Samsung and Cigna have agreed to a multi-year development alliance for health applications for the Samsung smartphone. The partners will initially focus on content (access to the health-related tips and articles Cigna already offers its customer base). Ultimately, the partnership will “connect individuals with caregivers, doctors and hospitals to improve health and wellness globally.” So far, the announcements have been silent on any exclusivity.
In our view, the content deal is a sideshow: health and wellness tips are highly commoditized and an insurer an undifferentiated supplier for this content. I believe building connectivity among patients and their continuous biometric data, and caregivers and providers that is the real strategic intent of the deal.
Partner assets
Samsung has ~30% of the global and 25% of the US smartphone markets (and growing based on latest shipment data). On its smartphones, Samsung has had the S Health app since 2012 and the latest generation allows tracking of workouts, diet and weight using a built-in accelerometer, manually entry and/or linked with an external heart rate monitor and body scale — thus covering much of today’s uses for health apps. Mobile health for consumers is not Samsung’s only interest in healthcare: it has positions in medical devices (in vitro diagnostics and imaging such as ultrasound, mobile CT, digital radiography) punctuated by several recent acquisitions.
Cigna brings:
- Purse strings – contracting relationships with a broad network of providers and option to pay for mobile interactions
- Big account focus: Cigna’s huge ASO business gives it relationships with the big employers most likely to buy in (philosophically and monetarily) to innovative wellness strategies. It also can’t hurt that these accounts may have enterprise level sourcing for employee mobile devices.
- International breadth: Cigna’s geographic footprint overlaps quite a bit with Samsung. Cigna’s strong position in international markets (1.3M lives in ASO and risk, and, notably a particularly heavy presence in South Korea, albeit selling life rather than health insurance) will give it the cultural savvy to provide relevant content to Samsung’s global customer base. Further, a global business model for mobile health and wellness will likely start with major multinationals looking for solutions to help their expats, key local employees and third country nationals navigate local delivery systems or connect with trusted doctors back home.
Samsung’s choice of a health insurance partner for their mobile health platform signals that they think (1) influencing the incentives for providers and patients to use mobile health is critical and (2) that mobile’s most readily monetized value creation is for the big employers. We can expect to see mobile built into product designs, incentives for using mobile to track behaviors and make cost effective site of service selections, and for providers to get rewarded for supporting patients’ interactions via mobile.
But why Cigna?
But if you are the #1 smartphone maker (in a fairly consolidated market), why pick Cigna? It is the #4 insurer in the US in terms of lives and a bit of a slow-mover in mobile relative to, for example, Aetna. Back in June 2011, Cigna CIO Mark Boxer said the company was taking a very deliberate approach to mobile. Only in 2013, did Cigna launch concrete steps towards a partnership-heavy strategy (covered insightfully by Chris Dolan and his team at mobihealthnews — see exhibit for a timeline of key moves).
The key elements of the strategy appear to be:
- Leverage externally developed apps and use market-driven curation to sort best in class
- Limit investing heavily in proprietary/native
- Deliver differentiation by bringing together apps with Cigna coaches (or other Cigna care management infrastructure) to reinforce/drive behavior change
- Focus on Cigna customers vs. seeking users outside of Cigna benefit designs
In other words, Cigna has relatively few proprietary assets to contribute to a mobile platform.
Contrast this approach with Aetna which – besides being #3 in the US market and not far behind Cigna internationally – can offer full ownership stakes in its mobile assets:
- Purchased Healthagen/iTriage at the end of 2011 (continued to grow it to 7 million downloads, 3 million uses a month, links with 20% of acute hospitals a year later Todd Park declaring himself a “massive fan”
- Owns Medicity which can facilitate with provider connectivity
- Launched its own curation platform Carepass offering mobile apps with a combined 100M downloads).
How is Cigna pulling its weight in the partnership with Samsung?
You stay in your sandbox while I expand mine
Perhaps Cigna’s apparent weakness is, in fact, attractive for Samsung. Let’s speculate a bit: Suppose Samsung wanted to make a major play for mobile health (e.g., sitting at the center of biometric data collection and sharing + mobile connectivity platform + access to advice, care and delivery system navigation). In its acquisitions (Healthagen), new business launches (Carepass) and positioning, Aetna appears to be targeting the same space. That would make Samsung and Aetna inevitable strategic competitors. Cigna’s partnership approach — focused on carefully leveraging mobile for their insurance clients, rather than playing in the space directly — makes it much strategically compatible with the very ambitious Samsung.
Nothing reinforces good rapport (which – per Cigna – the two partners enjoy) like strategic compatibility.
If this speculation is correct, there are several inferences we can draw:
- Samsung and Cigna are likely targeting the very large and international employer for their jointly developed services. Expect to see models with rich mobile health capabilities as a buy-up – perhaps PMPM to start, then shifting to a portion at risk as the model matures and adoption grows.
- Samsung and Aetna have different starting points (Samsung: device platform, large consumer installed base, all-payer, all provider vs. Aetna: all-device, clinical depth, control of provider and consumer incentives) but racing towards the same end-game. Expect a competitive struggle between the two.
- The Samsung- Cigna deal is probably not exclusive (at least in the long-term). Samsung is too ambitious to stick with the #4 only. Other payers can expect to have access to Samsung mobile health capabilities
- Cigna will help it build out the model for integrating providers (especially contracting, incentives etc), embedding mobile into member benefit designs. Other payers should pay attention to any pilots and learn where they can.