Health IT firm CoverMyMeds has raised $1 million to continue developing its prior authorization technology.
The fundraising has come over the course of about a year, with the largest investors being Cleveland venture development group JumpStart and Charles Hallberg, the founder of MemberHealth, a Solon, Ohio prescription drug coverage company that sold for $630 million in 2007.
Twinsburg, Ohio-based CoverMyMeds plans to use the funding to continue developing its software and hire more employees, said Sam Rajan, principal and co-founder. The company employs about 25 people, but Rajan didn’t want to speculate on what that number would be in about a year.
“It’s all about grabbing as much business as possible because we’ve done something that no one else has been able to do in this space,” he said.
The Twinsburg, Ohio, company has developed Web- and phone-based tools that speed up and automate the submission of prior authorization requests to health insurance plans. Insurers require these requests and other coverage determination forms to be submitted after they reject a patient’s prescription.
Insurers have typically handled prior authorization requests through call centers, but CoverMyMeds’ technology helps to automate the process, which can be an administrative hassle for patients, doctors and insurers.
“From a health standpoint, the easier we can make [the process], the more people are treated and the more long-term disease we can prevent,” Rajan said.
Launched in 2008, CoverMyMeds provides its services to pharmacies and doctors for free. It makes its money from charging fees to drug manufacturers, which have an interest in increasing their sales by expediting the prior authorization process. Clients’ drug reps then promote CoverMyMeds’ service to doctors and pharmacies.
The company’s service has been growing quickly, adding an average of about 150 doctors per day, Rajan said. He declined to disclose the number of drug companies CoverMyMeds has as clients.
The company’s future fundraising plans aren’t set and will be determined by the extent to which the company’s revenue offsets its expenses, Rajan said.
Lets see, when they invested in the company, 16 of their 19 employees were already in Cbus and right after that investment, they got a $596k tax credit from the state to expand in Cbus. This is wrong on two levels. First of all, according to the 3rd Frontier requirements, JS's investments must me made in companies that would most likely not exist without their investment. It is hard to argue that a company that already has 19 employees wouldn't exist if it were not for JS's investment especially when you consider their real start up funding was coming from founders who just had a very lucrative exit. Sinply by calling your HQ in NEO to get JS money does not make it a NEO company when the vast majority of the employees are in Cbus. Secondly and more importantly, how many real startups (not companies with already 19 employees) in NEO did JS turn down that could have used these funds. As JS is spending a 75% of their $13m annual budget on salaries and overhead and only 25% to fund companies, you would hope they would at least use that on actual startups and ones that are in NEO. Why wouldn't she comment on what they knew when they invested in the company. They already had 19 employees and most of them in Cbus. How can an investor like JS claim they didn't know they already were in the process of applying for a state tax credit to expand in CBUS. If Cathy is reading this, I hope she responds and lets us know when we can expect this year's "Jumpstart's Economic Impact Report on NEO for 2010"? Every year it has come out in April. Three months ago it was pointed out that all their previous reports included employees outside of the region, they didn't verify any of the jobs claims nor did they include total local payroll and they (not the company) decided how many of their jobs JS is responsible for. The real question is how many local direct jobs is JS responsible for. Also, JS should not be the ones putting this part of the report together. An independant party should be contacting all of their portfolio companies and ask the following 3 questions. 1. How many NEO employees did you have on payroll in 2010. 2. What was the total taxable income from these local companies and 3. What percentage of these jobs would they (not JS) attribute to JS's involvement. The report can do all the hocus pocus with indirect jobs they want but they need to have an accurate and independant report on direct jobs in NEO. If this happens, I think you will see that their previous jobs report numbers were fictitious. As almost all of the senior staff gets a large part of their compensation on bonuses which I imagine are tied to these inaccurate numbers they published, if it turns out to be true, will these execs return some of their bonus compensation they earned on the backs of these inaccurate reports? More importan
Mike- I spoke with Cathy and here's what I can report. JumpStart expects all their companies to "demonstrate a commitment" to Northeast Ohio. CMM's commitment is that they have their headquarters in the region. According to her records, CMM has four employees in Twinsburg. She wouldn't comment on what JumpStart knew and when they knew it regarding the timing of JumpStart's decisions to commit investments to CMM and CMM's apparent plans to add more jobs in Columbus rather than here. She rejected the premise of my question, which was that that the majority of CMM's growth would occur in Columbus. When I asked if the rejection of my premise meant that CMM would in fact be adding jobs in NEO in the future, she said not necessarily.
Brandon, Nice article. I am curious why Jumpstart is investing in a Columbus based company. Of the 25 employees, 22 of them are in Columbus. Right after Jumpstart made their initial investment, the company got a $596k tax credit from the state to expand in Columbus. It is obvious from the start that this company never intended to grow in NEO. I have nothing against this company and I hope they succeed, but Jumpstart's mandate is to help and grow companies in NEO. The 3 people in NEO are the 3 cofounders and not all of them even work on the biz full time. It seems like they basically saw JS money as low hanging fruit as long as they claim their "Headquarters" was in NEO, even though almost none of their employees work there. Can you call Jumpstart and find out why they are spending their money in companies with almost all their employees and all their growth outside of NEO?