Consumer / Employer

Morgan Health’s $30M investment in Centivo to power alternative health plan focused on VBC

Centivo Health is a health plan that only sells to self-funded employers. Morgan Health chose to invest in the company because of its focus on providing low-cost coverage.

Morgan Health, a JPMorgan Chase business unit, has made a $30 million investment in Centivo, a health plan for self-funded employers, as part of an extended Series B-1 financing.

With this investment, announced Tuesday, Buffalo, N.Y.-based Centivo has raised $148 million in total. The company has 11 other investors, including B Capital Group, Bain Capital Ventures and Bessemer Venture Partners. 

Stuart Roth, Centivo’s chief business officer and co-founder, said Centivo will use Morgan Health’s money to improve its product, expand its presence in its current markets, expand into new markets, and develop and build on new capabilities. One of these new capabilities is virtual primary care. 

Morgan Health chose Centivo because of its focus on providing low-cost coverage, said Clare Krusing, executive director of external communications, in an email.

“Centivo’s specific value-add for employers and employees is the fact that it can deliver an affordable coverage option with predictable (and lower) out-of-pocket costs compared to traditional insurance,” Krusing said. “This is in addition to the high-performing network of doctors and providers that are proactively engaged with patient care in a meaningful and proactive way.”

Centivo, launched in 2019, only sells its health plans to self-funded employers with at least 51 employees. This allows the company to negotiate lower rates than competitors, Roth said. These competitors include large traditional payers like UnitedHealthcare or Aetna or Cigna. These health insurance companies have several business segments targeting Medicare, the individual market or commercial/employers. But in this situation, if a payer negotiates too hard with a provider in one market, it may threaten other markets, requiring the payer to ease up on its negotiations. 

“We only focus on the self-funded employer/commercial market (we have no other lines of business), and therefore we can negotiate aggressively, and also make the ‘tough calls’ on who is in/out of our proprietary, high performing networks,” Roth said. “These in-network providers are often very willing to lower fee structures with us because in return we will be sending so many patients their way and not to their competitors down the street who have not been included in our networks.”

This ability to negotiate aggressively lowers the costs for employers.

Centivo’s employer clients have two options for its employees: it can provide Centivo’s plan with its existing health benefit plan, or it can completely replace its health insurance offering with what Centivo offers. Like any health plan, the latter provides administrative services such as paying claims, member care and education, and documentation. 

As the healthcare industry moves along the path to value-based care, Centivo is also creating its provider network on those principles. It contracts with specific physicians who have a proven track record of value-based care, Roth said, where payments are made on the basis of improving patient outcomes and reduced costs, instead of the fee-for-service model that pays providers based on the volume of services provided.

Centivo’s health plans also remove some of the barriers to getting care such as high deductibles. Roth said it offers free primary care, no deductible and predictable copays. On average, employees pay about $350 out-of-pocket each year, compared to the industry average of $800, Roth said. The typical American has about $500 on-hand for emergencies, and about four out of 10 Americans live paycheck to paycheck, Roth cited.

Already, the company’s approach to health insurance is paying dividends to employers, Roth maintains, adding that Centivo has saved 15 to 30% each year in healthcare costs for its clients, compared to other traditional insurance carriers. Centivo charges its clients a flat per member per month fee, but Roth declined to share its pricing information.

Morgan Health’s Krusing was similarly unforthcoming when asked if it has set any performance metrics that Centivo has to hit in lieu of this investment.

Other recent investments by Morgan Health include Vera Whole Health, a primary-care company, and Embold Health, a healthcare analytics company. These investments are part of an effort to grow accountable care, Krusing said.

“Our ventures team has a fairly robust pipeline of companies that they review and assess when it comes to potential investments with a eye towards companies that can successfully and strategically help accelerate the growth and adoption of accountable care in the commercial market,” Krusing said. “Centivo very much aligns with that ideal profile.”

Photo: Nuthawut Somsuk, Getty Images