More than one year since Minneapolis-based Bright Health‘s official launch, the new generation health insurance business cofounded by former UnitedHealthcare CEO Bob Sheehy has raised $160 million in a Series B round, adding four new investors. The funding will be used to support an expansion into multiple states after making its debut in Colorado this year through a collaboration with integrated health system Centura Health.
Bright Health uses broker partners to sell plans to consumers, but also offers its plans through public and private health insurance exchanges. The insurance startup works with large health systems interested in more integrated healthcare and seeks to create a culture of collaboration between payers and providers — a relationship that historically has been more combative than collaborative.
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Greenspring Associates led the Series B round and new investors Greycroft Partners, Redpoint Ventures and Cross Creek Advisors also took part. Existing investors New Enterprise Associates, Bessemer Venture Partners and Flare Capital Partners also participated in the round, according to a news release.
In an interview with MedCity News earlier this year, Bright Health Chief Business Officer Rachel Winokur highlighted these care partnerships as one way the company has insulated itself from the shifting insurance landscape.
“Because our model is anchored in exclusive Care Partnerships with leading health systems in each community we serve, we can continue to deliver what consumers value in a sustainable way.”
Bright Health CEO Bob Sheehy in a phone interview with MedCity News that the Series B is designed to fund the expansion of the business into multiple states driven by similar deals with integrated health systems in metropolitan areas.
“We have spoken with 35-40 health systems and all [of them] are developing integrated delivery networks but have decided against getting into health insurance. The reception has been really fantastic. In 2018 we’re looking at expanding into multiple markets. We plan to be in 10-15 markets in the next five years.”
There are three technology components to Bright Health’s business: the user interface, a data analytics component, and a scalable platform that can work with a variety of electronic medical records and telemedicine companies. A little more than one third of Bright Health’s 130 staff are developers and engineers. It plans to expand to 190 by the end of the year with the hiring focused on sales, marketing and growth jobs, Sheehy said.
The company also works with technology vendors such as Qnxt, which is part of TriZetto, Online Insight, and Deerwalk — an electronic data warehouse business.
Earlier this year in a phone conversation about his report on digital health, Venrock Partner Dr. Bob Kocher noted that although the insurance industry needs to improve the “broken” member experience, the challenge faced by the likes of Oscar and Bright Health is that commercial insurance is a super price sensitive market that’s not profitable.
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