Dive Brief:
- Care navigation and telehealth firm Included Health is buying Firefly Health, a virtual-first primary care provider and integrated health plan, banking that their combined offerings will be attractive for employers looking for new ways to cut healthcare costs.
- Included has signed a definitive agreement to acquire Firefly, according to a Tuesday press release. Financial terms of the deal were not disclosed, and a spokesperson declined to share specifics.
- The acquisition is expected to close in the third quarter this year pending regulatory approval.
Dive Insight:
The goal of the combination is to give employers a substitute for traditional health plans, with access to higher quality care and more predictable costs. The acquisition builds on the alternative health plan design that Included launched in January, the company said.
According to the release, Firefly — which offers team-based primary care and a nationwide network of more than 2,300 providers — cut care costs by 15% across its administrative services book of business last year compared to a market benchmark. Every customer saved money, the company said.
Joining with Included should allow Firefly to scale its model and reach more potential clients. Currently, the company, which was founded in 2017 by two doctors, serves about 20,000 people across the U.S.
By comparison, Included has tens of millions of members nationwide through contracts with more than 300 employers and health plans. The company, which was formed from the merger of care navigation platform Grand Rounds Health and virtual care company Doctor On Demand in 2021, offers virtual and in-person care, along with care navigation and coordination services.
“We’ve seen firsthand what works, and Firefly’s proven results in total cost of care and member experience align and complement our core offerings,” Included Health CEO Owen Tripp said in a statement. “Together, we’re giving employers a single, connected benefits experience that integrates plan design and administration, comprehensive care, and full system support to reduce friction, improve employee health, and lower costs.”
Included is hoping that the acquisition will set it apart in a crowded employee benefits space and attract employers fed up with point solutions and ever-rising healthcare costs.
Health benefit costs are expected to rise by 6.7% this year — the highest jump in 15 years, according to Mercer. Other estimates peg the jump much higher, around 9%.
Employers have tried to absorb the majority of cost increases. But that’s an increasingly unsustainable solution, according to benefits experts. As a result, more employers are considering pushing costs onto their workforce, through higher premiums, deductibles and out-of-pocket limits. Other strategies include tightening utilization controls in high-cost areas, like GLP-1s, or reconsidering health and phramacy benefits vendors.
Employers are also increasingly open to alternative plan designs like that being peddled by Included. According to Mercer, nearly one-third of employers currently offer or plan to offer at least one nontraditional medical plan in 2027. Another 38% are considering that approach.
