trying a few things to get around that, I keep getting the same results. Let me know if you see something different though?)

Here’s a rundown of how the real-world version of this seems to work vs the PR version:

• The ads for this program are not header ads like the mock-up above. They’re also not like “notifications” or “alerts” which were the words other publications used to describe them. The ads (see screenshot below) are buried halfway down the page of results instead. How many Amazon shoppers scroll past the “Overall Pick” and the “Highly Rated” options down to the fifth row of results?
• No searches for weight scales return any mention of this program. Despite these early press reports, I don’t believe searches for Bluetooth weight scales or weight scales of any kind trigger ads for this program. Searches need to be more medical, which likely means a far smaller pool of shoppers will be targeted.
• The same is true for searches on Amazon for “pedometers” and “fitness trackers”. Neither triggers ads for this program. I think it is a safe assumption that Amazon sells more connected weight scales and fitness trackers than it does glucose meters, so this is likely leaving out a significant number of people with coverage for Omada’s programs.
• Searches for “Glucose Monitor,” “Diabetes,” and “Blood Pressure” as well as those conditions plus a mention of a device like “cuff” or “monitor” seem to always trigger the ads. (See below for screenshots). But, as noted above, this row of ads is always halfway down the page — typically the fifth row of results. It’s not a header ad or a pop-up ad that warns people not to buy a device before checking for coverage. These are easily missed.

When searching for “Glucose Monitor” the fifth row of results displays this series of ads for various Amazon health programs:

When searching for “Blood Pressure” the row of results is still halfway down the page, but the wording is tweaked a bit:

Takeaways from the Amazon-Omada partnership

Amazon rounding out its suite of consumer-centric health offerings: As the screenshots above make clear, the ads that click through to this new Amazon Health Condition Programs page are nestled in with ones for Amazon’s other health offerings, like One Medical, Amazon Pharmacy, and Amazon Clinic. To the extent this marketing program saves people from paying out of pocket for health devices that their health plans’ already cover, it does fit in nicely with Amazon’s consumer-first positioning in healthcare.

Omada is making creative moves around enrollment: Despite the limitations of this program, Omada deserves a lot of credit for landing this deal and getting more creative around enrollment marketing. Re-reading E&O’s Digital Health Enrollment Report from 2020 is a good reminder that the state of the art there is still email marketing, branded napkin holders, and cardboard cutouts of glucose meters. Targeted ads on social media (like Facebook and Instagram) that inform people their employer covers a particular digital health program are also still common, but this Amazon deal goes beyond targeted advertising to point-of-sale purchase prevention. It’s clever — even if it may be too narrow in scope and too sheepish in presentation — to matter.

This program is not casting as wide a net as headlines suggest. Weight scale shoppers on Amazon aren’t seeing these ads. Only those shopping for glucose meters and blood pressure cuffs have a chance of seeing them… if they scroll halfway down the page. This is a much smaller reach than it could be, but at Amazon’s scale, that could still have an impact on Omada’s enrollment. However, if all of the above is correct, then this partnership is not going to have much impact on Omada’s flagship program: Diabetes Prevention.

That’s because weight scales are Omada Health’s key device. Most of its business is still its diabetes prevention program, which does not use glucose meters or blood pressure devices. E&O estimates that 80 percent of Omada’s 1 million all-time program participants were in its diabetes prevention program. We don’t know how many of Omada’s 20 million covered lives only have coverage for its diabetes prevention program — but that group is likely the majority. And so if searches for connected weight scales aren’t included in this Amazon marketing deal, that makes it much less valuable to Omada.

Good optics for the Omada IPO: As I noted above, Omada has previously described enrollment marketing as one of its “special differentiators”. As it prepares for an IPO — see Issue 058 of this newsletter for more on that — it can point to this partnership with Amazon. This isn’t an exclusive partnership, but Omada was Amazon’s only launch partner for this. That’s the kind of thing that plays well during the roadshow.

ICYMI: 87 Prices for Digital Health Programs in the E&O Pricing Database

ICYMI: I added 18 more prices to the E&O Digital Health Pricing Database, which now includes prices for 87 digital health programs. Prices vary for different channels and years, so some programs have more than one entry. E&O subscribers can click here to check out pricing info for programs from Big Health, Spring Health, Omada Health, Onduo, Hello Heart, Virta Health, Teladoc/Livongo, Hinge Health, Sword Health, Lyra Health, Headspace Health, Fern Health, Wondr Health, Kaia Health and more! If this was forwarded to you and you’d like to become a paying subscriber — click here.

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