Scoop: $30M to become "the OS of every health system"
Flume Health, a New York-based health plan builder for organizations, raised $30 million in Series A funding led by Optum Ventures, bringing its valuation to roughly $100 million, the company's CEO tells Axios exclusively.
Why it matters: Employers remain digital health's prime mover, and newer entrants like New York-based Flume help companies build health plans catered to their members.
Details: New backer Cigna Ventures joined the funding round alongside existing investors Route 66 Ventures, Accomplice, Founder Collective, Primary Venture Partners, Crosslink Capital and ERA’s Remarkable Ventures Fund. This fundraise brings Flume’s total funding to $40 million.
How it works: What Flume offers organizations is essentially a set of digital Lincoln Logs to build a health plan based on members' needs and preferences.
- "Everything from what’s covered in the benefit design to what language their providers and customer associates speak can be built around what a specific community needs," Flume CEO and founder Cedric Kovacs-Johnson tells Axios.
- Current clients include Firefly Health, maker of an employer-facing health plan centered on virtual-first primary care, and Hue Health, a value-based hybrid primary care provider.
Context: After watching his sister with epilepsy struggle to get the surgery she needed, Kovacs-Johnson came to see health plan administration as the crux of many of the industry's problems.
- "You can have the plushiest, nicest virtual or in-person clinic, but if your insurance isn’t on board, you’re stuck," he says.
Yes, but: Companies like Flume promise innovative alternatives to existing health plan third party administrators (TPAs), but they face hurdles including scalability, competition from incumbents and long sales cycles, outside experts tell Erin.
- Flume will likely "find significant receptivity in the TPA space, even potentially with established plans looking for a more modern core admin platform," says Ari Gottlieb, a health care consultant and the principal of A2 Strategies.
- Gottlieb adds that Flume is making it easy for others to get into the space, but he cautions: "They need to prove their solution works at scale and can administer all the nuances that complicated, established health plans must."
What's next: Flume plans to put the majority of the funds towards product development and engineering, as well as onboarding health plans like Firefly, startups they refer to internally as "challenger health plans."
- "If we’re successful, we want to be the operating system (OS) of every health system," says Kovacs-Johnson.
The bottom line: As digital health booms, players are tackling health care's core issues from different angles, whether as virtual care providers or as infrastructure builders.