Fourteen months after its launch, Instacart Health is starting to gain some traction in healthcare and eyeing more partnerships with health systems and insurers.
Instacart launched Instacart Health in September 2022 to expand the work it had been doing with food assistance programs, nutrition education and prescribed meal plans. While it continues to offer grocery delivery and other services to consumers, Instacart is increasingly partnering with healthcare organizations to offer food-as-medicine programs, said Sarah Mastrorocco, Instacart Health’s general manager.
“We came to healthcare humbly and said, ‘We have this massive tool and infrastructure, how would you like to use it?’ To be honest with you, I think maybe we started a little too broad,” Mastrorocco said. "We're really learning from our partners to offer them solutions that they need versus just simply saying, 'We're here, how can we help you?'"
As rising food costs hit people’s wallets, grocery allowance and prescribed meal programs are becoming more popular benefits within employer-sponsored health coverage and Medicare Advantage plans. “Instacart wants to be the infrastructure for food as medicine,” Mastrorocco said.
The company inked a partnership in October with Mount Sinai Solutions, the New York City-based health system’s employer arm. Instacart Health will offer $110 in fresh grocery stipends as a benefit for post-operative and post-partum patients insured by one of Mount Sinai Solutions employer or union customers. The partnership includes the creation of a virtual storefront with local and national grocers through Instacart.
Financial terms of the program scheduled to launch in early 2024 were not disclosed.
Also last month, Instacart and health insurance startup Alignment Health announced plans to jointly market Medicare Advantage policies next year.
The move into healthcare comes as Instacart is dealing with a challenging post-initial public offering financial reality. The company went public Sept. 19 at $30 per share. On Thursday, shares closed at $24.48 per share.
On Wednesday, the company reported a third-quarter loss of $1.99 billion, or $20.86 per share, which it said was primarily driven by stock-based compensation expenses tied to the IPO. The company did not detail results from its healthcare segment. Overall revenue increased to $764 million, up 14% year-over-year.
It remains uncertain whether Instacart can succeed where other tech companies have struggled. Big tech companies like IBM, Amazon and Google have encountered challenges trying to disrupt the healthcare industry.
“We’ll see if they're the anomaly in crossing from tech into healthcare,” said Lauren Lisher, senior vice president of specialty care and partnerships at Mount Sinai Solutions. “I do feel like the [food-as-medicine] space is interesting. And because they're partnering with traditional healthcare, this is an area where that could work. It's too soon to claim victory…but I'm optimistic.”
For fresh funds programs, Instacart doesn’t charge healthcare partners for the technology platform itself but for delivery and services costs, a spokesperson said. Organizations like Mount Sinai pay a specific stipend amount for the groceries. Instacart may take a cut of the money from whichever retailer the patient chooses to buy their groceries. The hope is the programs attract long-term customers to Instacart, Mastrorocco said.
Rising popularity of food-as-medicine programs
The rise of food-as-medicine benefits in Medicare Advantage plans offers an opportunity for companies like Instacart. The number of plans that have offered financial assistance for groceries has increased from 101 in 2020 to 1,475—around 25% of all Medicare Advantage plans—in 2024, according to ATI Advisory. About 336 Medicare Advantage plans will offer medically tailored meals as a supplemental benefit in 2024, up from 71 in 2020.
The food-as-medicine movement has gotten the attention of the White House. On the same day it launched Instacart Health, the tech company participated in a White House conference on Hunger, Nutrition, and Health. During the event, the White House included food as medicine in its national strategy on hunger, nutrition and health.
The co-branded Alignment Health-Instacart Medicare Advantage plans will be available in 13 California and Nevada counties and include extra benefits such as a quarterly stipend worth up to $100 that can be used for Instacart purchases or Instacart+ memberships as well as access to a virtual storefront.
Dawn Maroney, CEO of Alignment Health Plan and president of markets for Alignment Health, said Instacart’s connection to a sizable network of grocery stores made it an appealing partner. “They're experts in logistics, retail and getting access to food,” Maroney said. “And they're consistent. When we offer a particular benefit, we look for a partner that can be consistent on that service.”
Instacart allows organizations like Alignment to customize what people can and cannot buy with the stipends. The goal is to increase access of healthy foods for seniors, which can help them manage diabetes, weight and heart conditions, Maroney said.
Separately, Instacart is involved in a study on the effect of food-as-medicine programs for Medicaid populations. The company announced a research collaboration with Oakland, California-based Kaiser Permanente.
The study, which launched early last month, is providing some Kaiser Permanente Northern California and Southern California Medi-Cal members with Instacart Health grocery stipends that can be used to buy nutritious foods. The study will compare health outcomes such as blood sugar levels for members who received a stipend to people who did not.