For digital-health startups, money is no longer easy to come by. The pandemic led to a virtual healthcare boom, where cash for telehealth companies flowed like water. At its peak in 2021, funding reached nearly $30 billion. However, in 2023, funding for digital healthcare dropped to $10.7 billion. With funding scarce, direct-to-consumer healthcare startups have been pivoting toward employer-focused offerings to bring in more customers—and exploring new partnerships to help get employers’ attention.

Recently, TBD Health—which provides STI testing and pre-exposure prophylaxis (PrEP) via at-home kits—and two clinics made its diagnostic labs and PrEP prescriptions available to health companies Folx and Wisp through a partnership announced in January.

FOLX provides healthcare focused on the LGBTQ+ community, ensuring that patients in all 50 states can access hormone therapy, reproductive healthcare, and judgment-free primary care. Wisp is one of the largest sexual and reproductive healthcare providers in the U.S., with nearly one million patients treated. Wisp allows patients to meet a doctor virtually and have prescriptions for vaginal health and STI treatments shipped to their house.

For Wisp, which is fully virtual, the partnership helps connect its telehealth offering with IRL care via TBD’s clinics. Wisp will be able to send patients to TBD’s two locations for such services as IUD insertions and pap smears, as well as to receive PrEP prescriptions. Wisp will also stock its sexual health and wellness products at TBD’s clinics. In return, TBD will have access to Wisp’s large patient base.

“The women’s health industry is heating up, and we want to make sure we’re one step ahead,” Wisp’s interim CEO, Monica Cepak says. “Telehealth can only serve one piece of care and we’ve been chatting with TBD for about a year in order to understand how to unlock in-person care. By referring our patients to TBD Health’s clinics we’re ensuring continuity of care and providing them with everything they need to rapidly test and treat their symptoms.”

Folx, for its part, has built an enterprise offering that has brought its care to employees at dating app Grindr and social platform Discord. Under the partnership with TBD, employees who already have access to Folx through their jobs will be able to access TBD Health’s services including at-home STD/STI test kits, it’s diagnostics lab, pharmacy, and clinics.

“The partnership makes a lot of sense,” says Stephanie Estey, cofounder of TBD Health. “We want to make sure STI testing is available to different people across the U.S. Folx has a large footprint, while Wisp is primarily digital, so its patients can be treated at our in-person clinics.”

Arielle Trzcinski, a principal analyst at Forrester, noted that many digital-health startups are being forced to look for alternate sources of funding as venture capital slows or dries up. Partnerships offer the potential for new customers, and sharing resources, such as labs, instead of acquiring new ones. “Several digital-health startups are being acquired, or closing up shop,” Trzcinski says. “Partnerships help fill in gaps in their capabilities and improve their value proposition for customers. You get a 1+1=3 situation.”

In addition, while funding might be drying up, HR budgets continue to grow. According to Kayla Velonskey, a senior research principal at Gartner HR Practice, in 2023, 92% of HR leaders expect their well-being budgets to remain stable or increase compared to 2022.

Partnerships between different companies can help address the issue of a b2b market filled with players and the increasingly fragmented nature of healthcare making it harder for telehealth startups to gain a foothold.  “Some HR leaders feel overwhelmed with pitches from vendors on all fronts,” says Velonskey, “HR leaders are always looking to streamline the benefits administration process. If a partnership offers more, it’s more appealing to HR leaders.”

While partnerships provide benefits, Trzicinski warns that they’ll also present challenges as companies have to adjust from being direct-to-consumer to b2b. First, companies have to figure out how to sell to HR managers rather than patients. Second, they have less control over messaging. “Your message is now filtered through the employer, and often you no longer have a direct line to the customer or end user,” Trzincinski says. “You have to work through your partners and then through employers to reach the same outcomes and figure out how to handle new complexities—such as navigating unions.” Despite these challenges, Trzincinski believes telehealth partnerships will be the way forward. “I expect digital-health partnerships and acquisitions to be one of the top three trends we see in 2024,” she said.

Wisp’s Cepak noted that, going forward, Wisp is continuing to explore partnerships in order to understand how to offer its patients care that covers their whole body over the course of their life. “We want to do what’s best for the patient to make sure they stay within our ecosystem,” Cepak says.