Pelago Achieves Healthcare Cost Savings of $9,367 (3x ROI) in First Ever Substance Use Management Medical Claims Analysis

Cost effectiveness study provides real-world evidence of a digital substance use management program’s impact on healthcare costs and utilization in 2,670 participants

NEW YORK, August 17, 2023 — Pelago (formerly Quit Genius), the leading digital clinic partner to U.S. businesses and health plans for substance use management, today announced results of its substance use disorder (SUD) claims analysis. The analysis demonstrated that Pelago reduced medical claims on an annual basis by $9,367 per participant compared to a control group, delivering a 3.0x ROI. The study’s methodology, assumptions, savings, feasibility, and credibility were independently reviewed by a global leader in risk management.

“This study further reinforces the fact that improving access to high-quality substance use disorder treatment is not just the right thing to do, but also the responsible business decision for employers and health plans,” said Yusuf Sherwani, M.D., CEO and co-founder of Pelago. “We’ll continue to gather data and build on this analysis demonstrating the excellent health outcomes and financial results that can be attained with a dedicated, physician-led, digital substance use treatment program.”

Study Summary

Medical claims of Pelago members with tobacco and alcohol use disorders were compared to a matched control group comprising nonparticipants in the Pelago programs with diagnoses of tobacco and alcohol  use disorders in 2022. This study applied a propensity score matching method to identify a control group that was similar to Pelago members on baseline characteristics of age, gender, geographic region, and comorbidities.

Cost Savings and ROI

The study of 2,670 participants demonstrated a per-member-per-year medical claims reduction of $9,367 with respect to overall healthcare costs, or a 3.0x return on investment in the first 14 months after program launch. Of the total savings, $7,783 (83.1%) were physical health while $1,584 (16.9%) were behavioral health. The study findings were statistically significant (t=2.99, p=.005) and were replicated using a nonparametric Wilcoxon signed-rank test (Z= 2.31, p=.017).

To estimate savings, the study compared Pelago members’ cumulative healthcare costs and utilization at baseline (i.e., in the 12 months prior to enrollment in the program) versus 14 months post-enrollment, relative to those of a control group.

The majority of savings (48%) came from lower inpatient healthcare costs. The largest reductions in health service utilization between the two groups were linked with diagnoses of alcohol use disorders, known complications of alcohol related disorders, and cardiovascular disease.

“This is the first study of its kind to estimate changes in medical care costs and utilization,” said Suzette Glasner, Ph.D., Vice President of Clinical Affairs at Pelago. “We’ve been able to confidently estimate and establish the impact of our substance use management program on overall healthcare costs and to identify the main drivers of overall cost savings.”

At the national level, new Centers for Disease Control and Prevention (CDC) research shows the cost-saving potential of workplace SUD programs. Researchers pegged the annual minimum direct cost of substance use disorders at $15,640 per affected employee enrolled in employer-sponsored insurance, totaling more than $35 billion. And that does not include costs related to absenteeism, presenteeism, and turnover or the costly health consequences and complications of undiagnosed SUDs, including pancreatitis, liver disease, cardiovascular issues, obesity, depression, and anxiety.

Pelago’s substance use management program has been extensively validated in 13 peer-reviewed studies, including a randomized controlled trial. These primary research studies have demonstrated Pelago’s efficacy in facilitating smoking cessation, reducing alcohol and opioid use, and producing improvements in mental health, resilience, and overall functioning.

The 2023 Pelago Annual State of Substance Use Management Trend Report recently found that nearly half of all U.S. workers have experienced personal or family problems involving substance or alcohol use. This includes more than 1 in 3 workers who report having a family member struggle with substance use.

Furthermore, SUDs and mental health disorders often occur together, creating additional worries for parents and guardians of adolescents. This has led Pelago to expand its platform into adolescent care. Under Pelago’s clinically led, coordinated care program, adolescents aged 15 to 17 are now eligible for tobacco and alcohol SUD treatment, while opioid use disorder treatment eligibility starts at age 16.