The Franklin-based health care company Tivity renewed a major contract for its gym membership program for seniors, but a competitor is threatening that business.
Tivity’s SilverSneakers program gives seniors enrolled in Medicare Advantage plans access to gyms and fitness classes.
The program generated more than 40% of Tivity’s total revenue during the first three quarters of 2019.
A large portion of that revenue depends on just three customers, UnitedHealthcare, Humana and Blue Cross Blue Shield Association.
Tivity Health recently renewed a contract to provide UnitedHealthcare Medicare Advantage group members access to the SilverSneakers program through 2022.
More than 15 million Americans have access to the SilverSneakers program. The renewed contract for UnitedHealthcare’s Medicare Advantage group members represents about 1.1 million eligible participants.
UnitedHealthcare is a major client, but it’s also a competitor. In November 2017, the insurer announced that it would offer its own fitness benefit program in 11 states. Tivity’s stock dropped dramatically on the day of the announcement.
In 2018 and 2019, UnitedHealthcare discontinued the SilverSneakers program for some individual Medicare Advantage members, offering the in-house fitness program instead.
At first, Tivity expected to quickly lose all UnitedHealthcare individual Medicare Advantage members. Now, the company expects to retain about 20% to 25% of the remaining individual members in 2020.
In 2019, Tivity’s health care business collected about $60 million of revenue from UnitedHealthcare. About $40 million of that was from Medicare Advantage group members and the rest from individual members. Next year, the revenue from individual members will likely drop.
In addition to the competition from UnitedHealthcare, Tivity has also had trouble negotiating with some insurers and gyms in Tennessee.
Earlier this year, YMCAs in Tennessee decided to drop out of the SilverSneakers program, citing disagreements with Tivity about Payment. Soon after, Blue Cross Blue Shield of Tennessee decided to drop the SilverSneakers program in favor of a competitor.
Despite the increased competition, revenues for the SilverSneakers program have increased throughout 2019. The company reported about a 1.5% revenue increase for SilverSneakers this year, compared to the first three quarters of 2018.