For many Americans, trying to interpret a medical bill can be like reading a foreign language. There’s CPT codes, hospital charges, insurer discounts, random fees, deductibles and, finally, the amount you actually owe. Then the ancillary bills may start to trickle in. A balance from the diagnostics lab. Charges for medical equipment. Money to pay the doctor who saw you during surgery but wasn’t included in the bill from the hospital. And on and on.
With medical billing software startup Cedar, Florian Otto set out to fix one side of the equation: the financial interaction between the patient and the hospital or doctor. “We want to bring the digital healthcare experience on the financial side to the 21st century to make it personalized, immediate, transparent, and convenient,” says Otto, 40, cofounder and CEO of Cedar.
Every year, more than 12 million patients across more than 35 healthcare providers are using Cedar to verify their insurance, pay a copay before the visit and pay their outstanding bill after a visit. All the billing information is pulled from and integrated back into the patient’s electronic health record regardless of vendor. But even if the hospital or doctor bill now makes more sense, there is still one major sticking point: the insurance side. That is why on Thursday, Cedar announced a $425 million acquisition of San Francisco-based OODA Health for a mix of cash and equity. The move was fueled by a $200 million Series D cash injection in March led by Tiger Global Management, which valued Cedar at $3.2 billion. The company has raised $370 million to date.
Whenever you visit a hospital or a doctor or even get a prescription, insurers send out confusing documents called “explanation of benefits,” which explicitly say “this is not a bill” across the top, but, very confusingly, look much like a bill. “An average patient cannot really distinguish what comes from the provider and what comes from the payer,” says Otto. The combined company aims to make it easy for patients with one simplified bill.
When consumers have a better understanding of what they’re paying and why, they are more likely to pay their bills, which cuts down on the tremendous administrative burden for everyone involved. The U.S. spends nearly $500 billion on healthcare administration, in terms of billing, insurance and overhead costs not directly related to providing care.
It makes no sense that hospitals and doctors are the ones left to explain to patients how their insurance, a product designed by an entirely different company, works, but that is the strange reality of the fragmented U.S. healthcare system, says Seth Cohen, 41, cofounder of OODA. “The way that we process and manage claims, has not changed in decades,” says Cohen. “There’s all this innovation happening in Silicon Valley, New York, everywhere, but that administrative layer hasn’t been touched.”
Source: https://www.forbes.com/sites/katiejennings/2021/05/13/healthcare-fintech-cedar-moving-into-insurance-market-with-425-million-acquisition/?sh=6d07c6c1259a
