Most of us can relate to the experience of receiving what appears to be a multi-page medical bill in the mailbox after a “recent” trip to the doctor.
Except when you labor through the details of this document, you discover it’s not really a bill. It’s actually an Explanation of Benefits – an attempt to “explain” what you were charged, what the insurance company paid, what the doctor wrote-off (in insurance parlance, the “negotiated savings,” or the discounted rate the doctor agreed to accept for her services) and finally, what you might still owe.
When the actual bill arrives, weeks later, it’s yet again a confounding experience. Indecipherable codes to describe services rendered and no clear basis in reality (or expectation set) for the costs of those services, a frustratingly narrow set of options to actually pay the bill (who writes checks these days?), and no easy way to get answers to questions or set up payment plans (hours on hold waiting for a call center rep doesn’t count).
The whole process is needlessly complicated, frustrating, expensive, fraught with delays, unhelpful in managing overall medical care costs and a hindrance to everyone involved: patients, health systems, and insurance companies.
The problem has only gotten worse over the years, as the move to higher deductible insurance plans leads to an increasing portion of healthcare expenses being borne out-of-pocket by patients. Over the past decade, patient financial responsibility for healthcare costs has grown about 50%, reaching nearly $375 billion in annual costs. As a result, roughly one third of patients have had a medical bill turned over to a collections agency, and about 50 million patients have had their credit scores negatively impacted by a medical bill. All the while, doctors and other medical service providers are still losing about 40 cents on every billable dollar in unpaid claims, about $150 billion in annual lost revenue.
There must be a better way – this is where Cedar comes in.
Cedar brings a patient-centric and platform-enabled solution to this problem. It’s initial product, Cedar Pay, engages the patient to resolve medical bills in ways most convenient for her – be that digital or analog – provides a bill that is truly clear and legible, and offers payment options catered to her specific needs. Patients love Cedar Pay because of its personalization, clarity and convenience. Medical providers love Cedar Pay because it dramatically increases collections, reduces the time to get paid, and eliminates a lot of expense and hassle associated with chasing down payment. The amalgamation of this results in higher patient satisfaction.
But Cedar Pay is just the beginning. To solve the real problems of healthcare delivery costs and pricing transparency, we need to arm patients pre-procedure with the information and self-service they need to avoid the sticker-shock when the medical bill arrives many weeks post-procedure.
And Cedar is doing just that, rolling out a full patient engagement platform that will not only make the post-procedure payment process work smoothly, but engage the patient pre-procedure so she understands what she will owe the healthcare provider and can manage her information-exchange digitally. Less time and paper wasted in waiting rooms; more clarity, flexibility and self-service. Over time, Cedar hopes to transform the relationship between the patient, provider, and payor into one of trust, transparency, and partnership as opposed to the existing post-hoc, opaque, and transactional approach that currently breeds mistrust.
So, why invest now? At a16z Growth, we look for exceptional entrepreneurs with demonstrated operational excellence using software-based technology to go after massive markets. Cedar fits the bill in all respects.
The company’s founders, Dr. Florian Otto and Arel Lidow, bring a unique combination of medical, healthcare technology, and deep software expertise to the obviously huge market opportunity of improving the patient experience with the healthcare delivery system. Not only does the Cedar software benefit from deep integrations with the myriad of complex (and often byzantine) systems that exist in healthcare organizations today, but the company’s personalization engine learns over time the best ways to maximize customer engagement. Cedar has grown exceptionally over the past few years with levels of sales and marketing efficiency that reflect the team’s operational rigor.
We are excited to announce that we are leading a $102 million equity and debt financing round for Cedar, alongside its existing (Thrive Capital, Lakestar, Founders Fund and Kinnevik) and new (Kaiser Permanente, Jerod Mayo, and Jeff Vacirca) financial partners. I am privileged to have the opportunity to join the board of directors and look forward to seeing what the future will bring. Welcome Florian, Arel and the entire Cedar team to the Andreessen Horowitz family!