Startups, Health IT

Collective Health raises $110M to scale workforce health management system (Updated)

The company secured strategic investment from Sun Life Financial and added a new backer — United Arab Emirates sovereign wealth fund Mubadala Ventures.  Other investors included NEA, Founders Fund, GV, and Maverick Ventures.

Note: This post has been updated with comments from Rajaie Batniji, Collective Health Cofounder and Chief Health Officer.

Collective Health, a company that developed a workforce health management system that’s been compared with the kind of model the Amazon-Berkshire Hathaway-JPMorgan Chase alliance would like to emulate, has raised a new round of funding as the San Francisco-based business opens a new office in Chicago and seeks to expand its customer base.

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In addition to the Chicago office, Collective Health will expand its presence in Georgia, New York, and Southern California.  It will also use the funding to grow its workforce. The funding will also go towards product development said Rajaie Batniji, Collective Health Cofounder and Chief Health Officer, in a phone interview.

The company secured strategic investment from Sun Life Financial and added a new backer — United Arab Emirates sovereign wealth fund Mubadala Ventures.  Other investors included NEA, Founders Fund, GV, and Maverick Ventures. The funding was split between the Series D round and a previously unannounced Series C round, Batniji said. Sun Life is one of the largest providers of stop-loss insurance in the U.S. to provide financial protection for employers for catastrophic claims.

Collective Health is designed its “Health Platform” to make the user interface on par with one aimed at consumers. It’s designed to make it easier for employers to understand how their plan works, review claims, manage healthcare spend by improving the user interface and reducing the wait time on queries and using analytics tools to identify ways to better utilize available programs for employees. It also automates the process of verifying vendor invoices to prevent overpayment.

Rajaie Batniji, Collective Health Cofounder and Chief Health Officer said in a phone interview that the company’s “obsessive focus” on the user experience sets it apart and said the system is intended for both employers and staff.

“No one else has approached this solution with that kind of mindset…We have done a dramatic simplification and beautification of the user interface.”

Cofounder and CEO Ali Diab said in a company press release that its workforce health management system is intended to remove some of the fragmentation that thwarts employers’ ability to manage healthcare costs,

“Employers’ ability to drive positive change in healthcare is being hampered by antiquated technology that keeps all pertinent healthcare and financial information locked in disparate, legacy systems. The Collective Health Platform eliminates this fragmentation, removing inefficiencies, lowering costs, and improving the experience for American employers and workers.”

The company’s system analyzes employees data from eligibility files; medical, pharmacy, dental, and vision claims; utilization of healthcare programs and member search queries, according to the company’s website. It identifies patterns and insights to inform staff healthcare needs.

From 2006 to 2018, the total cost of healthcare per employee has risen 75 percent from $8,079 to $14,156, according to data cited from the National Business Group on Health.  Collective Health regards this trend as an opportunity to make an impact. That perspective is shared by other startups and growth stage companies and by more established companies that are acquiring businesses such as AXA Group’s acquisition of Maestro to build on their services and expand into employer healthcare management.

Photo: CreativaImages, Getty Images