Guidehealth announced a $14 million seed round on Tuesday, led by non-profit Memorial Hermann Health System in southeast Texas, entrepreneur Sidd Pagadipati and other healthcare investors and industry leaders.
Each of the founders also invested their own money into the seed round.
Guidehealth uses advanced technology to support health systems and clinical networks in scaling value-based care beyond the inpatient setting. Guidehealth facilitates care coordination like prior authorization and referrals and uses artificial intelligence to better predict the needs of patients. Guidehealth also assigns virtual clinical team members to work with its partner systems, called Healthguides.
The seed round funding will be used to make investments in technology, Sanjay Doddamani, M.D., CEO and founder of Guidehealth, told Fierce Healthcare. The seed money will also be used to continue to make improvements to Arcadia’s managed services organization (MSO) which Guidehealth acquired last December.
Since Guidehealth was founded last year, it has expanded to four states, Illinois, Pennsylvania, Georgia and Texas. The company is rapidly expanding and expects to double its revenue by the end of next year.
During the fundraising round, Doddamani pitched Memorial Hermann Health System because of its history of investing in digital health platforms. Doddamani saw an opportunity to work with the systems’ neighborhood clinics as well. Memorial Hermann became a principal investor and strategic partner for the company.
The partnership aims to improve care coordination for uninsured and underinsured patients, who tend to rely on the emergency department for health care needs rather than a primary care clinic. Mark Selna, chief operating officer and president of Guidehealth, said underinsured patients often lack access to care and long-term care coordination.
“Memorial Hermann is removing the economic barriers to getting access. And we are providing the outreach and the care coordination and care planning to make sure that those patients are seen but more importantly, have all of their high-risk needs addressed,” Selna said.
Executives from Guidehealth told Fierce Healthcare that investors saw a gap in value-based care: serving health systems. Health systems are an untapped market, Doddamani noted.
“Health systems have a very underrecognized asset,” Doddamani said. “They worked for decades to build up their physician referral networks and their overall clinically integrated network to support primary care and specialty integration, but they've never fully been able to activate it.”
Investors also liked Guidehealth’s low-cost model, which on average is two-and-a-half times lower than its closest competitor.
The low-cost solution allows health systems to implement Guidehealth across many or all lines of service. Higher cost solutions, in comparison, may only be able to be implemented in one population, like the Medicare Advantage population, Selna said.
Guidehealth taps into health systems’ clinically integrated network (CIN) of independent physician practices that are part of their value-based network or risk-based network.
The company leverages third-party technologies and builds capabilities around them rather than developing their tech stack from scratch, Selna said. It has partnered with other digital health companies like Story Health, Hippocratic AI and Arcadia to build out its technical network. This strategy helps keep Guidehealth low cost for health systems and in some cases augments the provider workforce.
In December, the company bought Arcadia's managed service organization and value-based care service division to build out its tools and services for providers.
Doddamani said the company will move immediately into its Series A funding round, in which Guidehealth will aim to expand its services nationally and improve its platform.