The comeback story of Decent Health and how it aims to make health plans more affordable

There have been many twists and turns in Decent Health's six-year journey as a startup.

The company launched in 2018 as a health insurance startup focused on small businesses. Decent Health, based in Austin, Texas, was gaining traction, and, in 2021, it launched a professional employer organization to help small businesses band together to get even lower rates. By June 2022, the startup had raised $43 million to fuel growth and expansion. The company's backers include Foundation Capital, QED Investors and Vulcan Capital.

But, 18 months ago, in January 2023, the company hit a major setback when a partnership with a large insurance company fell through at the last minute before a planned nationwide expansion.

Decent had been working with the insurance partner for more than a year to prepare for nationwide expansion. The company wound down its old product in anticipation of an improved new one. The loss of the partnership meant Decent Health no longer had a health insurance product to offer, and it had to stop serving customers. 

With no near-term path to market, Decent's co-founders Nick Soman and Richard Luck were forced to lay off 94% of their team and wound down all of the company's operations to just a core team, as detailed in a blog post.

"It was certainly the worst experience I've ever had to take people through professionally. This is still the best team, to this day, that I've worked with in my life," Soman, Decent Health's CEO, said in an interview with Fierce Healthcare. "We thought, maybe there's a future here, but we need to do right by the people that we're serving and make sure we have enough people here to keep the lights on and make sure claims get paid, but everybody else we had to let go."

Decent Health founder and CEO Nick Soman
Nick Soman, co-founder and CEO (Decent Health)

But, Soman said he and Luck were not deterred from their original mission. "The idea has never changed, which is, there has to be a way to give smaller and medium-sized businesses much better healthcare for less money. That's been the guiding principle behind Decent from Day One," he said. "The regulatory mechanic that we use to do that and the plan model that we use has evolved over time, but one thing that's really been consistent is it's always been built around direct primary care."

Decent has relaunched with a new approach to build level-funded employer health plans around the direct primary care model to serve small and medium-sized companies. The company will work with groups down to five employees, Soman said.

The company's health plan offering will be nationally available starting July 1.

Soman said this strategic move has enabled Decent to offer a health plan that is 40% less costly than traditional options, aligning with today’s demand for affordable healthcare solutions.

With a Decent plan, a member's care starts with seeing an in-network direct primary care provider or DPC. The plan provides unlimited primary care visits, and members who see in-network providers receive care with zero out-of-pocket costs, so no deductibles, no co-pays and no co-insurance, according to the company. That includes primary care, behavioral health, specialty care, surgery, maternity, hospital care and prescriptions through a transparent pharmacy benefit manager, executives said.

Decent's care team also provides members with clinical and nonclinical support.

Decent has formed major partnerships with other healthcare players like One Medical and Hint Health to begin delivering this offering nationwide in July.

Initial feedback from benefits advisers and employers has been positive. The company boasts a net promoter score of 79 compared to 26 for an average health plan.

Soman says he sees big opportunities for Decent Health's new approach in the market, anchored around direct primary care.

"I'm very bullish and confident that when we start making this available to people nationally, we've got something people want," he said. "I grew up fishing with my dad. So, to use an analogy, I know we've got something on the line, I don't know how big it is yet, but it's on there. It's a fun time to be building this company."

A new strategy for Decent Health

Decent's pivot comes as employers face rising healthcare costs while workers are feeling the squeeze from health insurance costs. Annual premiums for employer-sponsored family health coverage reached $23,968 this year, with workers on average paying $6,575 toward the cost of their coverage, according to KFF data. Workers at smaller firms on average contribute $2,445 more toward the cost of family coverage than workers at larger firms.

Soman said he was astonished at the cost of family health insurance. "My family of four was paying more for health insurance than for rent or anything else in our budget," he said.

Prior to founding Decent, Soman had founded one business, Reveal Chat, which was sold to Napster, and he helped grow several other businesses. He felt motivated to tackle the issue of improving U.S. healthcare in part because of his parents. He grew up on Bainbridge Island near Seattle, and both his parents worked as primary care physicians and later as healthcare executives. His father eventually served as chief medical officer at a health maintenance organization.

"I am the only one who did not become a doctor. Pretty much everybody in my family is a primary care doctor. The main topic at the dinner table was compassionate patient care," he said. But Soman said he noticed his parents became disillusioned with the influence of big insurance company policies on how physicians practice medicine.

"I remember being about 12 years old, and my dad, who is pretty soft-spoken, said one day, 'I just don't think my counterparts on the insurance side of the business care about the patient,'" he said. 

