The founder responsible for the largest digital health IPO in history launched another health tech startup on Thursday.
Livongo Founder Glen Tullman's newest venture is Transcarent, a health tech company aimed at reforming the employer-sponsored benefits space through a combination of navigation, virtual care and bundled providers, packaged in one carefully designed consumer platform.
Livongo went public in 2019 for $355 million. Tullman, who will serve as Transcarent CEO, has also taken AllScripts and Enterprise Systems public.
With the COVID-19 pandemic changing consumer preferences around telehealth, and healthcare costs for employers continuing to rise faster than the nation's gross domestic product, Tullman said the timing is right to disrupt employer-sponsored healthcare space.
"What we're doing is creating a new kind of alignment between you and self-insured employers," Tullman said. "We're creating a new financial model. We're really at risk. We'll work together with you to improve the quality and reduce the cost and make it a great experience for your people."
By making quality ratings and prices for facilities and individual providers easy-to-understand, Transcarent aims to incentivize workers to price shop their healthcare services. The startup also seeks to engage consumers to use their benefits through personalized AI nudges—Tullman said Transcarent pulls data from providers, employers, payers and other sources—and by making nurses, physicians and pharmacists easy to access through a phone call, text or video conference. Employees can use Transcarent to receive a second opinion on a procedure, review and manage their medication, receive virtual physical therapy or for full surgery management.
To build a provider network, the company has merged with BridgeHealth, a startup that said it has more than 160 Centers of Excellence and ambulatory surgery center partners, and more than 300 pre-negotiated surgical bundles. The company serves 1 million members through its self-insured employer customers, although Tullman declined to comment on Transcarent's clients.
"If you interview any large employer, they're going to tell you their biggest concern is healthcare costs," Tullman said. "Healthcare costs almost put GM out of business, the largest automobile company in the world at the time. So that's what we're focused on, and that's why it's so exciting."
Unlike most navigators, Transcarent does not charge employers a subscription fee to use. Instead, employers can sign up for the service, bolt it on to their existing benefits plan and, when employees use Transcarent, the business splits the cost savings with the startup.
In October, the company raised a $40 million Series A round, led by the managing partners of General Catalyst and 7wireVentures. Tullman is also the founder and a managing partner of 7wireVentures. He has also sponsored a $500 million special-purpose acquisition company, or SPAC, a blank check business aimed at taking "health assurance" companies to the public markets.
Along with Tullman, Transcarent's leadership team includes Aetna, Cigna, Optum, Signify Health, Haven, athenahealth and Glassdoor alumni.
The startup's launch follows a trend over the past few years of providers like the Cleveland Clinic partnering with companies like Lowe's in Center of Excellence programs, said Ari Gottlieb, a principal at the A2 Strategy Group. He added that it also follows employer interest in worksite primary clinics and AmazonCare scaling nationwide.
Focusing on the employer-sponsored coverage is a good way to protect customer churn, Gottlieb said, since most workers stay with their companies for longer than the average individual health plan member, which is about a year. He added that its model also represents a low barrier to entry since there's not much risk on the employer's part, and it's an extra benefit companies can use to drive worker loyalty.
"It's a way to cut costs, and also improve the quality life for the employees and make them more productive," he said.
Companies like Accolade have shown that concierge services can save healthcare costs, Gottlieb said. But he wondered how scalable Transcarent's navigator model is given that employee usage of healthcare varies by locale.
"I think there's a general bias in the market around highly affluent, educate people funding and starting businesses to think the employer landscape is like them everywhere," Gottlieb said. "And I don't think it is, across the board. My fundamental question is, 'How does it work in Des Moines?'"
