Concierge Medicine On Steroids raised $ 40 Million to disrupt employer-backed care

S.Suddenly after Glen Tullman resigned as CEO of electronic health record company Allscripts in 2012, he received a call from General Catalyst managing partner Hemant Taneja inviting him to dig out the frozen winter of Chicago for sunny Palo Alto. Taneja wanted to help Tullman reiterate the future of health care in the United States. The problem: the country with the highest level of health care spending in the world is deceived by a system that is economically impossible and completely inefficient.

“We decided we needed to create something new,” Tullman recalls. It required a combination of “the magic of Silicon Valley” and the focus on customer experience, along with knowledge of the “healthcare ecosystem.” General Catalyst would go on to become a major investor in the new company: Livongo. It offered breast disease management with real-time data and coaching that clinically improved consumer health and reduced overall costs for employers. In August 2020, Teladoc Health announced that it would join Livongo in a $ 18.5 billion contract worth to the company.

Seven months later, Tullman, 61, and Taneja, 45, are ready to release their most advanced project: Transcarent. In this new venture, the two are deploying an experienced playbook in an effort to overhaul the employer-supported health care system. About half of the U.S. population has health insurance that is tied to their employer. “Livongo was about this segment of the population and providing a good user experience,” said Taneja, who ranked # 31 on the Forbes Midas list of the best VCs in the world. “This is about the overall workforce base and how they change the quality of care and the affordable price.” Tullman will be CEO and executive chairman of the San Francisco-based company.

It is a well-documented course but few have successfully sailed. Earlier this year, Haven Health launched the joint venture between Amazon, JP Morgan and Berkshire Hathaway to lower employee health care costs. That experience provides a cautionary tale of how American healthcare corporate whales can be shipwrecked and even well-capitalized. “Haven was supposed to show how creativity, innovation, and entrepreneurship in the private sector could outweigh the healthcare sector – and that failed,” said David Blumenthal, physician and head of healthcare. sit the Commonwealth Fund healthcare think tank. “There is always the opportunity for better information in some way to crack this and empower employers in a way that has not been possible before. But history does not support that as a very likely success. ”

Tullman and Taneja promise to get digital health benefits in the past, deep pockets and a supported management team will be able to crack the code. Transcarent, which launched out of stealth on Thursday, closed its $ 40 million Series A round in October 2020, led by General Catalyst’s Taneja and Lee Shapiro, managing partner of 7wire Ventures (where Tullman is the founder and is a managing partner). Alta Partners, Jove Equity Partners and Jove Capital also took part in the tour.

Transcarent’s leadership team is a roster of alumni from healthcare and technology companies, including Aetna, Cigna, Optum, Signify Health, Haven, athenahealth and Glassdoor. This is Tullman’s fourth round as starting Chief. (He has given three companies to the public: Enterprise Systems, Allscripts and Livongo.) He and Taneja also supported a $ 500 million special purpose construction company or SPAC, which targets “health guaranteed” companies. presented to the public, along with General Catalyst managing director Quentin Clark, former Livongo president Jennifer Schneider, Health president Thomas Jefferson and CEO Stephen Klasko, and Head of Property Products Anita Pramoda, at the end of last year.

T.Ullaman states that Transcarent’s goal is to “empower people to be in charge of their overall healthcare experience in one place.” Think of it as a concierge cure for steroids. Users download an app that connects them to a doctor via video or chat within 60 seconds 24 hours a day. Easy things are dealt with online. For more complex problems, Transcarent maps out the doctors and hospitals with high quality and low costs. He will arrange a meeting for a second opinion. He flies the patient to the better facility, rather than recommending a local subpar one. All this without prices, without co-payment and without bills for patients.

Taneja and Tullman are so confident that this model will create significant cost savings that will not raise upfront costs for employers. Many digital health companies rely on the monthly per-member fee that customers pay. Not Transcarent, which instead offers a pre-arranged percentage cut of employer health care cost savings after the fact. “This is a special time in a time where both the employer and the employee are engaged in solutions,” says Taneja. Instead of sifting through options like using the mental health or diabetes app, the idea is for staff to make one decision: “I need to choose Transcarent and they will look after my care for me. ”

Tullman and Taneja are also not aiming to restart the wheel – they are buying some of the company’s pre-made components. Just as their previous venture, Livongo, strategically owned to build their technology platform, in October 2020, Transcarent merged with Denver-based BridgeHealth. Start-up that offers pre-arranged rates to self-insured employers for 300 different types of surgery. BridgeHealth focuses on Centers of Excellence, which are places known for providing quality care.

This has been a growing trend among employers. (For example, Walmart first launched a program in 2012 where employees could receive free spinal surgeries and referrals while going to one of six health systems across the country.) BridgeHealth, which covers 1 million members of staff, says its 80% model has fewer problems, which will reduce costs both at the level of care and in the long run.

Tullman sees the current pandemic has accelerated toward digital health adoption, while at the same time increasing employer frustration with higher health care costs. That, he says, is why Transcarent is needed. “We have this special time, where self-insured employers are unhappy. Individuals are unhappy, and we can come up with something that just makes it easier, ”says Tullman. “We think of this as bringing health and care together.”