Livongo founder Glen Tullman's latest venture has raised $58 million backed by major investors General Catalyst, Merck Global Health Innovation Fund, Kleiner Perkins and Bayer's corporate venture arm.
Transcarent launched out of stealth mode in March to tackle the employer-sponsored benefits space. The startup uses a combination of software, technology and data science to provide members with health navigation, virtual care and bundled providers in one consumer-directed health and care platform, according to the company.
The company provides members with a personalized, 24/7 experience and connects them via chat, phone or video to a personal health guide or a physician, expert second opinions, medication review and management, virtual physical therapy or full surgery management, officials said.
Employees will also have access to the leading centers of excellence and appropriate site-of-care offerings as well as a range of care provided at home rather than in the hospital.
Self-insured employers, who pay for almost half of the healthcare expenditures in the U.S., have seen costs escalate year after year without corresponding improvements in the quality of care. While employers attempt to offer their employees access to best-in-class healthcare services, the result for employees and their families is often fragmented solutions that are confusing to use, complex to understand and costly to pay for, company officials said.
Silicon Valley-based Transcarent is taking a different approach as it will strike risk-sharing agreements with employers, Tullman told Fierce Healthcare in March.
"We're changing the business model to align with self-insured employers and their members. We're not asking employers to pay anything upfront. If we don’t provide higher quality and lower cost, you don’t have to pay anything. Nobody else has been willing to go at risk," Tullman said.
The startup got a major cash infusion with a $40 million series A round in October 2020, led by General Catalyst Managing Partner Hemant Taneja and Lee Shapiro, managing partner of 7wireVentures, of which Tullman is a founder and remains a managing partner.
General Catalyst was a big investor in Livongo, a diabetes management company.
The series B investment announced Thursday was also led by General Catalyst and 7wireVentures, with participation from Merck Global Health Innovation Fund, Kleiner Perkins, Leaps by Bayer, GreatPoint Ventures and Threshold Ventures along with existing investors Alta Partners and Jove Equity Partners.
Transcarent has raised close to $100 million in total funding to date.
The fresh capital will enable the company to respond to the demand for rapid expansion of its risk-based offering for self-insured employers, executives said.
“We believe the next 18 months will define the next five years in healthcare, and much of that innovation centers around two words: experience and alignment,” said Tullman, CEO of Transcarent, in a statement.
“There’s an extraordinary amount of friction in today’s healthcare journey which makes an individual’s experience more confusing, complex, and costly than ever. Siloed point solutions and navigators don’t improve people’s experience and don’t address the lack of alignment with the true payers in healthcare—employers and the people who work for them. Transcarent will remove the unnecessary barriers and provide employees with the right resources to make informed decisions for themselves and their families, while realizing better value for their employers," Tullman said.
The company reports that, to date, its solutions have improved health outcomes for patients by connecting members seeking care to a physician in 60 seconds, on average. According to the company, 21% of patients have received a change or correction in diagnosis; 40% of patients avoided unnecessary surgeries or procedures; and its surgery solutions provide an average overall net savings of 25% to 50% per procedure.
“Rising costs in the self-insured employer space, along with the acceleration of broad adoption of virtual care due to the pandemic, have underscored the need for new and different health benefit models,” said Bill Taranto, president and general partner of the Merck Global Health Innovation Fund, in a statement. “We’re inspired by Transcarent’s vision to empower employees and their families in making informed choices when seeking cost-effective, high-value care.”
In October 2020, Transcarent also acquired BridgeHealth, a company that connects workers with centers of excellence and other appropriate sites of care. BridgeHealth's capabilities are now a core component of Transcarent's services, according to the company.
Through those surgery solutions, Transcarent now serves 1 million members with more than 160 centers of excellence and ambulatory surgery centers and more than 300 pre-negotiated surgical bundles across eight surgical categories, and it provides documented improvements in quality of care, resulting in 80% lower complications, company executives said.
The startup has recruited a team of healthcare and technology leaders, including Krishnan Sridharan, formerly with Aetna, Cigna and UnitedHealthcare, who will serve as president of Transcarent. Jeff Dobro, M.D., joined as chief innovation officer after stints at Mercer, One Medical and Willis Towers Watson. Jamie Hall joined as chief commercial officer after working at BridgeHealth and the BlueCross BlueShield Association.
A former Remedy Partners and Signify Health executive, Bipin Mistry, M.D., has joined as chief medical officer, and Caitlin Fleming, who worked at Haven and Optum, is serving as chief of staff.