Ali Diab had no desire to get into the healthcare sector. A former executive with AdMob, Yahoo and Microsoft, Diab said that healthcare seemed “foreign” to him.
That all changed in March 2013 when he had to go to the emergency room with intense stomach pains.
“The pain was so intense that I couldn’t sit,” said Diab, the CEO of the San Francisco-based health technology startup Collective Health. “I was wheeled into the ER. I had my stomach scanned and they discovered a massive intestinal blockage. I was in and out of the hospital for the last six weeks. I almost died.”
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But what really surprised Diab and helped inspire him to co-found Collective was getting a bill from his insurance company for charges that he thought were covered.
“I was surprised to see that my hospital charges were being denied and using indecipherable language and codes on the form that I didn’t understand,” he told FierceHealthcare. “I grew really disenchanted with the overall service experience. I spent almost 200 hours on various call lines just trying to get [answers] to very basic questions.”
Diab shared his complaints with his friend, physician and healthcare economist Rajaie Batniji, who complained that he spends more of his time dealing with insurance companies than patients.
Diab said the mission of the healthcare startup is to help employers and their workers understand healthcare benefits through a comprehensive app and by administering the employers’ health program.
The startup combines leading healthcare networks across medical, dental, vision and other benefits and integrates them into an HR system. Collective can adjudicate claims, reconcile and process partner payments and share data across health programs. So far, Collective Health manages plans for 50 employers and has more than 200,000 members.
Here’s more from our conversation:
FierceHealthcare: How has Collective Health improved the way health benefit plans work for employers?
Ali Diab: We just invest in user experience design and technology and service design to actually solve the issues for people when they encounter healthcare in their life. It is as simple as making health plans supereasy to understand and enabling people on an iPhone or in-network app to find a doctor and a rough estimate on what that procedure will cost.
Increasingly like other great consumer products, we are using the data that we amass and the interactions we have with our members to tailor the experience to be specific to their needs so they aren’t hunting for information they don’t need at that time.
I had to read through a dense, 200-page legal document to understand what was covered on my health plan. That should not be the case.
On behalf of the employers that we serve, we make it easier to knit together all of the aspects of these health plans. You can think about it like what an app store does in knitting together payment and user identification.
FH: Collective secured $205 million in its latest funding round back in June. Why are companies interested in investing?
AD: They see in us an opportunity to invest in a company that sits at the intersection of healthcare and software.
For the vast majority of employers, healthcare is the second largest expense, but they don’t have the system to manage it. We represent probably the best way to address that ability to empower the employers to take their rightful seat at the healthcare table.
One of the things that investors see in us is we are a company approaching this like an enterprise software problem.
FH: What lessons did you apply from your time at internet giants such as Yahoo and Microsoft to Collective Health?
AD: A lot. I think a lot of uninitiated people think of healthcare as a superesoteric cult in the economy. There are a lot of nomenclature and acronyms that seem alienating. It is a market like any other market with supply and demand characteristics, and it can be generalized like any other market I have worked in.
I think the experience of having built ad networks and the economies that underpin them are applicable to what we are making at Collective Health. What we are really trying to do is bring buyers and sellers closer.