Healthcare navigation wasn’t wrong. It was early.

Four years ago, while working on the investment team at the venture capital firm OMERS Ventures, I wrote about the rise of healthcare navigation companies — vendors designed to help employees find doctors, understand their benefits, and make sense of an opaque system that even experts struggle with. The piece garnered a big reaction from the health-tech community (mostly positive, but some pushback). My co-author for the piece was my former colleague Michael Yang, a veteran healthcare-technology investor and former Accolade board member. 

At the time, as we explained in the piece, navigation was largely defined by human advocates. Accolade, which was publicly traded and one of the category’s early winners, built its reputation on trained, empathetic individuals who helped employees find in-network providers, resolve billing issues, and coordinate care. These were teams of trained guides, often working out of call centers, helping employees navigate a fragmented system.

The value proposition for these players - for the purpose of the piece, let's call them “Gen 1 navigators” - was straightforward: healthcare is confusing, and people need help making sense of it. Navigators offered a so-called “front door” for healthcare for members that chose to use these services by logging into the app or calling the 1-800 number, and occasionally scored a win by referring a patient to a lower cost option. Imagine a situation where a doctor recommended an orthopedist for a patient’s back pain as the next step. Assuming the patient wanted a second opinion or needed help with a referral to an in-network specialist, a company in the navigation space might intervene and recommend a consultation with a more affordable physical therapist instead. That’s essentially Navigation 1.0. 

“As an industry, we have been trying to solve this problem for multiple decades,” said Castlight CEO Jon Porter. “That’s essentially how to transition someone from point A to point B in a way that feels great for them and optimizes healthcare overall.” 

That transition piece is more challenging than it might seem, according to Porter. And that’s what our original thesis got wrong. In the ensuing years since we wrote it, some vendors got acquired, some shut down, and several got absorbed into broader platforms. That includes TPAs like Quantum Health, primary care models like Included Health, Centers of Excellence programs (Accolade after the Transcarent acquisition), and integrated care platforms that focus on areas like advanced primary care, like Castlight/ Vera Whole Health. As we’ll explore throughout this piece, that shift has been a necessary one, and it aligns much more with customers’ expectations. Standalone navigation is a tricky value proposition, arguably outside of niche areas like specialty pharmacy, which is where it makes sense to embed it into a broader set of solutions that are driving towards delivering higher quality, lower cost care. 

By expanding into new areas, like primary care, navigation also benefits by reaching the patient upstream of the moment where they’ve already received a recommendation from a doctor they trust or gone to the emergency room. “Navigation 1.0 was about changing the decision for the consumer. A navigation company would try to insert themselves between the patient and their provider, and influence the decision,” Porter continued. “Navigation 2.0 is about having the member come to us to help the member make the optimal decision in the first place. So imagine a scenario where a primary care doctor sees that back pain… we will make the patient and their provider aware that there’s this covered benefit called Hinge Health that’s virtual, offered by their employer, and super convenient.” 

As we move into this new era for navigation, there’s also a renewed interest from venture capital firms in navigation after a five-year or so hiatus. Investors now perceive an opportunity for navigation companies that are deeply personalized, AI native, consumer-centric, and people light (a.k.a not a glorified call center). That’s the thesis that drew Sam Toole, a partner at New York-based firm Primary Ventures, to make a bet in a stealth company called Tokaido Health in the pharmacy navigation space.

“What’s old is new again,” he said. 

Brad Nations, an independent advisor working with Castlight, thinks of the first generation of navigation players as being built for a time when it was enough to sell employers on value on investment or VOI. Could these vendors provide a better experience for a member in a competitive talent market? Now, it’s all about return on investment or ROI. Employers want to know how they can partner to bring down the top five drivers of cost (musculoskeletal, cancer, behavioral health, GI, diabetes, and pregnancy/ postpartum are typically on the list for most). A single medical claim in one of these areas can easily cost millions of dollars for an employer and their health plan.

The challenge with Gen 1? Many of the early navigators could reliably deliver VOI for the employer and their members. But ROI was a harder case to make, especially if they weren’t top of mind in a moment of need for the member, where an intervention could make a big difference. Part of the challenge was related to consumer experience (too many native apps). Another issue was structural. Early navigation companies were trying to improve the healthcare experience while operating outside the core infrastructure — namely, the health plan itself.

“The early disruptors were able to sell on the idea that healthcare is complicated and your health plan is not doing a good job helping simplify the experience,” Michael Perlmutter, senior director at the consulting firm WTW, told me. “But what they found was the experience is still very fragmented when carving out from the health plan.” And in fairness to these companies, the larger health plans weren’t quite sure whether to embrace navigation or compete with it. Nowadays, as Porter told me, many health plans, including smaller, regional plans and modern TPAs, have seen the light and know where their strengths and weaknesses lie. Gen 1 navigators also didn’t always get access to the critical data about denied claims or the status of a claim, so patients ended up having to go to the insurer nonetheless. Again, that’s increasingly starting to change – and payers are under much more pressure to share this information.

The economics of the model were also difficult to sustain for the first generation. Many navigation vendors relied on staffing-heavy approaches, employing clinicians, care coordinators, and customer support teams to deliver personalized guidance. “The early models required higher staffing levels, with more clinical expertise and more technology and data management functions,” Perlmutter said. “That resulted in higher administrative costs, and the investment in staffing did not always translate into meaningful savings.”

Another problem was the lack of targeting. Healthcare spending is highly concentrated among a small subset of patients, but early navigation models were designed to support everyone equally. 3% to 5% of employees routinely drive 50% of costs, but the early engagement models treated everyone equally. 

That dynamic is beginning to change, as newer platforms use analytics to identify higher-risk members earlier and intervene more selectively. As Nations explained, the key is really to focus on those top drivers of spend and help members engage in lower-cost, higher-quality forms of care. Katie Christiansen, who works in marketing at Castlight, also pointed out that the right messages for the right audience also matter. An apparently healthy individual without claims data for a few years, because they avoid the doctor, could be well. But also could be undiagnosed and high-risk, making a primary care visit a crucially important next step. A truly well person might need one to two touchpoints a year with a health coach or care guide, she said. 

That step into services might involve a digital health vendor, like a Hinge Health or Sword Health, but it might also mean the navigator helps a patient proactively get an appointment at a brick-and-mortar clinic. Reaching these members at the right moment is everything - and that could mean creating a new app, but it might also mean a text messaging service or a chat interface built on top of Gemini, Anthropic, or OpenAI. Employers and navigation companies view interfaces as needing to evolve to meet the members where they are – or at least, as much as possible in light of challenges related to privacy and compliance. 

One of navigation’s central promises involved simplification. But in practice, navigation itself became fragmented.

“An employer would have a general navigation vendor, but then they’d also have an oncology navigator or a behavioral health navigator,” Ellen Kelsay, president and CEO of the Business Group on Health, said. “So even within navigation, you had micro niche needs.”

Some of these specialized vendors focused on specific clinical areas, like cancer or behavioral health, where care decisions are particularly complex and costly. Others helped employers steer employees toward higher-quality providers or Centers of Excellence programs that favored certain providers over others, based on factors like cost and outcomes. There was a clear rationale for specialization.

“The good news is there is a need there,” Kelsay said. “People do need comprehensive support.”

But the proliferation of niche vendors also created operational challenges.