Centivo, a health plan for self-funded employers, secured $75 million in equity and debt financing to scale its product and technology and ink new partnerships with health systems.
The company launched in 2018 with the bold goal of making healthcare "radically affordable" for working America, according to Ashok Subramanian, CEO and co-founder of Centivo.
Centivo aims to align the incentives between providers and employers to ensure timely access to care, predictable costs and outcome-based reimbursement for providers. The company partners with local health systems and offers primary care-centered health plans to employers as a replacement to traditional health insurance carriers.
The model enables employers to offer benefits that include no deductibles, free adult and pediatric primary care and predictable co-payments, according to the company.
"If you're a person, if you're an employee, if you're a family member, if you work for a really big company or a really small company—at the end of the day, your healthcare needs are the same. You want great access, you want great quality, and you want it at a price that you can afford. And we managed to make that message resonate in a way that can scale, and that's showing results," Subramanian said in an interview with Fierce Healthcare.
He added, "We've been, from day one, sticking to our vision around the fact that most working Americans need a health plan that they can actually afford to use as opposed to what's out in the market, which is complete unaffordability even for folks who have health insurance."
New strategic investors Cone Health Ventures and MemorialCare Innovation Fund, a strategic healthcare investment fund wholly owned by MemorialCare Health System, backed Centivo's new financing round. Existing financial investors including B Capital, Cox Enterprises, F-Prime Capital, Ingleside Investors and Morgan Health, the healthcare arm of JPMorgan Chase, also backed the round.
Debt facilities are provided by Trinity Capital and ongoing banking partner JPMorgan Chase.
The company has raised $225 million to date, $196 million of which is equity financing.
"What this capital will allow us to do is continue on that path of growing, in terms of adding clients, adding markets, working with more provider partners, as well as working on the smaller pieces of the things that create challenges around member experience, so making it easier to interact with us, making it easier to interact with your primary care team, embedding the healthcare part with the plan part to really make the experience feel seamless," Subramanian said. "The double benefit is if the experience is more seamless for the employee and for the employer then it also helps us operate in a more efficient, more scalable way."
Centivo serves more than 160 employers ranging from Fortune 100 companies to small businesses, executives said. The company is growing rapidly. "We're targeting being at about 100,000 covered lives for January 1," he said. Centivo is charting 80% revenue growth, the second consecutive year with that growth rate, he noted.
"We're adding a number of provider partners to our footprint and we're looking to add a couple new markets in a targeted way and expand in existing markets. We are expanding our presence in Texas and in North Carolina," Subramanian said.
Healthcare costs in the U.S. continue to rise, with the majority of costs shouldered by U.S. employers. There's also an affordability crisis for working families with rising deductibles. In 2023, the average deductible for family coverage among enrollees in plans with a deductible was $3,811, according to data (PDF) from the Agency for Healthcare Research and Quality.
Centivo offers a three-part solution to help employers manage these costs consisting of an advanced primary care-centered model, anchored by Centivo Care, the organization’s in-house virtual primary care practice.
"We embed primary care as a key centerpiece to everybody's plan experience. It's how you get access to specialty care, by working with a really great primary care team," Subramanian said. "Two, we partner with health systems that are known for being leaders in accountable care, or known for being cost effective and high quality. So, partners like MemorialCare and Mount Sinai. And then third is to overlay all of that on top of a tech-enabled member engagement and plan administration platform that is really working on behalf of the employer."
He added, "We don't have to support a fully insured book of business. We don't support Medicare. We don't own a PBM [pharmacy benefits manager]. So, a lot of the conflicts and a lot of the challenges that are built into the incumbents in the industry are ones that we don't worry about."
In May, the company acquired virtual-first medical provider Eden Health to broaden its reach with employers and expand to all 50 states. Eden Health, founded in 2015, is a concierge provider that offers healthcare services to employers and provides primary care and care navigation services all through its mobile app. The addition of Eden Health also added access to integrated behavioral health to Centivo's platform.
The company says its approach drives better clinical and financial outcomes. In 2023 alone, Centivo’s health plans achieved a 71% reduction in member out-of-pocket costs compared to the plans they replaced. The company's approach typically saves employers 15% or more while increasing utilization of primary and specialty care. The company also can reduce annual employee out-of-pocket costs by nearly $1,200, executives said.
"How do you restore affordability without costing employers more? Any employer can restore affordability tomorrow simply by paying more. We know that's not a realistic solution. How do we get to those numbers? It ties to working with providers in the community, partnering with providers who are committed to accountable care," Subramanian said. "One of the things that we like to note is the rate of growth in Medicare has slowed significantly. A lot of that is due to innovations that organizations, like many of our provider partners, have embraced, and those same protocols and procedures that they use in the Medicare market apply to the commercial market, things like moving healthcare services outside of the hospital and having the ability to coordinate care more effectively."
He continued, "In a PPO model, it is very hard to accrue the benefits of those innovations around accountable care and care coordination, because, simply put, a member can do whatever they want anytime. What we've done is create the model centered around primary care and working with these partners to make sure that we're guiding people with the most efficient care possible, and that drives the financial results."
In the near term, Centivo will focus on enhancing the member experience and member technology platform to reduce friction. The company also aims to reach more employers and grow its footprint in more markets.
"Our next step is to expand the number of Americans who can finally have a health plan that they can afford to use and to make more heroes out of those employers who are restoring healthcare affordability in their workplaces," Subramanian said.