B2B Dominates as C-End Health Management Struggles with High Acquisition Costs and Low Market Awareness

“Health management” is an emerging service industry that began to rise in Western countries during the 1960s and 1970s, widely applied in areas such as health insurance, medical services, and community services. It mainly relies on the strong support of modern medicine and IT technology, providing personalized interventions through health screening of populations.

Sean Sullivan, President of the Integrated Benefits Institute, has emphasized that health is productivity. In 2010, Harvard University conducted a highly notable study examining whether corporate spending on employee health benefits effectively reduced medical costs and improved employee productivity. The results were clear: for every $1 spent, companies saved $3 in absenteeism costs and $3 in healthcare expenses.

In the view of Kong Fei, CEO of Miao Health, it is difficult for health management companies to generate revenue from individual consumers (C-end). Through observations of domestic and international health management enterprises, VCBeat has also found that many such companies initially grew by providing health management services to corporations. Employee health benefits have emerged as a new frontier in healthcare and serve as the primary business source for health management companies.

Corporate Employee Health Management originated in the United States in the 1990s. It is a corporate management practice that leverages either internal resources or third-party services, applying modern medical and information technologies to monitor and assess employees’ health status from both physiological and psychological perspectives. This approach systematically safeguards employees’ physical and mental well-being, reduces healthcare costs, and enhances overall corporate productivity.

Employee health management can be traced back to the United States during World War II. Due to labor shortages and government-imposed wage controls, which prohibited companies from attracting workers by raising wages, businesses began to focus on other forms of benefits, one of which was purchasing health insurance for their employees.

Due to various historical factors within its healthcare system, medical costs in the United States have remained persistently high, with insurance companies bearing the direct brunt. In response, practitioners identified health management as a powerful tool for cost containment, leading to the emergence and promotion of insurance models such as Health Maintenance Organizations (HMOs) that prioritize prevention.

According to statistics from Johns Hopkins Medicine in the United States, the emergence of health management companies has reduced direct medical expenditures for health insurance companies by 30%. Health management companies have indeed emerged in response to the development of the insurance industry.

Not only did the concepts and practices of health management originate in the United States, but the most widely applied and successful models within the industry are also found there.

HMSA was established in 1980 and specializes in health services and consulting. Its network of 13,000 health management consultants is distributed across more than 3,000 cities in the United States, providing health management services to clients including Fortune 500 companies, government agencies, and renowned universities.

HMSA has launched an Employee Assistance Program (EAP) for enterprises. Typically, employers pay the annual membership fee as a corporate health benefit. Staffed by professionals with formal medical training, the health management company provides round-the-clock, complimentary consultations on health, medication, diet, and physical examinations, along with translation services in 140 languages.

For employees with existing medical conditions, including high-risk pregnancies, diabetes, asthma, and obesity, the company provides specialized disease management services. These services include health risk assessments, incentive management, biometric testing, a 24-hour nurse hotline, comprehensive reporting, and online physician consultations. HMSA also regularly mails member handbooks to these employees to provide written health education guidance. Additionally, HMSA offers professional psychological training to help employees alleviate stress and enhance their stress resilience.

UnitedHealth Group (hereinafter referred to as “UnitedHealth”), a U.S. insurance giant, was established in 1974. After restructuring and divesting several non-core businesses, the company focused on strengthening its core operations and subsequently expanded its business scope through acquisitions and other means. It has gradually grown into an industry leader and is now one of the world’s largest diversified health and well-being companies.

Within UnitedHealth Group’s subsidiaries, Optum Health serves as the provider of health management services for group clients. Currently, it primarily caters to group clients within UnitedHealthcare’s insurance segment, delivering personalized services and charging corresponding administrative fees. Optum Health’s services span a wide range of areas, including primary care, chronic disease management, and behavioral health management.

As a specialized subsidiary of UnitedHealth Group, OptumHealth not only provides a comprehensive suite of health management services to UnitedHealth’s customers but also achieves strong operational performance. Since 2005, while maintaining continuous growth in business scale, OptumHealth has consistently sustained an operating profit margin above 10%.

Jiff, founded in 2011, is a technology company dedicated to providing employers with employee health management platforms. Its platform collects employee health data through wearable devices and associated mobile applications, generating insights through data analysis. By adopting Jiff’s health management solutions, employers can improve employee health outcomes and significantly reduce healthcare expenditures.

Jiff offers employers three versions of its employee health management platform: the Basic, Enhanced, and Premium editions.

The basic version of the platform provides essential health data analytics services, including tracking of activity intensity, dietary intake, and sleep patterns. The upgraded version builds upon the basic tier by adding features such as health risk assessment and prediction, biometric measurements, lifestyle guidance, nutritional counseling, weight tracking, and smoking cessation records. Compared to the basic and upgraded versions, the premium version offers more detailed and in-depth services, including remote treatment, transparent pricing, service navigation, second medical opinions, disease management, preconception care, mental health services, and other customizable options. The company was acquired by Castlight Health for $135 million in January 2017.

China’s health management sector started late and has followed a different development path from that of the United States. In China, health management originated in response to market pain points, rather than as a corresponding measure under the medical insurance system; indeed, health management services often lack reimbursement support from medical insurance.

As Kong Fei from Miao Health pointed out, due to a lack of market awareness, health management services targeted at individual consumers often struggle to achieve tangible results. Consequently, collaborating with various corporate clients as one of the customer acquisition channels has become the primary source of business for health management companies.

Several health management companies in the market have secured corporate health contracts with major enterprises and public institutions, with each service provider offering distinctive services that reflect their unique brand identity. Among them, some are asset-heavy institutions that have expanded from offline physical examinations to comprehensive health services; these entities emphasize offline services and leverage the advantage of tangible medical resources. Others are “asset-light” companies specializing in mobile health management, distinguished by their superior performance in the digitization and visualization of health information, as well as the convenience of accessing services.

