Healthcare has quickly shifted to digital technology to provide care during the COVID-19 pandemic, but how patients pay for medical services still needs a major update.
Patients can talk to a doctor through mobile apps and telehealth visits. But they still get paper statements in the mail, where the breakdown of physician services and facility charges can be confusing and opaque, said Florian Otto, M.D., Ph.D., CEO and co-founder of Cedar.
Payment options are often limited to inefficient and archaic forms of money transfer such as personal bank checks.
Compared to Amazon and Netflix, healthcare operates more like a Blockbuster video store with a "one-size-fits-all" approach, he said.
"There is a huge unmet need to improve the financial experience as the experience for patients is basically still stuck in the 1980s," Otto told Fierce Healthcare.
Patients often struggle with incomprehensible medical bills while they also face a serious medical condition or illness of a family member, he said.
Otto, a former physician and executive at Zocdoc, had his own frustrating experiences with healthcare's complex billing system. He helped launch Cedar in 2016 to make it better.
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 company says its technology has increased patient collections for providers by 30% while driving a 70% increase in digital self-service payments.
The COVID-19 pandemic has only amplified the need for virtual-first, digitally enabled services in healthcare, Otto said.
Underscoring the demand for digital services in healthcare, the startup has scored $102 million in a series C funding round, led by venture capital firm Andreessen Horowitz.
The deal includes $77 million in venture capital and $25 million from JPMorgan in venture debt, the company announced Monday.
Other participants in the fundraising round include Kaiser Permanente and individual angel investors including Jerod Mayo, linebacker coach for the New England Patriots, and Jeff Vacirca, M.D., CEO of New York Cancer and Blood Specialists, as well as Cedar’s current investors including Kinnevik, Thrive Capital, Lakestar and Founders Fund.
Andreessen Horowitz Managing Partner Scott Kupor will join Cedar’s board of directors. This round brings Cedar’s total capital raise to $157 million to date.
To support Cedar’s rapid growth, the funding will be used to invest in expanding the company’s reach and to accelerate product innovation, the company said.
The startup also signed a deal with North Carolina-based health system Novant Health to roll out its patient engagement and payment technology.
Cedar 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.
As part of that partnership with Novant Health, the health system will pilot Cedar's new 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 plans to incorporate data from a network of health insurers, health savings account banks and payment processors, price estimate generators and credit reporting vendors to enable a more seamless billing experience for patients.
Novant Health expects to roll out the technology before the end of 2020.
“At Novant Health, we are always looking at how we can implement new technology to create a world-class consumer experience for our patients,” said Geoffrey Gardner, senior vice president of operational finance and revenue cycle at Novant Health, in a statement.
Novant Health wants to use technology to make healthcare costs and billing more understandable, personalized and convenient, Gardner said.
The COVID-19 pandemic also has driven demand for "touchless" technology services to reduce the time patients spend in providers' waiting rooms, and Cedar's pre-visit technology meets this need, Otto said.
Providers also are focused on improving the patient experience at a time when consumers are hesitant to return to in-person appointments.
"Providers built muscle on accelerating technology implementation in just a few weeks and now they understand they need to change to be competitive," Otto said. "Providers' margins got hit because of COVID-19 and providing a more efficient and better experience for patients is very important."
Several tailwinds are driving Cedar's continued growth, Otto said. Patients' out-of-pocket costs are on the rise due to the increase in high-deductible healthcare plans and patients want to better understand these costs.
The Trump administration also has pushed regulations to improve price transparency.
In June, the Centers for Medicare & Medicaid Services (CMS) published price transparency rules for providers and insurers. The regulation will require hospitals to post payer-negotiated rates for more than 300 shoppable services. That rule goes into effect in 2021.
A CMS proposed rule also would mandate insurers post online real-time cost-sharing information.
"The rule doesn’t help without technology to make that information digestible to patients," Otto said.