Every day, more than 300,000 patients across 36 health systems use Cedar to pay an outstanding bill after a doctor visit or check their co-pay before a visit.
Florian Otto, M.D., Ph.D., co-founder of Cedar, launched the startup in 2016 to modernize the medical billing process and remove pain points for patients around confusing, difficult billing and administrative processes.
Cedar offers patient-personalized medical billing and pre-visit technology that includes appointment reminders, digital registration forms and the ability to collect insurance information. But focusing on provider billing only solves "one part of the problem," Otto told Fierce Healthcare.
Cedar now wants to tackle the insurance side of the market by acquiring startup OODA Health in a $425 million deal for a mix of cash and equity.
The transaction is expected to close this month, subject to regulatory approvals.
San Francisco-based OODA Health launched in 2017 and also focuses on eliminating the friction and delays in current payment processes. Both companies started with the same vision to fix the current "broken" healthcare financial experience for consumers but took different paths, according to Seth Cohen, co-CEO and co-founder of OODA Health.
By bringing together providers and payers onto one healthcare financial technology platform, Cedar will offer a complete solution to address the full set of challenges consumers face when paying for healthcare, Otto said.
OODA Health's platform connects payer workflows for nearly 20 organizations, such as Blue Cross Blue Shield of Arizona, CommonSpirit Health and Blue Cross Blue Shield of Massachusetts. Cedar interacts with more than 12 million patients a year and currently partners with health systems across the United States, including Yale-New Haven Health, Summit Health, Novant Health and ChristianaCare.
Healthcare billing and administration is still a huge pain point for consumers—84% of U.S. adults are worried about paying their medical bills in the next year, and one in 10 consumers simply won't pay their bill if they don't understand the administrative process. Ultimately, the provider and payer billing process remains fragmented with consumers often caught in the middle, leading to high costs, confusion and potentially delayed care.
By combining Cedar's capabilities in the provider space with OODA Health's payer-integrated offering, the company is uniquely positioned to solve many of the problems that often lead to poor consumer financial experiences and administrative waste in healthcare, according to Otto.
"Cedar's mission has always been to transform healthcare and deliver the best possible financial experience for consumers," he said. "We've made great progress toward that goal, but consumers still need greater financial clarity and more affordable healthcare—and the experience with one's provider or one's payer is just part of the issue. Both Cedar and OODA Health are forward-thinking when it comes to putting consumers first, and we believe that by bringing our companies together, we can identify new opportunities to help consumers, as well as payers and providers, navigate an increasingly complicated healthcare system, leading to better outcomes for all parties involved."
The two companies have built innovative software and technology integrations into provider and payer organizations to tackle the healthcare financial experience. But the challenges with healthcare administration and billing are not necessarily technical, Cohen said.
"It's not like you have to build some crazy AI proprietary approach in order to unravel these byzantine areas. Having a great tech stack is essential but it's not about finding the next advanced technology and installing a magic chip. It’s much more about aligning the incentives in this crazy system that we have in the U.S.," he said. "That's the learning for me over the last 13 years I've spent in this space. We've got to find approaches to bring stakeholders to the table and work on behalf of the patient."
Over the past year, Cedar has experienced significant growth. Underscoring this demand for digital technologies, Cedar recently 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.
The company now plans to broaden its product roadmap to prioritize features that are powered by integrations with providers and payers, as well as automation use cases that advance the consumer financial experience and healthcare affordability.
"Payers and providers recognize the importance of working together to fix the broken consumer financial experience, and are more committed than ever to unlocking administrative efficiencies that drive accessibility and affordability," Cohen said. "We're tackling healthcare administration and billing head-on by building the most comprehensive technology and services platform for providers and payers."
With the acquisition of OODA Health, Cedar is now well-positioned in the market as providers and payers come into compliance with federal price transparency regulations, Cohen said.
"This is where that payer-provider connection that we uniquely bring is so powerful. Providers are now publishing cost estimates that they build in-house and are publishing on their websites, but then payers also are creating their own cost estimates. It's a well-intended set of efforts but it's not coordinated at all and patients are left to figure out which cost estimate is correct," he said.
Cedar can work with providers and health plans to build cost estimator tools that provide a "single source of truth" for patients, he said.
Otto will continue to serve as CEO for the combined company, and Cohen will become president of Cedar, in addition to joining Cedar's board of directors. Additionally, Cedar co-founder Arel Lidow and OODA Health co-founder Anshul Amar will serve as co-chief makers within the executive team.
The company will be headquartered in New York City and will expand its footprint as a result of the transaction with additional offices in San Francisco and Salt Lake City.
Cooley LLP acted as legal counsel to Cedar in connection with the transaction. Fenwick & West LLP acted as legal counsel to OODA Health in connection with the transaction.