The Benefits of Per Engaged Member Per Month (PEMPM) Pricing

Cameron Jacox is the founder of Rocket Digital Health, the foremost digital health scale consultancy. Go-to-market is hard in healthcare, and we believe that you don’t need to reinvent the wheel to bring your brilliant invention to market. Having helped scale 13 digital health startups, including for 4 years as Chief Growth Officer at Lark Health from Series A to Unicorn status, Cameron & his team work with select startups to bring growth strategy to bear to beat their growth goals and catch their stride.

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Per Engaged Member Per Month (PEMPM) contracting is an alternative pricing model to Per Member Per Month (PMPM) contracting that is gaining popularity among digital health startups. PEMPM contracts pay startups based on the level of engagement they achieve with health plan members, rather than a fixed payment per member per month. This model offers several benefits for digital health startups, including:

1. Incentives for Engagement: PEMPM contracting incentivizes digital health startups to engage health plan members and encourage them to use their services more frequently, which can lead to better health outcomes and cost savings for health plans.

2. Higher Revenue Potential: Because PEMPM contracts pay based on engagement, digital health startups have the potential to earn more revenue if they are successful in engaging a higher number of health plan members.

3. Improved ROI: PEMPM contracting can improve return on investment (ROI) for digital health startups, as they are paid based on the value they deliver to health plans.

4. More Accurate Pricing: PEMPM contracts allow digital health startups to price their services more accurately, as they are paid based on the actual level of engagement with health plan members.

5. Better Alignment with Health Plans: PEMPM contracting can also help align the interests of digital health startups with those of health plans, leading to more collaborative and mutually beneficial relationships.

What are the Benefits of PEMPM Contracting for Health Plans?

In addition to the benefits outlined above for digital health startups, PEMP contracting can also offer several advantages to health plans, including:

1. Improved Health Outcomes: PEMPM contracting incentivizes digital health startups to focus on engagement and preventive care, which can lead to better health outcomes and cost savings for health plans.

2. Cost Control: PEMPM contracting can help health plans control costs by incentivizing startups to deliver cost-effective care that engages health plan members and reduces the need for more expensive services.

3. More Targeted Investments: PEMPM contracts allow health plans to target their investments more effectively, by paying digital health startups based on the actual level of engagement with health plan members, similar to how they pay for reimbursed services.

4. Improved Quality: PEMPM contracting can encourage digital health startups to focus on delivering high-quality care that meets the needs of health plan members.

5. Flexibility: PEMPM contracting can provide health plans with more flexibility to experiment with new care delivery models and partnerships with digital health startups.

How does Rocket Digital Health Help?

Rocket Digital Health is a healthcare consulting firm that specializes in helping digital health startups navigate the complex healthcare landscape. One area of expertise is in structuring the right PEMPm or PMPM model for startups and securing health plan buy-in on the model. Rocket Digital Health can also help startups identify and pursue other pricing models that may be appropriate for their business model.