Pricing Strategy in Digital Health: Competing, Surviving, and Creating Value

Authors: Demi Radeva, Clem Foltz

Pricing healthcare technology isn’t just about covering costs or chasing growth. Beneath the spreadsheets and projections, it’s really a question of credibility.

For payers and managed care organizations (MCOs), every vendor pitch is scrutinized through the lens of medical loss ratios (MLR), total cost of care, and quality outcomes. If your pricing model doesn’t align with that world, you’ll struggle to gain traction, no matter how brilliant your product is.

In digital health, there are three keys to a credible pricing strategy: competitive analysis, cost analysis, and actuarial value analysis. Think of them as context, floor, and ceiling. Competitors define the playing field, costs keep you grounded, and actuarial value reminds you that payers invest in probability, not possibility. Mastering all three is what separates credible solutions from those that get stuck in endless pilots.

Competitors: Context and Anchors in the Payer Market

When a health plan CFO sees your price, they immediately anchor it against two benchmarks: 

1. what they already pay for similar solutions, and 

2. the “going rate” for digital health tools in your category.

Case Example - Care Management Platforms

Think of care management platforms as the steady percussion section of the payer orchestra. Most care management SaaS vendors price at $1-$3 per member per month (PMPM). That PMPM anchor shapes payer expectations for tools that claim to improve care coordination, nurse productivity, or SDOH integration.

So when a new startup bursts onto the scene asking $10 PMPM, payers raise an eyebrow. What makes this solution that different? Is this solution just out of rhythm with the rest of the payer orchestra? Without clear differentiation, the startup will get dismissed as completely out of touch.

Case Example - Point Solutions (e.g., Diabetes Apps)

Digital therapeutics for chronic disease often price $400–$800 per enrolled member annually. Payers know these numbers by heart because they’ve seen the same pitch deck, rebranded, a dozen times. If you’re outside of that range, you either need:

1. a credible reason to justify the premium (e.g., proven net savings, outcomes-based guarantee), or

2. a disruptive model (e.g., bundled into a broader care management platform).

Best Practice

Your competition isn’t just the company that does what you do. It’s everything payers could buy instead of you. That COPD app? It’s competing not only with another respiratory solution but with telehealth visits, remote patient monitoring, and even nurse case management. Smart startups don’t just track competitors. They map the entire orchestra of adjacent categories.

“Light-touch” vendors that sell into Medicaid MCOs and (in practice) are likely priced in the ~$0.10–$1.00 PMPM range when scoped as outreach/education/nudging rather than high-touch clinical services. (Pricing is rarely public; links show Medicaid/MCO focus, use cases and pricing are estimated based on member restrictions and comparative RFPs.)

1. mPulse Mobile - SMS/Conversational-AI outreach for redeterminations, screenings, gaps in care; supports 30+ Medicaid MCOs and publishes Medicaid case studies. mPulse MCO support

2. Icario - Payer “health action” platform that uses machine learning and non-health related data measures to provide holistic segmentation of members allowing for a more personalized approach to outreach and behavior change. Used by Medicaid plans for engagement and quality gap closure. Icario Medicaid engagement

3. findhelp - SDOH referral directory/platform widely contracted by plans, including Medicaid lines of business. Usually licensed annually rather than PMPM, but operationally “light” and pricing tracks according to their limit on members.  Findhelp

When you move up the intensity scale, the price tag follows. “Light touch” grows into $1–$5 PMPM when paired with live support, incentives, or digital coaching. 

1. Wellframe (HealthEdge) – Blends digital care management and member engagement for Medicaid plans like Sunshine Health/Centene.. Sunshine Health

2. Babyscripts – Maternal digital programs (mobile app, remote patient monitoring and care management services) for Medicaid payers (pregnancy/postpartum engagement and risk ID) to improve access to care and health inequity. babyscripts.com

Recognize that payers evaluate solutions in portfolios, not silos. Your price competes against all the other line items fighting for the same care management budget.

Costs: The Floor That Keeps You Viable

Costs matter because digital health isn’t just software. Implementation, integrations (hello, Epic and Azure), compliance, customer support, and outcomes reporting all eat into your margins.

Case Example - Behavioral Health Platforms

One mental health startup priced its therapy sessions at fifteen dollars per visit, delivered through a subcontracted network of clinicians. On paper, it looked efficient and scalable. In reality, the math unraveled fast. Provider recruitment, credentialing, HIPAA compliance, and patient support all piled up until the margin disappeared. They had to reprice to $30–$35 per visit to remain viable.

