A healthcare startup focused on simplifying claims administration has pulled in $40.5 million in a series A funding round, with several large insurers among the investors.
Although none of them led the round, Anthem and several Blue Cross Blue Shield plans made sizable investments in OODA Health, indicating an interest in the startup's proposed solutions.
The San Francisco-based startup, which is focused on eliminating waste and inefficiencies in healthcare administration, saw the largest contributions from venture capital firms Oak HC/FT and DFJ. But it counted among its strategic partners Anthem, BCBS of Arizona, BCBS of California, Zaffre Investments (a subsidiary of BCBS of Massachusetts), Dignity Health and Hill Physicians.
In the short term, OODA's healthcare stakeholders indicated they are most interested in the startup's cloud-based solution for real-time claims payments. Blue Shield of California and OODA plan to roll out the technology in a pilot program in Oakland, California, along with Dignity Health and Hill Physicians.
“When it comes to payment, leaving the doctor’s office or hospital should be like checking out of the grocery store. Everything is settled when you walk out the door,” said Paul Markovich, president and CEO of Blue Shield of California, in a statement. “Creating this capability will dramatically improve the experience of members, physicians and hospitals.”
Blue Shield of California committed $1.5 million during the funding round but said in its release that it would make further investments if the claims pilot goes well.
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OODA is a very new and unproven company, but it arrives on the scene with a seasoned executive team. Its CEO, Giovanni Colella, M.D., previously founded Castlight Health and RelayHealth, the latter of which was acquired by McKesson in 2006. At his side are Seth Cohen, president and COO, and Usama Fayyad, Ph.D., CTO. OODA noted that together they bring "more than 100 years of combined healthcare and technology experience."
They'll need every year of experience they can get given the startup's ambitions. It is aiming to disrupt the legacy processes and technologies that have stubbornly stuck around healthcare administration well past the rest of the country. The company estimates these outdated systems cost the healthcare system around $400 billion a year.
The company's business model is appealing to both payers and providers because it settles claims in real time rather than the often byzantine claims process.
“As consumers, we are accustomed to easy, near-instant transactions. But in healthcare, administration is time-consuming and expensive," Cohen said in a statement. "OODA brings the digital DNA and technological capabilities to enable payers and providers to collaborate and mutually benefit from the efficiencies of a faster, more dynamic healthcare payment system."