Turquoise Health, a startup that aims to bring more price transparency to healthcare, clinched $20 million in fresh funding to build out its capabilities and support the rollout of its new direct contracting platform.
The company launched in December 2020 with a focus on helping patients know prices for healthcare services upfront before they show up for treatment. Turquoise Health developed a search engine as a research tool that serves as a starting point for users to compare relative costs of care. Turquoise Health executives said the goal is to make shopping for healthcare as simple as buying a plane ticket.
Using Turquoise Health's website, consumers can search for shoppable healthcare services and also can research providers to view services and quality of care.
The company's price transparency database is also being shared downstream (via API) to referring providers, care navigation portals and employers.
Existing investor Andreessen Horowitz (a16z) led the series A round with participation from Bessemer, Box Group and new investor Tiger Global.
The startup nabbed $5 million in seed funding about a year ago to expand access to hospital rates data. That funding round also included individual investors: tech leaders Henry Ward, CEO of financial tech startup Carta, Lyft Healthcare president Megan Callahan, former Athenahealth CEO Jonathan Bush and NBA champion Klay Thompson.
“We're committed to a vision of the new ‘pre-revenue cycle’ where patients and payers know the costs upfront and providers become accustomed to real-time payment for shoppable services,” said Turquoise Health co-founder and CEO Chris Severn.
The company launched at the same time that a controversial rule went into effect in January 2021 requiring hospitals to post online payer-negotiated rates. The law requires all hospitals to make their prices publicly available via a machine-readable file (MRF). Turquoise Health's data is sourced from the machine-readable files posted by the hospitals themselves as a part of compliance with the government's price transparency rule.
However, several studies and analyses throughout 2021 indicated that many hospitals are not complying with the requirements. Even a year after the federal rules compelled hospitals to make healthcare prices public, some of the nation’s biggest chains haven’t done so, with no penalty so far from the Biden administration, the Wall Street Journal reported in December.
In January, Turquoise Health launched a verification program for hospitals that spotlights providers that have signed off on their rates. That service connects compliant providers to cash-paying patients, executives said in a blog post.
In March, the company rolled out a beta version of its price transparency scorecard, a search tool that enables customers to assess the health of a hospital’s machine-readable file pricing information. Currently, there are nearly 6,000 hospitals to search from.
The startup launched its direct contracting platform, which executives describe as a SaaS platform that streamlines the direct contracting process between providers and purchasers atop a foundation of pricing data. The platform, called Clear Contracts, will support single case agreements, retrospective out-of-network agreements and group health agreements. Today providers and purchasers connect on the Turquoise Platform to negotiate, redline, and sign data-driven contracts.
“By creating a clean, easy-to-use direct contracting platform, Turquoise Health is shifting the industry's focus towards complete financial certainty prior to care ultimately resulting in less friction between patients, providers, and payers.”
The federal price transparency mandate also extends to health plans, requiring them to build an online shopping tool for members. That mandate goes into effect in July.
Insurers must post online machine-readable files that include their in-network negotiated provider rates, out-of-network coverage rates and in-network drug pricing. The following year, in 2023, insurers must offer an online shopping tool or similar platform that includes an out-of-pocket cost estimate and negotiated prices for 500 of the "most shoppable" services. By 2024, the requirement will be extended to all services.
”Payor-provider contracts are the tail that wags the dog for most healthcare navigation decisions, and yet they remain amongst the most archaic artifacts in our industry. We're excited to be doubling down on Chris and Turquoise as they digitize the payor-provider contracting process to enable transparent, nimble, and data-driven negotiations using real market pricing data, such that consumers can more confidently maneuver their care journeys,” said a16z general partner Julie Yoo in a statement. Turquoise Health also announced that Yoo is joining the company's board of directors.
The company already sees an impact on patient behavior. While most of Turquoise Health’s downstream pricing data reaches care navigation platforms through a Pricing API, thousands of patients browse the Turquoise Health website each month for affordable care across hospitals in all 50 states. The company seeks to spread clear pricing data to patient encounters at all sites of care.