Bright Health, the insurtech startup we talked about here, is based in Minneapolis and offers affordable health insurance policies to individuals and families and is licensed for the Medicare Advantage healthcare plans (special health insurance for the over 65s) in Alabama, Arizona, Colorado, New York City, Ohio and Tennessee. It has just made a round of investment from the American venture capital industry of 200 million dollars, following another 160 million collected in 2017 and 80 million in 2016. The latest funding of 200 million, brings the startup’s rating to $950 million (almost a unicorn), according to Techcrunch, twice as much as the $400 million rating for the previous $160 million investment round.
It is one of the most financed insurtech ever with an extraordinary growth. So, why are venture capitalists so fond of this company? Below are a handful of good reasons.
First of all, the company was founded by three no longer very young gentlemen with decades of senior management experience in insurance: Bob Sheehy, former CEO of UnitedHealthcare; Kyle Rolfing, former CEO of Definity Health (acquired by UnitedHealthcare); and Tom Valdivia, another former executive of Definity Health. In terms of expertise, market knowledge and relationships, they are very sound.
Technology: Bright Health is data-driven, i.e. its mission is to improve people’s customer experience with respect to the entire healthcare experience, leveraging data and digital as a whole. The funds raised will be used to strengthen the company’s technology platform, focused on the consumer. Craig Sherman, Managing Director of Meritech Capital Partners, one of the investment funds, said: “Meritech is looking for investment opportunities in fast-growing industry leaders whose technology potential can massively enhance the customer experience. Not only has Bright Health shown this to be possible with its above-average renewal rates, but the data infrastructure it is building offers the opportunity to improve health services for millions of hard working Americans and transform health insurance and care, as it has been to date”.
Business model: it’s not about replacing brokers, on the contrary it’s about allying with them. Bright Health encourages customers to leverage its brokers to better understand their health insurance choices; on the other hand, it offers its brokers digital tools to better understand their customers’ needs. It builds its insurance proposal by relating to, allying with local health facilities: its Care Partner Health Plan Model is the exclusive partnership with a health system for a specific geographical area so as to offer better and integrated care to remove the long-standing conflict between payers and suppliers, i.e. companies and health services. This relationship allows for the coordination of services and administration to optimize the consumer and patient experience.
Growth: company’s ongoing overperformance, high renewal rates in existing markets, and a significant pipeline of partners, is what Bright Health reports in a press release. Founder and CEO Bob Sheehy says: “Bright Health is moving fast towards its goal of breaking down the old model of health care that puts insurers at odds with health care providers. Our expansion will triple our geographical presence in 2019. The current high renewal rate shows that consumers are ready for this new health experience, especially if the price is competitive. We are proud of welcoming these long-term investors to the Bright Health community and look forward to the company’s future. We’re just getting started”.
Development plans: In 2019, the company will triple its presence by entering 9 new markets including the metropolitan areas of Ohio, Tennessee and New York. “We are going to develop our roadmap, and have been approached by more than 40 health systems across the country,” Sheehy said to MedCityNews. “It is a matter of finding the right synergy between a service delivery system adapted to a market and our position in the regulatory process. So far, there has been an extraordinary growth outlook and a huge desire on the part of healthcare providers to get closer to the consumer through Bright”. The funding raised will be used primarily to support Bright Health’s expansion from 2020 onwards, according to a company press release.
Another investor, Andrew Goldfarb from Declaration Partners, said: “Bright Health’s diversified model solves long-standing problems in the healthcare sector and, foremost, provides high-quality, integrated and affordable care to its growing number of customers. We are keen on supporting Bright Health in this next phase of the its growth.”
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