“Information is not knowledge.” Einstein said it, and nowhere is the disconnect between information and knowledge more evident than the health insurance industry. Self-funded employers and their covered members are flooded with payment data, plan information, eligibility requirements, and care documentation, without a true understanding of what it all means and what needs to be done to maximize care and minimize cost. The 2014 Global Brand Simplicity Index surveyed thousands of consumers on brand perception across 25 industries—the health insurance industry came in dead last, with strong consumer demand for simpler communication and experiences. There is no denying the high levels of frustration and lack of understanding: over 54% of Americans surveyed in a 2014 public opinion poll are confused by their medical bills. Even I— who have been fully immersed in this industry for over a decade, and heads healthcare services investing at a leading global VC firm—often look at EOBs and processed claims and have difficulty deciphering what they really mean.
One of the largest segments of healthcare consumers is those covered by employer-sponsored programs. This market adds up to a total of 147 million Americans today. Employer-sponsored or self-funded healthcare means that employers pay for the actual medical costs incurred by employees. This allows for more control and transparency than fully insured plans where the employer contracts an insurance company to cover employees and their dependents. 60% of American’s with private health insurance are on a self-funded plan; it’s a $1 Trillion market with immense opportunity for improvement. That’s where Collective Health comes in.
NEA has a storied history of betting on game changing SaaS companies (see Salesforce, Workday). Over the past few years, we have taken notice of the immense impact that industry-specific (or vertical) SaaS can have, and have steadily expanded our portfolio of stellar companies with vertical solutions: Placester for real estate, Canopy for financial services, and MOVE Guides for mobility management, to name a few. Collective Health fits right into this theme as an industry specific solution with a massive market, and when we first met CEO Ali Diab, and his founding team comprised of product, healthcare, and UX experts in 2013, we knew they were onto something. The CH team wasn’t just building an innovative healthcare IT company, they were building the software backbone of American health insurance. CH provides small to large businesses with the tools to manage spend and design unique plans to best fit employee needs. CH’s tools span billing, eligibility, payments, claims processing, analytics, and more. The beautifully designed UIs for both employers and members provide a sleek, easy-to-use experience on both web and mobile.
2015 has been a tremendous year of growth for Collective Health. The industry consolidation (Humana acquired by Aetna, Cigna acquired by Anthem etc.) has catalyzed the opportunity for employers and their members to take more ownership over thir healthcare. Large companies are taking notice, with several leading companies selecting Collective Health to take care of their people – 30,000 in total going into 2016, putting the Collective team on track to process over $200M in claims in 2016. Adding to the current momentum, they’ve just announced an $81M Series C round , that we are thrilled to be a part of, along with new investors Google Ventures and Maverick Capital. Collective Health has all of the pieces in place to be the go-to solution for data and financial management within the self-funded healthcare sector. CH is empowering employers and employees alike with a deeper understanding and ability to make better decisions. It’s truly an instance of turning information into knowledge, and we can’t wait to see it become the new definition of American healthcare.