The market for healthcare navigation — especially companies targeting self-insured employers — is pretty crowded. You have public companies like Accolade, bankrupt public companies like Castlight healthalready private and is merging with Vera Whole Health and a number of other private companies such as He includedhealth, The right wayand HealthJoy. Not to mention point solutions for diabetes, MSK, hypertension, weight loss and so on that aim to reduce the costs associated with these conditions for employers and health plans.
But the CEO of the Columbus, Ohio-based privately held health navigation firm Quantum Health, believes it is miles ahead of all these direct and indirect competitors. In a recent interview, Zane Burke said the company has been profitable since 2000. This is a feat that other more famous players like Accolade have yet to achieve. The financial strength will likely cast the firm in a positive light to investors when Quantun decides to go public. Burke was coy about the IPO and didn’t address it directly, but what did he do talking at length is the advantage Quantum has when it comes to interacting with suppliers:
“We take calls from vendors, so we’re the only ones that take vendors. No one else in the industry [does that]. Sixty-eight percent of our call signals—the power for our artificial engine—comes from these vendor interactions. Simple things like if a provider calls and asks, “Is John eligible for this treatment – is this in network?” that’s when we know John is ready to embark on a health care journey. In the traditional sense of healthcare, [it takes] 120 days [for employers] to get that statement and that’s it [the] it’s your first time seeing it. The cow is out of the barn. The game ends at this point. [slightly edited]
This early pulse that Quantum receives can help navigate the employee to the right set of providers for whatever the current healthcare need is. And this, in turn, can help reduce costs for the employer and provide a better outcome for the patient.
“You have to be in that vital flow of the member,” Burke said, to ensure good results and a better experience.
An equity research analyst recently commented on this vendor interaction that Quantum touts.
“Accolade doesn’t spend a lot of time talking about whether they’re engaging with suppliers as much as Quantum says they are,” Jailendra Singh, a research analyst at Truist Securities, said in an interview last week
In a research note published on January 16, Singh wrote:
“…Quantum Advocates can engage with providers to understand the diagnosis and outcomes of a service to obtain additional information. In other words, Quantum may use the interception capabilities of provider interactions in addition to member interactions to improve its navigation services.”
Burke believes the company’s technology platform allows Quantum’s “health warriors”—the company’s employees who interact with members both physically and digitally—to have a complete picture of the member.
“So they can say, ‘I see you have access to Livongo. Oh, I see you did your A1c once but didn’t retest. Is it a matter of training? Is it something else?'” he explained.
And that, according to Singh, is exactly what employees want: a healthcare advocate. He argues that most people don’t want to call their employers or insurers for help with medical needs. This is because there is no trust there.
“Put, Quantum and Accolade and included [Health] in the mix there – they’re the guys who act like they’re the voice of the employees and they will act in their best interest,” Singh said. “They’re trying to build trust with employers and insurance companies.”
Singh declined to comment on whether Quantum will be more successful than competitors, given all the financial and platform strength that Burke is touting. Instead, he acknowledged the possibility in general.
“The market is still very under-penetrated and there are still a lot of new opportunities for these players,” he said, noting that the market could easily support multiple companies vying for employee benefit dollars.
Accolade, of course, is a public company that has seen its founder’s wealth — at least as measured by its stock — rise. Roughly six months after going public, the stock hit a high of $59.28 on December 7, 2020, and has been on a downward trend ever since. It is currently trading for just over $9.
Singh attributed the poor performance to several factors. First, investor sentiment has changed.
“In the last two to three years, investor interest has shifted from focusing on companies that only grow at the top to companies that grow at the top and [being] profitable and generating cash flow,” he said.
Also, earlier last year, Accolade lost a major client contract with Included Health.
“For background, Included Health has had a long-standing relationship with Comcast, with Grand Rounds serving Comcast since 2014 and Doctor on Demand since 2015. Wanting a comprehensive solution, Comcast moved to All Included Care, which offers premium navigation, behavioral health, primary care, specialty care and communities (diversity and inclusion tool),” Singh wrote in a Nov. 14 research note.
But Accolade hasn’t lost any big contracts, and in fact, contract retention has been pretty good lately, he said in the interview.
Quantum Health is also doing well in terms of customer retention, with a 92% customer retention rate, according to Needham senior analyst Ryan McDonald. The company also boasts a high return on investment — $2.50 for every $1 spent — on employee benefits.
“We give 2.5 to 1 ROI. It’s not cherry-picking — I’m picking one customer on Saturday,” Burke said. “It’s our entire book of business.”
The return on investment is likely to be attractive to employers looking for solutions to manage spiraling health care costs, including for chronic diseases. Burke said there’s also a winning argument for employers who are slowly growing weary of point solutions and want one place to send their employees.
“[Employers] they’re not getting value out of all the point solution stuff,” he said. “We want to do deeper integrations [with other vendor solutions] and say, “You don’t want the Livongo app, the Hinge app, whatever else here. You just want to go to one place. [Hinge, Teladoc, are partners of Quantum Health.]
While winning with its core client base of self-insured employers is vital, Burke is also looking to diversify Quantum’s client base.
Last year, the company made investments in the government market to cater to the health needs of government employees.
“Last year we invested in government and healthcare. “We will invest this year in the business’s work and health plan … No one should have to navigate their health care alone.”
Photo: Eightshot Studio, Getty Images and Quantum Health