Health Insurance Industry Analysis

According to CDC, 86% of US healthcare costs go to treating chronic diseases such as diabetes, heart problem, obesity, etc. Through diet and exercise, chronic diseases can be prevented. So, healthcare costs can be reduced by improving the total population’s health. Irrespective of healthcare policies, health insurance companies can increase their profit by focusing on improving the health of the population they manage. Health Insurance providers can use fitness trackers to incentivize consumers to stay active. For example, last year one of the largest insurers, UnitedHealthcare, launched a pilot program called UnitedHealthcare motion which offered private brand fitness trackers to its participants to track activities and offered financial incentives

They want to improve productivity and reduce healthcare costs by improving their employees’ health. Health and wellness companies such as Tivity Health, Virgin Pulse, etc., have wellness programs to improve total population health. Health insurers offer discounts to employers who spend on corporate wellness programs which leads to many employers spending money on these programs. Typically, these corporate wellness programs offer biometric screenings, on-site blood drives, flu shot clinics, on-site fitness centers, offer discounts on gym memberships, etc. These programs are often plagued with low participation rates, and now fitness trackers can be used to incentivize employees to stay active and improve participation rates. For example, Virgin Pulse’s corporate wellness programs offer fitness trackers to participants to track activities and offer financial incentives to achieve goals. Recently, Virgin Pulse has partnered with Fitbit and will be using Fitbit trackers as recommended fitness trackers. According to Virgin Pulse, fitness trackers are helping the company to improve its corporate wellness programs’ participation

However, that doesn’t necessarily mean there is a future for Fitbit because it is not the only company that is going after this market. Apart from that, wellness programs are focused on improving participation rates and are going after Bring Your Own Device (BYOD) model. Fitbit needs to improve its switching cost. That can’t be attained just by integrating its trackers to other programs. The company needs to offer integrated solutions. The company is making slow progress towards that goal. It is going after large employers directly and providing hardware, software, and services. For example, Target is offering free or discounts on Fitbit trackers to its employees as part of its corporate wellness program. Target is hosting Fitbit challenges to improve communications between employees and also increase participation rates. There are, however, privacy concerns. Employees don’t want their employers to know about their personal lifestyle, such as sleeping habits, etc. Fitbit is aware of this and to protect users’ privacy it lets employers access total population data, not individual employee