OODA Health, a San Francisco startup looking to reshape healthcare’s existing billing and claims payment system has launched with a $40.5 million Series A financing round and provider and payer partners including Dignity Health, Anthem, Blue Cross Blue Shield of Arizona and Blue Shield of California.
The fundraising round was led by Oak HC/FT and DFJ and also included support from the company’s health system and health payer partners.
The company was founded last year to fix what OODA Co-founder and President Seth Cohen called the “operating system” of healthcare, essentially the process through which care is paid for. The company’s founding team includes Cohen and Giovanni Colella, who also started Castlight Health and RelayHealth.
“We really tried to rethink the model of the claim,” Cohen said in a phone interview. “The way in which a provider gets paid for care has not changed in 30 or 40 years and sometimes they have to wait months to find out whether they are being reimbursed.”
He drew a distinction between that process and the general retail consumer experience of paying with a credit card, which is instantaneous and has security features built-in like automatic fraud detection.
By pulling in clinical data from electronic health records, OODA is trying to help health plans pay for care in real-time instead of with the lag and administrative burden that exists in the current system. The company makes money by taking a fee for its services and a risk-sharing payment.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
“Our collaboration with OODA Health and payer partners will be a game-changer in healthcare by removing administration that can be a friction point in delivering care,” Dignity Health CEO Lloyd Dean said in a statement.
With the startup’s technology, the payer would be responsible for collecting and dealing with outstanding payments, instead of the hospital.
According to Cohen, this represents an improvement because it helps insurers evolve into a “true payment company” with what the company hopes to be a better patient experience and a higher collection yield on hospital bills.
The idea being that health plans would be able to better integrate disparate bills and provide a more convenient, user-friendly method of payment.
Currently, the company has started pilot programs in California and Arizona with some of its partners like Dignity Health, Hill Physicians Medical Group and Blue Shield of California.
“Our partnership with OODA is a great example of how Blue Shield is innovating to create a healthcare system that is worthy of our family and friends and sustainably affordable,” Blue Shield of California CEO Paul Markovich, said in a statement.
“Our members and providers deserve a seamless, real-time billing experience, so they can focus on what really matters, getting and staying healthy. We’re working with OODA to make this a reality.”
OODA pitches its technology as a win-win for both payers and providers. Providers get paid out immediately and are unburdened with the task of patient bill collection. Health plans, in turn, sidestep late payment fees and penalties.
So who loses? Cohen pointed to the bill collection companies enlisted by hospitals as one potential victim, as well as technology vendors profiting from the current antagonistic relationship between health plans and providers.
Photo: Getty Images, utah778
