Exclusive: a16z leads $20M Turquoise Health funding

Turquoise Health, a price transparency startup for health care, has collected $20 million in Series A funding led by Andreessen Horowitz, Axios has learned.

• Existing investors Bessemer and Box Group participated in the round, with Tiger Global joining as a new investor.

Why it matters: Prices for health care services have historically been kept secret, but new laws mandating rate disclosures unlock new possibilities around what Turquoise envisions as the 'pre-revenue cycle'.

• San Diego's Turquoise aims to be the platform through which payors and patients can know and compare provider and procedure costs upfront, ultimately driving better decision-making, co-founder Chris Severn tells Axios.

Driving the news: The funding will support the roll out of Turquoise's newly launched direct contracting platform, Clear Contracts.

• Payors, providers, care navigators and self-insured employers already pay for Turquoise's data, but then go off the platform — taking that data to guide purchasing decisions and build contracts around market rates.
• Now, Turquoise is creating what Severn describes as a SaaS-based B2B marketplace for purchasers and providers."Clear Contracts keeps people on the platform to negotiate contracts," he says.
• Its data product is licensed via a recurring annual fee, and Clear Contracts will be licensed on usage of the platform.

Catch up quick: Turquoise got its start, and $5 million of seed funding, in 2021 after new federal rules required hospitals to make health care prices public.

• Starting July 1, additional new requirements around non-hospital payor rate disclosures will go into effect.
• "The open secret in the industry: there's really no price of health care," Severn says. Rather, payors and employers strike handshakes with hospitals and providers using non-standardized formulas. "It's a jungle. All the data is siloed"
• Hence, Turquoise began collecting and simplifying that data — and putting it on its website for free — so it could be better understood by patients and others.

Reality check: In December, a Wall Street Journal report unveiled that some of the nation's largest chains had yet to comply.

• The laws "pretty much fell from the sky," says Severn. "We’re in the stage of acceptance, past denial. And now in [a period of] reluctance from payors and providers."

Zoom in: Turquoise has now raised just north of $25 million.

• The startup has 70-plus customers across payors and providers, and Severn says Turquoise is generating "millions" in revenue.
• It's previous a16z-led seed round included several individual investors including ex-Athenahealth founder and current Zus Health founder Jonathan Bush, and Golden State Warriors guard Klay Thompson.

💍 One fun thing: Severn named his startup after Turquoise Street in Pacific Beach, San Diego, where his fiancé lived when they first met. The couple is tying the knot in just over a week.