/Costco gets into health care business with $29 online visits
Costco gets into health care business with  online visits

Costco gets into health care business with $29 online visits

Costco will offer members access to medical care through a deal with online marketplace Sesame, as the retail giant joins peers by pushing deeper into health care. 

Costco’s members will be eligible for Sesame’s “best pricing,” including online primary care visits for $29, Sesame said. They’ll also get mental health visits for $79 and 10% off other services. On the platform, clinicians set their prices and patients pay them directly, not through insurance.

Sesame aims “to provide great health care to the value-conscious,” said David Goldhill, the startup’s chief executive officer. 

The companies didn’t disclose financial terms, but the agreement benefits both sides. Issaquah-based Costco, which declined an interview request, will add to members’ benefits. And Sesame, a New York-based startup that’s backed by Alphabet’s venture unit, gets its marketplace in front of a vast pool of potential customers; Costco has about 125 million cardholders worldwide and generates roughly 70% of sales in the United States. 

Walmart, Amazon

Retailers increasingly want to tap into the $4.3 trillion U.S. health care market to broaden their revenue and deepen relationships with customers. Walmart is opening store-based clinics and exploring buying a stake in primary-care chain ChenMed, Bloomberg News reported this month. Amazon purchased One Medical for $3.5 billion. Drugstore chains CVS and Walgreens are leaning further into care delivery, and retailers as diverse as Kroger and Best Buy have health care divisions.

Talks with Costco began about a year ago, according to Goldhill. The retailer, which is looking to boost sales growth as a pandemic-era boom slows, offers other health services in stores including pharmacies, optical care and hearing aids. It also purchased a minority stake in a pharmacy benefits manager, Navitus Health Solutions, in 2020. Doctors on the Sesame marketplace work from their own clinics. Costco and Sesame don’t have plans to open clinics in the retailer’s stores, according to Goldhill. 

Sesame is aimed at people without health coverage or those with high deductibles who have to pay out of pocket. The marketplace approach distinguishes Sesame from many telehealth services, where doctors’ fees are set by the platform or negotiated with insurers.

The platform offers video visits and in-person appointments, with about 85% done online. Roughly 3,500 clinicians — doctors and other providers — list services on Sesame, Goldhill said, and they’ve seen about half a million unique patients through the platform.

Sesame was founded five years ago in response to rising interest from both doctors and patients for out-of-pocket services. The 46-employee company has raised $75 million, and its valuation reached $175 million in March 2022, according to PitchBook. 

Critical book

Goldhill, a former television executive, came to the business after writing a critical book about the health care system, including an account of his father’s death from an infection acquired in a hospital.

Most doctors on Sesame also take insurance and see patients off the platform. Some use it to fill cancellations or do consults during evenings and weekends. Goldhill said Sesame doesn’t need to recruit more physicians in anticipation of fresh demand from Costco members. 

When the company started out, the idea of doctors selling services online like gig workers was “very foreign and very uncomfortable” to many people, according to Goldhill.

“Health care is increasingly becoming a consumer business,” he said. In an industry rife with middlemen, Goldhill said Sesame aims to upend “this idea that every single thing in health care needs something between doctor and patient to mediate.”

Bloomberg’s Brendan Case contributed to this report.