Employer Health: Specialty Benefit Managers

A multi-part series on investment opportunities in employer health businesses

With healthcare costs continuing to climb, a host of innovative businesses have emerged to help employers better manage those expenses while improving employee wellness and satisfaction.

In this series, Harris Williams senior professionals from our Healthcare & Life Sciences Group describe the key subsectors of the growing employer health industry. Here, we describe the opportunities facing specialty benefit managers, which focus on lowering costs and improving outcomes through specialization.


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Employers continue to look for ways to provide better access to quality care for employees while controlling healthcare costs. This ongoing imperative has supported a steady rise in specialty benefit companies across multiple healthcare segments.

Specialty benefit companies focus on a specific health issue, therapeutic area, or set of high-cost procedures or surgeries. By doing so, they are positioned to provide insured patients with better outcomes more cost-efficiently than a traditional insurance provider’s network. Specialty benefit companies can focus on either a subset of employees or the entire population.

Specialty benefit categories include vision, dental, and pharmacy plans, and the space is expanding into new areas. Yet it is not a new idea: Specialty benefit management has been around for decades. Early participants helped employers manage care more effectively by building provider networks, creating content to help reduce costs, and providing access to better care for members.

The success of these early attempts has spurred new entrants to the sector, seeking to provide a better member experience and reduce costs for payors in high-cost therapeutic areas.

Progyny, for example, partners with employers to provide an all-inclusive fertility benefit plan to employees. The company has built a high-quality network of fertility providers who demonstrate greater pregnancy success rates and have technology and content to help members through the family-building journey.1 “As more employers offer coverage for fertility services as a way to attract top talent, having a specialty benefit manager who can help manage this high-cost procedure while reducing stress for members provides a clear value proposition,” notes James Clark, a managing director in the Harris Williams Healthcare & Life Sciences Group. “That has driven strong growth and high valuations for Progyny and others who specialize in fertility benefit management services. Harris Williams has seen similar success stories in a growing range of specialty sectors, including durable medical equipment, home health, behavioral health, and others.”

Harris Williams has also seen insurers acquiring specialty benefit managers to expand their capabilities in managing high-cost benefit. “The recent Centene acquisition of Magellan Health demonstrates the increasing focus of payors in expanding behavioral health and other specialty health management services,” says Nick Owens, a director in the Harris Williams Healthcare & Life Sciences Group. “This acquisition enables Centene to enhance these service offerings across their 41 million members, driving better outcomes and improving the value proposition they can offer to government-sponsored health programs.” 

Two Key Levers

In general, these specialty benefit companies seek differentiation and value through two levers: better outcomes and lower costs.

How do they approach bringing about superior results? Better providers are one avenue: Specialty benefit managers typically evaluate and add the best specialists in their field to their network, often contracting at lower rates due to their ability to refer greater volume to these physicians. Better content is another important capability. Their extensive educational materials equip patients to help drive better choices for treatment plans and overall health and wellness.

Another approach to better outcomes is the strategic deployment of technology. Many specialty benefit managers have workflow solutions that streamline processes, enable employees to engage with and understand their benefits, and provide analytical insights into best practices. “Specialty benefits managers who leverage technology solutions to more effectively communicate with all stakeholders and improve patient compliance with doctors’ orders are achieving differentiated financial and clinical results,” says Sam Hendler, a managing director in the Harris Williams Technology Group.  

In terms of cost reduction, specialty benefit managers tend to have scale advantages in their specialty areas, which provides them with negotiating power and lower unit costs. For example, a specialty benefit company may partner with a large medical equipment manufacturer to provide patients with the equipment they need at a lower rate. Because the specialty benefit manager focuses on specific therapeutic areas or treatments, it can pool order volume from several different customers and thereby get lower prices from manufacturers. It can create similar economies across many types of medical products and services.


Lower costs and better health outcomes are powerful incentives for employers to work closely with specialty benefit managers, driving strong growth in the sector. Yet it’s still highly fragmented by geography and specialty area. As employers continue to strive for fewer vendors that can provide more services, a clear opportunity exists to create scale platforms that offer more services in more areas. In particular, Harris Williams sees substantial opportunity for platform creation in home healthcare, behavioral health, and durable medical equipment.

The ultimate winners in the space will be those that can combine the benefits of specialization with a broad array of high-tech, lower-cost offers that drive better health outcomes for their customers’ employees.

For more information, please contact our senior bankers.

1. CNBC: The $3 billion reason Progyny is breathing new life into fertility benefits, 5/18/2017 (https://www.cnbc.com/2017/05/18/the-3-billion-reason-progyny-is-breathin....)

Published March 2021


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