Derek Newell
Derek Newell will soon be shifting from his role as the cofounder and CEO of employment health benefits manager startup Jiff, to president of Castlight Health following the strategic acquisition announced earlier this month. He shared some insights on the consolidation happening with platforms offered by companies like Jiff and Castlight Health in a phone interview with MedCity News.
Newell noted that in the past few years he has seen a proliferation of digital health investments in point solutions.
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“In order for [point solutions] to be adopted en masse, there would have to be healthcare delivery built into them.”
As far as getting contracts for them was concerned, it made more sense for these solutions to be integrated into one place.
There are several platform oriented companies that are built around digital health services, aside from Castlight and Jiff, including Accolade, Quantum Health, Sharecare, Welltok, Virgin Pulse, Evive Health, and Limeade, among others. Even UnitedHealthcare moved into this space when the insurer’s Optum division acquired a majority stake in Audax Health Solutions, the precursor of Rally Health.
Newell estimated that roughly $1 billion has been invested in digital health platforms, with a handful of these companies raising the lion’s share. Although traditional and strategic investors have invested in individual platforms they tend to back one horse rather than hedge their bets with investments across multiple platforms.
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With the consolidation trend, Newell said the company started to look at other companies that it could partner with to add capabilities and customers that Jiff either lacked or where it needed to grow significantly.
“We knew we needed to partner up and we looked for one that had the claims data — that was our gap and it was going to be expensive to build.”
Jiff also needed self-insured employers. Those two factors were why a deal with Castlight Health made sense. The combined company’s customers include 70 Fortune 500 companies.
Some of the priorities after the acquisition is completed in the first half of the year include integrating Castlight and Jiff’s products and services to maximize the power of their combined platform. When that process is complete, the business will turn its attention to adding new functionalities that fit into three groups: stay healthy, managing a condition and accessing care.
“We could go deeper into any one of these areas,” Newell said.
But what will happen to the Jiff brand name in this process? Will it fade into the sunset or will it live on in the combined business? That hasn’t been decided yet though Newell sounded optimistic that the brand would continue in some form.
“Castlight is a better-known brand, but Jiff has better [brand] affinity,” Newell said. “The Jiff brand will likely be preserved in the platform or product in company.”
Looking ahead, Newell expects the consolidation trend to accelerate in the next few years as companies continue to ramp up services to grow their customer base.
Photo: Hong Li, Getty Images