Cedar was launched in 2016 to modernize the medical billing process.
Patients often struggle with incomprehensible medical bills while they also face a serious medical condition or illness of a family member, according to Florian Otto, M.D., Ph.D., co-founder of Cedar.
"There is a huge unmet need to improve the financial experience as the experience for patients is basically still stuck in the 1980s," Otto, Cedar CEO, told Fierce Healthcare.
Otto, a former physician and executive at Zocdoc, had his own frustrating experiences with healthcare's complex billing system and said he helped to get Cedar off the ground to make it better.
The rapid shift to digital technologies during the COVID-19 pandemic has driven skyrocketing demand for the company's patient financial engagement technology, Otto said.
Underscoring this demand for digital technologies, Cedar has raised $200 million in Series D financing led by Tiger Global Management, bringing the company’s valuation to $3.2 billion, according to the company.
Existing investors Andreessen Horowitz, Thrive Capital and Concord Health Partners also participated in the Series D round.
The latest funding round comes on the heels of a $102 million Series C funding round back in June, led by venture capital firm Andreessen Horowitz. The company has raised $350 million in total funding to date.
Cedar offers patient-personalized medical billing and is focused on eliminating pain points around confusing, difficult billing and administrative processes. The company wants to make the healthcare financial experience more in line with what digital natives have come to expect from other industries.
The startup is known for its patient billing service, Cedar Pay, but Otto says the company wants to be more than just a provider of cloud-based billing software. The company is working to provide tools that help patients before they even step foot in the doctor's office.
In 2020, Novant Health announced it would pilot Cedar's pre-visit technology that includes appointment reminders, digital registration forms and the ability to collect insurance information just by taking a photo of the insurance card.
Cedar now partners with more than 35 healthcare providers across the United States, including Yale New Haven Health (YNHHS), Summit CityMD, Novant Health and ChristianaCare.
Cedar says it now engaged with more than 300,000 patients a day. And while healthcare providers typically see a 30% lift in patient payments, Cedar also helps nearly 3-in-4 health system patients who interact with its platform avoid collections by providing clarity into healthcare costs and pathways to affordability, all while maintaining an 88% patient satisfaction score, the company said.
Cedar will use the new capital to fund its go-to-market strategy and to ramp up more partnerships with health systems, Otto said.
As the company continues to invest in scaling its technology platform, funds from this round will be used to broaden Cedar's product roadmap beyond its flagship financial engagement product, making the healthcare experience more personalized, transparent and convenient.
The startup also wants to improve its technology integrations with electronic health record platforms, Otto said.
The funding comes at a time when meeting and exceeding consumer preferences around digital experiences is no longer optional for healthcare providers. As COVID-19 has accelerated the digital shift in healthcare, demand for Cedar’s product has increased significantly, with the company quadrupling its business throughout 2020.
Since the onset of the pandemic, 40% more patients have switched providers over a poor digital experience and almost 50% wish their digital health experience was more intuitive, similar to Netflix, Amazon or Uber, according to Cedar.
“Now more than ever, patients deserve a healthcare experience that prioritizes their needs, and yet there are still so many problems on the financial side, which negatively impact their medical journey,” Otto said. “Our mission has always been to enable exceptional patient experiences and transform healthcare. With this funding, we are in a position to further extend our footprint, help relieve financial burdens for patients and continue innovating to respond to ongoing shifts in the healthcare industry.”
Cedar plans to build out additional pre-visit functionality and tools that provide more pathways to affordability and actionable price transparency, with the ultimate goal of delivering better experiences and outcomes for both patients and providers.
Last year, the company partnered with Waystar to roll out pricing estimates and payment options, as well as eligibility verification, into its pre-visit offering. Waystar's technology enables providers to proactively reach out to patients with personalized price estimates through Cedar's platform.
Investors are backing the financial engagement startup because they see the opportunities for the healthcare industry to shift to digital technologies, Otto said.
"Right now, the healthcare system on the digital side is not par with expectations. The problem is 100 percent there. Even with our recent momentum, we have still only penetrated the market by 1%. Ninety-nine percent of patient visits go outside of Cedar. There is clear market traction here," he said.
Several tailwinds are driving Cedar's continued growth, including new federal regulations to improve price transparency. The Centers for Medicare & Medicaid Services (CMS) is now requiring hospitals to post payer-negotiated rates for more than 300 shoppable services.
"We are very excited that CMS is pushing this. But the fundamental problem right now with the CMS regulations is that it doesn't translate into a product that providers or patients can use. There is no real product patients can use to compare prices," Otto said.
Technology is needed to make that information digestible to patients, he noted.
“Cedar has emerged as the market-leading, technology-enabled platform helping patients resolve their medical bills in ways that are easier and more relevant, resulting in improved financials for healthcare providers. We are very excited to back Florian and the team as they continue to optimize patient-centric financial engagement in healthcare,” said Scott Shleifer of Tiger Global Management in a statement.