Despite Decent's setbacks, Soman and his co-founder saw an opportunity to take a different approach centered around direct primary care.

Level-funded health plans are gaining ground and becoming more widely available to small employers. According to an annual KFF survey, among employers with less than 200 workers, 38% reported offering a level-funded plan in 2022, compared with only 13% in 2020. 

With level-funded arrangements, an employer makes a monthly payment to cover costs of claims payments, administration and stop-loss insurance. Level-funded health plans often cost less when compared to fully insured health plans, and these options package together a self-funded plan with extensive stop-loss coverage that significantly reduces the risk retained by the employer. 

Decent Health's relaunch also comes amid growing interest in direct primary care, particularly among employers. As of 2021, more than 4,000 employers have signed on with a direct primary care plan as an employee benefit, according to one estimate. A study conducted by Hint Health found strong growth in direct primary care membership, jumping 241% (PDF) from 2017 to 2021—representing a compound annual growth rate of 36%.

And, a Milliman analysis, commissioned by the Society of Actuaries, found that enrollment in DPC can result in using less downstream healthcare services, leading to cost savings.

"We want to build what [direct primary care providers] need. And it turns out, what they need is a plan built around them because most of their growth is coming from employers," Soman said.

Decent is able to offer a health plan that is 40% less costly than fully insured market rates by leaning on the DPC model for patient engagement and cost control. "When people get direct primary care, it's really unlimited primary care access with no additional cost. That saves a ton of money. It allows people to go get care when they need it and not wait for something really expensive to happen," he said.

He added, "This is an underwritten plan, so we're able to save about 85% of groups significant money."

A movement to reduce health benefits spending

Decent is working with a handful of companies as planning design partners including Health Rosetta, an organization that is an open-sourced ecosystem of transparent healthcare advisers, services, vendors and strategies all meant to reduce an employer's total healthcare spend. The organization, founded in 2015, aims to provide a blueprint for high-performance health benefits.

"We're two entities; we're a nonprofit and a public benefit corporation," Sean Schantzen, co-founder and president of Health Rosetta, said in an interview. "We build a community of early adopters of innovative health plan strategies. We're most known for a certification and education program of benefits advisors. We're also building open-source standards for how to do these things, so things like contracting guides and procurement field guides, to help employers to build better health plans."

He added, "We also build technology and services that help make these plans function better."

As part of its work, Health Rosetta developed its Plan Grader as an independent 360-degree health plan risk assessment. That tool evaluates 40 measures to assess a plan's performance around quality care, reducing costs, member experience and fiduciary duty for employers to create a standard, objective indicator of the value of a health plan, Schantzen said.

Decent's health plan received a score of 95 out of 100 through the Plan Grader evaluation.

"One of the things we've discovered about high-performing health plans is that there's not a single silver bullet. They tend to do a lot of little things right that collectively have a greater impact than each of the individual things," Schantzen said. "The biggest thing that Decent is doing from the get-go is that they're sweating a lot of little details that add up, such as integration with primary care and a focus on value-based primary care. There wasn't a single area that's a big gap compared to a lot of things that we see in the market."

Health Rosetta, which has about 13 employees, also is partnering with Decent Health for its health benefits plan. "Our head of operations looked at different options on the market, and a combination of the fact that Decent sweats the little details and then the rates that the plan came back with for our group and their ability to work with a small decentralized team made them a good fit," Schantzen said.

Decent is part of a cohort of players addressing the needs of smaller employers, he noted. "Historically, it's been difficult for smaller employers because they've been limited to just fully insured options from large carriers. That is starting to change pretty meaningfully in the market," he added.

A number of companies have launched to try to disrupt the traditional healthcare model and lower costs for employers.

Harbor Health launched in 2022 to bring a new care model to the Central Texas market that integrates primary and specialty care services. The company has larger ambitions to build a vertically integrated "pay-vider" business. It secured $95.5 million backed by General Catalyst, Alta Partners and 8VC.

Angle Health, a payer serving employers, launched in 2021 and banked a $58 million funding round in early 2023 to expand to new markets.

In 2021, UnitedHealth Group acquired Bind Benefits and then launched it as an insurance product for smaller groups called Surest

Individual coverage health reimbursement arrangements, otherwise known as ICHRA, are enjoying a surge in popularity, fueled by interest from small employers.

Of course, one of the most high-profile initiatives to try to tackle employer healthcare costs failed to make an impact. Haven, a joint venture formed by Amazon, JPMorgan Chase and Berkshire Hathaway, shuttered after only three years.