Two early Brex engineers launched a startup to make it easier for telehealth providers to collect and verify patients' health insurance as virtual care becomes a mainstay in healthcare.
Opkit developed an automated health insurance verification platform that is purpose-built for telehealth companies and virtual medical clinics, according to co-founder Sherwood Callaway, an early back-end engineer at fintech company Brex.
Callaway teamed up with Justin Ko, who also worked at Brex as a front-end engineer, to develop a platform to make the insurance verification process faster, more accurate and more efficient for virtual care providers. The software also enables providers to give patients better visibility into pricing and fees, Callaway noted in an interview.
"What we found through many conversations with telehealth companies is that they are using the same tools that were designed for brick-and-mortar providers to try to do insurance verification in a much different context," he said.
Current methods for insurance verification weren't designed for the virtual setting, Callaway noted. Brick-and-mortar providers are often regional and deal with a handful of different insurance companies while telehealth companies serve patients all across the country and, consequently, deal with many different insurance companies and plans.
Insurance verification tools used by brick-and-mortar healthcare providers are often clunky, manual processes with no insurance card scanning and often do not integrate with third-party tools, he said.
"As a telehealth company, you're not able to collect the patient's physical insurance card. What we found is that these companies are struggling with insurance verification and they need a digitally native solution," Callaway said.
Telehealth is rapidly becoming a mainstay in healthcare. According to a recent Rock Health report, 80% of consumers said they have accessed care via telemedicine at some point in their lives, up from 72% in 2021. Telehealth is now the preferred channel for prescriptions and minor illnesses, the report found.
The global telehealth market is also projected to grow at a rapid rate, reaching a CAGR of 24% from 2023 to 2030, according to Grand View Research data.
This growth means administrative tasks related to insurance, which are time-consuming and employee-intensive, have become a major problem for the healthcare industry, particularly for digital-first providers, Callaway said.
"COVID has obviously led to changes in consumer behavior and physician behavior and in the regulatory landscape. I think all of those have led to a big boom in the digital health space, and it makes sense now for us to be building solutions that are for this new generation of tech-forward healthcare providers," he said.
According to Opkit's fundraising deck shown to investors, which Callaway shared with Fierce Healthcare, the company got firsthand accounts from telehealth companies about the challenges with the current insurance verification process.
"We rely on humans for our insurance verification process. There's a lot of messaging back and forth between operations, the patients, the providers and the payers … It's time confusing and difficult," the head of product at a series B weight loss startup said.
"Our current insurance verification workflow is very manual. [This is] the last piece we need to figure out before we can deliver full price transparency to our patients," the chief technology officer at a series A family care startup said.
Opkit executives say the company's software automates most of the steps involved in insurance verification and automatically repeats this process for existing patients prior to each follow-up appointment.
"We enable faster, more automated intake and we streamline these providers' operations, and that makes their patients happier because their wait times are shorter and they have better visibility into their fees. There are fewer rejected claims so that improves the revenue cycle and less human error," Callaway said.
Opkit's platform consists of two main components: a web dashboard that allows users to load-in, verify and track patient insurance coverage manually and a JSON REST API that can be used by engineering teams to perform insurance verification programmatically.
Through the company's technology, the insurance verification process can be performed in seconds and with just a few clicks, as opposed to taking an hour or more in a tedious process involving multiple apps, spreadsheets, and often phone calls, executives said. The company connects to hundreds of insurance carriers across the country.
"Opkit fills a critical need that has only become more important as telehealth has become universally accepted," said Reshma Khilnani, a former Y Combinator visiting partner and three-time healthcare startup founder whose current company is integrated with Opkit. "Understanding the eligibility status of a patient as quickly as possible is key for telehealth companies to manage their day-to-day operations, collect payments and grow."
The startup, which participated in Y Combinator, is emerging from stealth with initial funding of more than $1 million from Global Founders Capital, Mischief—which is Plaid founder Zach Perret's fund—Socially Financed, Y Combinator and Rex Salisbury, former partner at Andreessen Horowitz.
Opkit plans to use the funding to expand its engineering, product and design teams.
"Justin and I are big believers that founders should be doing the selling, especially in the early days. So that's where we'd like to shift our focus," Callaway said.
At first glance, there doesn't seem to be a common thread between fintech and healthcare.
Callaway says he gained an interest in healthcare as his father is a Harvard-trained orthopedic surgeon who opened up an ambulatory surgery center. Observing how medical practices operate and the business of healthcare, Callaway noticed the administrative problems that doctors and medical practices face.
"There are some interesting parallels between Brex and the fintech world and the healthcare world," he noted. "Both are regulated industries. At Opkit, what we're doing is integrating with insurance carriers to facilitate transactions related to determining the patient's eligibility and coverage, which is very similar to the kind of thing that we were doing at Brex. There, we were also working in a regulated industry, integrating with legacy incumbents and financial institutions and facilitating transactions. It felt like a good problem for Justin and I to be working on based on our experience and based on my personal connection to the space."
Health tech funding has cooled down after hitting a high in 2021. After a wild ride in the past two years, digital health startups are adjusting to a new reality faced with difficult economic changes and investor pullback.
"The fundraising market is obviously very turbulent right now, and I think a lot of people are having challenges. We, fortunately, didn't have too much trouble fundraising. I think that we have a really strong network. Our team is impressive. Y Combinator helped us make the right connections," Callaway said. "When you start to identify the parallels between the work that we were doing at Brex and the work that we're doing here in healthcare, Opkit is really a fintech and healthcare business and it seems like a compelling opportunity for investors."
He added, "I think investors are still willing to take bets in this environment. There's a lot of dry powder. When they see a good opportunity, they are willing to commit."
Opkit is currently piloting its software with two growth-stage telehealth companies.
"Telehealth is the segment that we're focused on to begin with because we think that they experience this problem more acutely than other types of providers and they have special needs. They want a solution that integrates with third-party tools, is developer-friendly and a solution that is more automated. But, we think that our software is really valuable and could be impactful in the brick-and-mortar space, too, so we'd like to bring it to traditional practices one day," he said.
The founders' vision is to "make using health insurance as easy as using your credit card," Callaway noted.
"We want to unlock real-time patient payments for covered services. That's the North Star that we're working towards," he said.