There is no 'perfect decision' in healthcare: Virta Health CFO on balancing cost and employee benefits
With inflationary pressures and the introduction of new drug categories such as GLP-1 medications, healthcare costs continue to rise. Virta Health Chief Financial Officer Manu Diwakar said in an interview with CFO Dive that financial executives must first clarify 'how much cost they are willing to bear overall' and set budget limits accordingly. He emphasized that in a high-interest-rate environment, companies need to review the generosity of employee benefits and collaborate with HR and other departments to find efficiencies. Diwakar also pointed out that healthcare decisions often face conflicts between ethics and finance, such as long-term health investments for short-term employees may not be cost-effective, but they differ for long-term retained employees. He concluded that there is no perfect decision in healthcare, and managers must accept and address the issues that arise from this.
Over the past few years, healthcare costs have continued to rise due to broad inflationary pressures and the introduction of new drug classes such as GLP-1 medications. These drugs reportedly cost between $936 and $1,023 per month.
Faced with rising costs, financial executives looking to design attractive healthcare benefit plans for employees first need to answer one question: "How much cost am I willing to bear overall?" Manu Diwakar, CFO of metabolic health platform Virta Health, said, "Then, that becomes my budget ceiling—whether on a per-employee basis or on a total basis, that's the amount I'm willing to spend on this."
Determining this cost range is crucial because employers need to balance rising healthcare costs with the long-term needs and goals of the business. Diwakar told CFO Dive that financial executives are "ultimately responsible for the company's financial health." "If any cost grows faster than business performance can absorb, you immediately enter a discussion about how to rationalize or control that cost."
Asking tough questions
As healthcare spending grows, companies face a difficult decision—"how much cost they are willing to bear and how much is passed on to employees," Diwakar said.
With interest rates currently at their highest levels in years, "I think you really have to ask yourself what being better or more generous to employees gets you," Diwakar said. "In this environment, costs are skyrocketing. People are asking themselves very, very tough questions."
According to Diwakar's LinkedIn profile, he has served as CFO of Virta Health since 2022. The company, headquartered in Denver, Colorado, is a telehealth and metabolic health services provider. Since January 2019, he has also been a managing partner at S7 Ventures, an investment platform focused on technology and healthcare. Before joining Virta, he served as CFO of Kaia Health and Ceres, a data and analytics platform focused on agriculture.
To answer these tough questions, it is crucial for financial executives to work closely with other key executives, such as heads of people and benefits or HR leaders, not only to determine total costs but also to identify areas where efficiency can be improved.
For example, at a company where Diwakar previously worked, the team discovered during a review of health benefits that although the organization was very generous with health insurance coverage for employees, "coverage for spouses and dependents was very poor, so more healthcare costs fell on employees with families or spouses," he said.
The company subsequently lowered premiums for spouses or dependents, but to achieve this, they had to raise the cost of coverage for each employee, he said.
No perfect decisions
Norms in healthcare are shifting, such as the rise of artificial intelligence and the growing prevalence of new drug classes like GLP-1s—which are used to treat metabolic conditions such as diabetes or cardiovascular disease, while also targeting weight loss—further complicating employers' coverage decisions.
According to a March 26 article from the National Conference of State Legislatures, more than 12% of adults are currently taking GLP-1 drugs—although most say their insurance covers at least part of the cost, 53% say out-of-pocket expenses remain too high.
Providing coverage for these conditions and supporting treatment "is the morally right thing to do, and it is also the most cost-effective approach," Diwakar said. However, "the complicating factor ultimately becomes: how much are you willing to spend to do this, and who is benefiting?" he said.
To put it another way: for example, if an employee stays with a company for two years, "and you spend a significant amount of money keeping them healthy for the rest of their lives, then from a purely monetary perspective of a single business, it ends up being the wrong thing," he said.
For employees who stay with a company for decades—such as Diwakar's father, who spent his entire career at General Motors—"ensuring someone is healthy forever is 100% justified," he said. "The moral imperative, health imperative, and financial incentives all clearly align."
Therefore, as a CFO, "you have to think deeply about what kind of workforce you want to encourage, how you view retention, and how you view attracting top talent," Diwakar said. This decision becomes very different depending on company size, economic conditions, and the company's own stage of development, he said.
"I think you have to realize there is no perfect decision," he said. "You will always create a problem somewhere; you just have to acknowledge what it is and then figure out how to deal with it."