WHEB Commentary

Ted Franks

Tivity Health; new portfolio holding – May Monthly


We expanded our Wellbeing theme this month with an investment in Tivity Health.

Tivity is an American company with a profound positive impact. It provides fitness programs for the individuals covered by its insurance company customers. It designs good courses and encourages the individuals to stick with them. This has a measurably positive impact on their health.

Tivity’s most famous program targets older adults. It goes by the memorable name of “SilverSneakers (R)”. It is the largest such program in the USA. Over 15 million people are eligible to take part, and more than three million do so.

One fascinating aspect of SilverSneakers is that exercise is not the whole story. Part of its power comes from simply reducing social isolation. Studies have shown quite striking health impacts from doing so. One attributed a 50% increase in mortality to isolation, more than from obesity*. Another equated isolation with the health negatives of smoking 15 cigarettes a day[1].

Tivity operates within the unique framework of the US healthcare industry. But the ideas that underpin its business are important around the world. They are generally referred to under the broad heading of ‘population health management’. This means addressing the health outcomes of a defined group of people.

There is no health system anywhere in the world where cost isn’t a key consideration. This is particularly true in the developed world where populations are aging fast. Population health management keeps people away from expensive medical interventions. It’s a cheaper approach for stretched health systems. The cost/ benefit trade-off is also easy to see.

The concept of population health is not new. In our portfolio, Cerner, Centene, Premier and HMS Holdings are all involved in population health. It’s a key justification for the acquisition of insurer Aetna by our holding, CVS Health.

But the number of emerging businesses in this area is growing rapidly. Most of the major technology companies have population health initiatives. And there are lots of interesting smaller growth companies, like Tivity.

Besides healthcare cost pressures, there are a couple of key reasons why this market is flourishing now. Both reflect broader trends we see across the sustainability spectrum.

The first is digitisation. The power of information technology is visible in all of our investment themes. In Health and Wellbeing, this is improving treatment methods and patient outcomes. But it is also enabling the kind of data-gathering which is revolutionising population health.

The other trend that links to the broader sustainability agenda is consumer responsibility. Tivity and the other companies provide the tools. But it is down to the individual to engage. In previous generations individuals were rarely encouraged to make their own healthcare choices. This was the responsibility of insurance companies and health systems.

Individuals know more about their lifetyle options than ever before. Increasingly they want to make more sustainable choices. Our strategy’s exposure to consumer-led sustainability is increasing. Lenzing, Nautilus and DSM are relatively recent additions, and now Tivity is another. We expect there to be more.

[1] Study data from Tivity Health Investor Day Presentation, 1 June 2018.

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