In the current health management industry, companies involved in employee health management can be broadly categorized into three types:

First, brick-and-mortar chain health examination providers, represented by Ikang Guobin, provide annual regular health check-ups for corporate employees and conduct health analyses based on the examination reports.

Its distinguishing feature lies in the tiered management of corporate personnel: in coordination with human resources departments, it develops targeted health and wellness plans for three distinct employee categories—senior executives, middle management, and general staff. Its services include customized health screenings, interpretation of screening reports, vaccinations, health seminars, and on-site corporate clinics. Employees can also access their personal health records through a dedicated corporate health management online platform.

Second, mobile health management platforms represented by Miao Health have adopted the enterprise health management platform model to provide services such as employee health check-ups, analysis of employee health records, intervention in employee health behaviors, early warning systems for employee health risks, and employee healthcare.

Miao Health’s business model shares similarities with Optum, both adopting a B2B2C approach. For corporate clients, Miao Health not only provides customized health examination solutions but also offers targeted interventions based on examination reports. Furthermore, without requiring companies to change their health examination providers or packages, or incur additional costs, Miao Health provides value-added services free of charge to employees, including interpretation of health examination reports, online consultations, and telephone physician services. This helps enterprises build a comprehensive health management system. Additionally, Miao Health has developed a dedicated employee health management platform that enables companies to monitor employees’ physical and mental health status in real time through a visualized data backend, thereby eliminating potential health risks within the workforce, improving attendance rates, and reducing medical expenditures.

Third are resource-aggregation platforms represented by Yitong Health. Such companies are characterized by their access to extensive physical examination resources from public hospitals, having originated as third-party health management service providers, and possessing certain advantages in information technology infrastructure development.

Yitong Health’s service process encompasses pre-examination consultation and assessment, personalized customization of health checkup packages, on-site examination services, as well as post-examination follow-up, health analysis, and interpretation. It provides users with tailored health management solutions, intelligent health checkup services, and a diverse range of health management products. Additionally, it offers corporate clients customized online appointment platforms with dedicated domain names to enhance management efficiency. To date, Yitong Health has partnered with over 5,000 corporate clients.

The benefits of corporate health management lie in reducing total corporate healthcare costs, significantly minimizing indirect economic losses caused by employee illness or health-related leave, and markedly improving employee productivity, making it an attractive benefit for recruiting top talent.

Data shows that companies providing health management services to their employees have seen an increase of over 50% in the average annual output value per employee.

Experience in corporate health management in the United States reveals a key insight for both enterprises and individuals: the “90/10 rule.” Specifically, 90% of individuals and enterprises that implement health management see their medical costs reduced to 10% of the original levels, whereas the 10% that do not adopt health management experience a 90% increase in medical costs.

The reason is simple: companies that implement health management programs see a significant reduction in employee morbidity and hospitalization rates, with the vast majority of disease risks eliminated in their early stages through various measures. Even if illness does occur, prompt recovery is achieved thanks to the “Three Early” approach (early screening, early diagnosis, and early treatment). Consequently, total corporate expenditure on employee healthcare declines significantly, thereby reducing costs.

Taking Union Pacific Railroad in the United States as an example, Peng Dezhi, Chief Representative of Starr Group China, introduced the economic benefits brought about by the company’s health management program. One year after implementing the “Healthy Tracks” initiative, the ratio of total costs to total benefits was 1:3,124. The “Healthy Tracks” program screens and classifies populations through health assessments, then formulates health improvement targets based on the specific health risk factors of different groups. Targeted interventions are subsequently selected to effectively reduce these risk factors.

Previously, in interviews with some entrepreneurs, reporters observed a pattern: companies with a larger base of B-end clients tend to generate higher revenues. Examples include Yitong Health, which serves 5,000 corporate clients, and Miao Health, which is backed by the Sanpower Group’s major business segments and closely integrated with insurance services.

Given the heavy reliance of health management platforms on capital and resources, few startups have been able to carve out a viable path. Sanpower Group spans multiple sectors, including finance, real estate, healthcare, consumer goods, and information services, with over 100 wholly-owned and controlled subsidiaries. It has established a significant presence in the big health sector both domestically and internationally. In 2014, Sanpower Group acquired Leye Communications, bringing Miao Health—originally incubated within Leye—into its healthcare portfolio. In July 2015, Miao Health was formally established as an independent company for separate operations.

Under Sanpower Group, Leyu Communications alone covers 26 provinces and more than 230 cities across China, with over 2,000 offline stores. The total number of offline stores under Sanpower Group exceeds 3,000. Miao Health will gradually establish dedicated health zones in these stores, making them one of the important offline sales channels for wearable devices. Due to the market’s limited awareness of health management, Miao Health, backed by Leyu Communications and Sanpower Group, is largely engaging in market education through its 3,000 offline stores.

Miao Health targets business-to-business (B2B) clients. Kong Fei stated in a media interview, “In the United States, the payers for health management services remain enterprises, such as insurance companies and even the government. In China, individuals have even less incentive to pay out-of-pocket, particularly middle-aged and elderly people over 45. If you ask them to pay, they feel it is more cost-effective to simply go to a hospital and get prescribed medication, as these expenses are covered by medical insurance.”

For platform-based enterprises, data is of paramount importance. In addition to data from wearable devices, partner companies have also become a significant source of data for Miao Health. Health management companies possess B-side client resources; for them, this represents a strategy of leveraging individual partnerships to achieve broader market coverage. As some entrepreneurs have previously noted, the cost of acquiring C-side customers one by one is relatively high, whereas starting with B-side clients is an effective means of reducing customer acquisition costs.