Digital health startup Yuvo Health has raised $7.3 million in seed funding, the company announced Tuesday.
Yuvo Health, founded last January, provides administrative software that federally qualified health centers can use to transition from fee-for-service to value-based payments. A lack of scale, regulatory burdens and limited resources make it hard for these safety net providers to participate in shared risk programs, limiting care coordination services and revenue opportunities for community health centers, CEO Cesar Herrera said.
The startup does not charge the clinics to use its technology. Instead, Yuvo Health takes a share of any savings achieved through its services. The company's founders all identify as Black, Indigenous, people of color, which is critical for gaining trust with the organizations and patients Yuvo Health aims to serve, Herrera said. The executive identifies as Asian American and spent part of his childhood uninsured, he said.
"We're deeply personally connected and aligned to the mission of our FQHC partners, and that's something that our lived experience enables us to do," Herrera said. "Being seen as only an organization that is in it to make a quick buck off the backs of FQHC partners—that is certainly not our goal."
Yuvo Health plans to apply its investments to expanding its initial program in the New York market, develop its technology platform and increase its partnerships with community health centers and health insurance companies. Herrera declined to divulge how many centers and insurers currently partner with Yuvo Health.
Investment is growing in digital health startups such as Yuvo Health and Main Street Health that help physicians navigate the transition from fee-for-service to value-based reimbursement. Yuvo Health differentiates itself by focusing on the Medicaid population, Herrera said.
While startups such as Cityblock Health, Belong Health and Brave Health recently have attracted financing, Medicare-oriented companies have been more popular with investors than companies targeting Medicaid business. So much money has gone toward primary care and insurtech startups eyeing Medicare patients that some analysts believe that market may be ready to burst.
Medicaid represents the "final frontier" for driving cost reduction and quality improvment, Herrera said. And enrollment is at an all-time high, so states are looking for ways to contain costs, he said.
"For the vast majority of states, Medicaid spending is the number one cost item," Herrera said. Everyone is really looking closely to figure out how best to manage it, people are seeing that there is opportunity."
AlleyCorp led the funding round, with participation from AV8 Ventures, New York Ventures, Laconia Capital and Brooklyn Bridge Ventures, as well as angel investors such as Dr. Melynda Barnes, the chief medical officer of health technology company Ro.