Health IT, Patient Engagement

Digital health coach provider Noom shifts model to embrace outcomes-based pricing

Will other digital health companies adopt outcomes-based pricing too?

The Jump evolution

Noom, a digital health business that uses a virtual coach as part of a set of programs to prevent or improve the management of chronic conditions, has changed its business model so that customers only pay when they achieve their goals, according to a news release. It seems a risky move but one Noom views as achievable based on the data the company has collected.

Noom CEO and Cofounder Saeju Jeong said in emailed responses to questions that the company made the change proactively and not because of pushback from Noom’s customer base.

Jeong noted that 84 percent of participants in the company’s diabetes prevention program complete the course, and more than half of them (64 percent) achieve transformational weight loss — 5 percent weight loss or more. For the hypertension program, nearly half of participants (45 percent) improved their blood pressure readings toward a healthier range.

Noom’s previous pricing model involved charging when users hit specific milestones and actions that were predictive of positive health outcomes such as meaningful weight loss and improvements in blood glucose and in blood pressure. The new pricing model removes those milestone charges and zeroes in on user outcomes.

Like many digital health companies, Noom started with a direct-to-consumer model before adding an enterprise model three years ago once it had gathered enough data on users and outcomes.

“So now when we work on our product, we always have both users in mind — the individual who wants to prevent a chronic condition and the company who wants to improve the health of its employees. This price change is merely the latest evolution of our product to better serve our users,” Jeong said.

He acknowledged that Noom is not the only digital health company to adopt outcomes-based pricing. At least one other company has done so — Omada Health. But Jeong contends that other companies tend to charge for milestones such as engagement metrics, enrollment, and participation as well as whether an outcome is reached. Alternatively, several businesses charge companies on a per member per month basis, Noom’s announcement noted.

“We’ve seen time and time again that other vendors continue to charge for arbitrary metrics. But customers ultimately care about real health outcomes and we’ve modeled our new pricing model around this,” Jeong said in an email. “What Noom has done differently is to charge ONLY when a positive health outcome is achieved, nothing else. There is zero risk to the customer because if we don’t deliver results, then they don’t pay. It’s as simple as that.”

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