Three Key Structural Forces Expanding Demand for Employer Health Technology

Three structural forces are driving the market opportunity in employer-sponsored healthcare: growth in self-insured coverage, rising specialty drug costs, and higher cost-sharing for employees. Together, these trends expand the market for employer technology while increasing urgency around cost containment, according to the latest industry report released by the Healthcare Technology investment banking team at Brown Gibbons Lang & Company.

Self-Insured Coverage is Expanding

Self-insured employers already make up the largest share of commercial coverage and are expected to grow through 2030. Employer healthcare spending exceeded $700 billion in 2021, about 18% of total U.S. healthcare spend. Costs continue to rise faster than wages, with self-funding plan premiums growing faster than fully insured plans over the past five years.

Rising Costs of Specialty Drug Spend

Specialty drug spend is one of the fastest-growing cost drivers. Per-member specialty drug costs have risen sharply and are projected to continue increasing. These drugs now account for about half of the total drug spend, despite being used by a small portion of members.

Higher Cost Sharing for Employees

Employee cost responsibility continues to rise. Deductibles and out-of-pocket costs have increased steadily, and enrollment in high-deductible plans has nearly doubled over the past decade. This makes employees more sensitive to pricing and access, increasing demand for navigation and transparency tools.

BGL’s Healthcare Technology investment banking team has extensive experience serving public, private, and sponsor-backed companies. Our team has specialized expertise healthcare technology M&A within software as a service (“SaaS”) and digital solutions and is able to serve these clients holistically through its collaboration across BGL’s Healthcare & Life Sciences and Technology verticals. Our team has domain expertise across core subsectors, including consumer health, hybrid delivery, provider- and payor-focused IT, pharma IT, and virtual care/telehealth.