The hypothesis that if more patients were able to understand their medical bills, more people would pay them helped lead a former doctor to raise more than $100 million for his startup company, Cedar.
For Florian Otto, who started Cedar in 2016 with co-founder Arel Lidow, it was his wife’s billing experience following a hospital visit that led him to try and find a better way to help patients pay their medical bills. Otto’s wife received multiple bills from different doctors, had to fax in a payment to one of the doctors, and received a call from a collection agency for a bill she never received.
“The big problem is on the interaction side between the hospital and the patient,” said Otto, a former physician and a former executive with Zocdoc, in a published report. “The problem is not the willingness or ability to pay. Hospitals make it extremely difficult for patients to pay their bill.”
Cedar raised $102 million, with $77 million coming in venture capital investments in a group led by Andreessen Horowitz and $25 million in venture debt invested by JP Morgan.
To help patients understand their medical bills, Cedar offers an explanation for each line item, instead of using billing codes. It also personalizes the billing experience to help providers understand why a patient is not paying his or her bill, and provides analytics and communication opportunities to connect patients and providers.
Cedar has now raised $157 million in venture funding during its three rounds.
Cedar can look at a patient’s bill and assess whether the individual is eligible for Medicaid and walk people through the application process, and is working with patients whose claims are denied by insurance to understand the root cause — such as an expired insurance card — to help them work out those problems.
“There is a huge unmet need to improve the financial experience as the experience for patients is basically still stuck in the 1980s,” Otto said in a report.