Case Example - Value-Add SDOH Platforms

A company that screens Medicaid members for housing and food insecurity underestimated the integration and case management lift. Their original $1 PMPM price didn’t cover the support staff needed to make referrals actually “stick.” Payers saw high dropout rates, and the vendor had to increase pricing which strained credibility mid-contract.

Best Practice

Build a “true cost per member” model that includes overhead and scaling costs.

Layer in the margin expectations of investors. A payer might accept a low-margin pilot, but no VC will back a company that can’t scale profitably.

Avoid “foot-in-the-door” pricing that sacrifices sustainability, as payers will lose trust if you can’t deliver at the agreed price.

Actuarial Analysis: Pricing for Value, Not Just Cost

This is where digital health companies either break through or stall. Payers don’t buy software. They buy measurable value, like fewer ER visits, higher HEDIS scores, reduced admissions, and improved patient experience. They buy proof that your idea doesn’t just sound good, but it actually saves something real.

Health plan CFOs, for instance, see your price and immediately start running mental math. They benchmark it against the medical spend in your category before you’ve finished your pitch. A price of $400–$800 per member per year? That can make perfect sense for diabetes management. After all, the average member with diabetes costs roughly $12,000 annually, and a digital program that trims that by 10-20% creates savings of $1,200-$2,400. That’s a 3-to-1 ROI ​for health plans.

Credibility is at risk if you either overstate potential savings (unbelievable) or appear unaware of true medical costs in your target population.

These calculations aren’t one-size-fits-all. Medical costs vary dramatically across Commercial, Medicaid (which differs from state to state), and Medicare lines of business, often by thousands of dollars per member per year. Smart vendors adjust pricing and ROI assumptions accordingly rather than applying a single model across the board.

Case Example - Maternal Health Platforms

One vendor priced their maternity solution at $500 per pregnancy episode. Why? Their actuarial analysis showed it reduced NICU stays enough to save $5,000-$10,000 per high-risk pregnancy. That ratio of cost to value was compelling, and payers signed multiyear contracts.

Case Example - Remote Patient Monitoring (RPM)

A hypertension RPM startup priced itself at $60 per enrolled member per month. At first, payers dismissed the offer until the vendor showed actuarial data that their intervention reduced stroke and heart attack admissions, with an ROI of 3-to-1 within 18 months. The actuarial framing shifted the conversation from “this is expensive” to “this pays for itself.”

Best Practice

Use actuarial models to quantify savings in the payer’s language, also known as PMPM cost offsets, HEDIS gap closures, and risk adjustment revenue.

Offer risk-sharing or outcomes-based pricing when possible, such as bonuses tied to ER diversion or adherence rates. That kind of partnership builds trust and keeps incentives aligned.

Present ranges and probabilities, not just averages. Payers respect transparency around uncertainty.

Bringing the Three Together

• Competitors set the context.

• Costs set the floor.

• Actuarial analysis sets the ceiling.

The sweet spot is where your price reflects the real value you create while still fitting payer mental models and covering your costs.

Practical Tips for Digital Health Founders

1. Start with payer math, not product math. Payers think in PMPM, ROI, and MLR. If your pricing doesn’t translate into those metrics, you’ll lose the room.

2. Pilot strategically. Use early contracts to gather outcomes data you can feed into actuarial models. Don’t give away your product. Instead, charge enough to validate value.

3. Build pricing flexibility. Offer multiple models (PMPM, per episode, outcomes-based) to fit different payer preferences & populations.

4. Invest in outcomes measurement. Your actuarial credibility depends on it. Hire the health economists, actuaries, and data scientists needed, early.

5. Revisit pricing regularly. As your costs fall (scale) and your outcomes strengthen (more data), your pricing power grows. Don’t stay locked into “pilot prices” that no longer reflect your value.

Closing Thought

In payer markets, pricing isn’t just a number. It’s a story about how your solution fits into a crowded vendor ecosystem, sustains itself financially, and most importantly, generates measurable, actuarially sound value.

That story only holds up when it’s supported by evidence. Credibility depends on a clear, data-driven rationale for your pricing structure and a demonstration of how your solution integrates seamlessly into care management and reporting frameworks. When payers see that alignment, they are buying not just your product, but your expertise.