$25M to cut health care red tape
PriorAuthNow, a health tech startup focused on streamlining treatment approvals, raised $25 million in fresh funds led by Insight Partners, the company's executives tell Axios exclusively.
Why it matters: Even as telehealth gains steam and virtual care tools proliferate, traditional channels still dominate health care delivery.
- Many aspects of those channels desperately need innovation, and prior authorizations (PAs) are just one example, industry sources tell Axios.
- Each health insurer has different PA policies, but in general, they require providers to get a green light on the medical necessity of a given treatment.
- Providers respond by packaging up all the necessary information about the patient and the procedure and sending it to the insurer.
One (un)fun thing: The vast majority of PAs are still processed manually (think phone calls and fax machines), which delays care.
- Manual processing also raises costs, since providers have to maintain staff to handle it.
- "A lot of the pain providers feel is that every payer has different policies and it’s a very manual process," one entrepreneur tells Axios.
- In response to surveys compiled for a 2021 report by the Medical Group Management Association, 91% of providers said the overall regulatory burden on their practices rose over the past year — and they identified PAs as the worst part.
How it works: The Columbus, Ohio-based company's platform connects to providers' electronic health record and insurers' case management systems.
- A case study performed by the Council for Affordable Quality Healthcare at the Cleveland Clinic found that ~25% of all PAs processed by PriorAuthNow were processed without needing human intervention.
- That said, some PAs require such complex data and patient history that doctors on both sides of the payer-provider fence must discuss it. "That’s the piece that drives providers crazy," says one entrepreneur.
- "PAs are one of those problems that plagues the last frontier of the revenue cycle," PriorAuthNow CEO and co-founder Joe Anstine tells Axios. "It has deep tentacles in the overall health care delivery system."
Details: PriorAuthNow's latest raise, which was supported by Panoramic Ventures and Health 2047, brings its total funding to roughly $57 million.
- As part of the deal, Insight's Jon Rosenbaum is joining PriorAuthNow's board, and Insight's Scott Barclay will become a board observer.
The bottom line: Traditional care delivery would benefit from the innovation fervor (and cash) sweeping today's buzzy digital health sector.
- In addition to PriorAuthNow, other startups using automation to soothe the prior authorization headache include Wash., D.C.-based Altruista, Boston, Mass.-based Cohere Health and Arlington, Virg.-based Surescripts.
- "Prior authorizations might seem niche, but we think of them as a kind of Trojan Horse that could be used to better connect providers and payers," says PriorAuthNow's Anstine.
Erin Brodwin co-authors the Axios Pro Health Tech deals newsletter. Start your free trial at AxiosPro.com.