It’s estimated that physicians leave $125B on the table annually due to poor billing practices. These losses ultimately make healthcare more expensive for the entire industry and all its participants. A number of companies have emerged to focus on revenue cycle management to track the financial status of a patient visit. Cedar focuses on the patient experience with its patient engagement and financial technology platform that simplifies the entire patient financial journey associated with healthcare visits. Used by healthcare systems, hospitals, and practice groups, the company’s flagship product, Cedar Pay, brings a personalized experience that gives patients a transparent understanding of all the financial ramifications of each and every healthcare interaction and ultimately improves collections for the providers. With the pandemic accelerating adoption of digital health solutions, Cedar quadrupled the size of its business in 2020 alone.
AlleyWatch caught up with CEO and Cofounder Dr. Florian Otto to learn more about how Cedar facilitates the digital shift in healthcare for both patients and providers, the company’s impressive traction since raising its Series C in June, future strategic growth plans, and the latest funding round, which brings its total equity funding raised to $351M. This funding comes at a $3.2B valuation (4x the valuation in June) and also makes Cedar NYC’s newest unicorn.
Who were your investors and how much did you raise?
Cedar, an innovative patient engagement and financial technology platform, raised $200M in Series D financing led by Tiger Global Management. Existing investors Andreessen Horowitz (a16z), Thrive Capital, and Concord Health Partners also participated in the round.
Tell us about the product or service that Cedar offers.
If you look at other companies in consumer industries like retail, commercial banking, and air travel, they typically use one technology platform for enterprise functions and another for customer engagement. Cedar is that consumer-facing technology layer in healthcare, analogous to what electronic health record systems are to clinicians and provider staff.
Our flagship product, Cedar Pay, is a healthcare financial engagement platform used by hospitals, health systems, and medical groups to clarify and simplify the financial experience for patients, improve bill resolution and payment outcomes for providers.
We’re also focused on making the entire patient digital experience feel personal, modern, and empowering – not just the post-visit billing experience. During a single episode of care, consumers are typically required to interact with numerous apps, paper forms, and portals to manage the different aspects of their healthcare; this results in an experience that feels fragmented and disjointed. Cedar is solving this problem by building a platform that supports a broad range of provider-to-consumer engagement use cases that ease administrative burdens, offer actionable price transparency, and recommend effective financial solutions.
What inspired the start of Cedar?
In 2016, I had a terrible billing experience when my wife (then-fiancé) fainted and had to go to the emergency room. She swiped her credit card for the co-payment at the facility but we still found ourselves dealing with a billing nightmare in the months that followed (including indecipherable stacks of paper bills, statements sent to the wrong address, and even a call from a debt collector). It became clear that if this was the financial experience for patients at a premier NYC hospital for people with the means to pay, it must be a pervasive problem in healthcare.
With my cofounder, Arel Lidow, we started Cedar to address this problem and improve the financial engagement experience for all patients. And today, that mission is as critical as ever. With many patients facing confusing new bills for COVID-19 treatment and the US reporting record levels of unemployment over the last year, patients clearly need a better healthcare financial experience. Through that lens, Cedar’s mission couldn’t be more timely: to enable exceptional patient experiences to improve lives, foster engagement, and transform U.S. healthcare.
How is Cedar different?
Unlike our competitors, our leadership team has been building great consumer experiences and financial technology for more than a decade. We’ve leveraged this expertise to develop a superior product that incorporates best-in-class data science and UX design practices enhanced by a deep empathy for patients.
We know that patients are more than a propensity to a pay score or user persona, which is why we combine technology and human creativity to personalize the patient experience across the entire healthcare journey. Our data science and design teams work symbiotically to build hypotheses that improve our product, design thoughtful features and deliver personalized experiences that we continuously improve through experimentation.
What market does Cedar target and how big is it?
Cedar’s addressable market is large and growing, driven by the increased prevalence of high-deductible insurance plans and growth in patient-cost sharing. According to CMS National Expenditure data, total patient out-of-pocket spending is up more than 50%, and our recent Healthcare Consumer Experience Survey found that 86% of U.S. adults reported concerns about paying their healthcare costs in the next year.
At the same time, meeting and exceeding consumer preferences around digital experiences is no longer an option for healthcare providers. Since the onset of the pandemic, 40% more patients switch providers over a poor digital experience in the last year and almost 50% report that they wish their digital health experience was more intuitive, similar to Netflix, Amazon, or Uber. As COVID-19 has accelerated the digital shift in healthcare beyond virtual care, demand for Cedar’s product has increased exponentially.
What’s your business model?
The Cedar business model is based on aligned incentives. In short: we get paid when our client partners see results. Our performance-based approach helps ensure that we continue to deliver the most innovative solutions to providers and an outstanding experience to patients. In addition, Cedar does not lock providers into multi-year agreements, and our historically low churn rate is a testament to the enduring relationships we develop and maintain with our clients.
The Cedar business model is based on aligned incentives. In short: we get paid when our client partners see results. Our performance-based approach helps ensure that we continue to deliver the most innovative solutions to providers and an outstanding experience to patients. In addition, Cedar does not lock providers into multi-year agreements, and our historically low churn rate is a testament to the enduring relationships we develop and maintain with our clients.
How has COVID-19 impacted the business?
Our mission has always been to enable exceptional patient experiences and transform healthcare, which is becoming more and more relevant in today’s market. Last spring, the COVID-19 pandemic quickly brought the need for better technology in our healthcare system into sharp focus and healthcare providers — out of sheer necessity — found themselves having to move quickly to scale new technology. Since then, COVID-19 has heightened the need to minimize physical interaction and facilitate contactless engagement, massively accelerating innovation roadmaps and the need to develop new ways of digitizing patient touchpoints. Over the next few years, we believe that this by-product of COVID-19 will actually have a meaningful positive impact on our business.
What was the funding process like?
Across the healthcare ecosystem we’ve seen digital tool adoption accelerate rapidly during the pandemic. This funding round came together due to the fact that solutions for a better financial healthcare experience are needed now more than ever before and we’re seeing healthcare providers prioritize digital transformation.
Across the healthcare ecosystem we’ve seen digital tool adoption accelerate rapidly during the pandemic. This funding round came together due to the fact that solutions for a better financial healthcare experience are needed now more than ever before and we’re seeing healthcare providers prioritize digital transformation.
What are the biggest challenges that you faced while raising capital?
As a late-stage startup, it was imperative to find the right partner to help us effectively scale to take over the market and build our credibility while continuing to deliver better outcomes for patients and providers.
What factors about your business led your investors to write the check?
Our investors see us as a leader in the patient financial engagement space, and understand the strong value proposition that we offer to both patients and healthcare providers, especially as we continue to scale our product.
What are the milestones you plan to achieve in the next six months?
We have raised this significant Series D so that we can continue investing heavily in innovative technology to build out our full product roadmap, beyond our core financial engagement product, making the healthcare experience more personalized, transparent, and convenient. We are continuing our work with our development partners this year to expand our end-to-end touchpoints with patients in order to be the seamless thread that connects their administrative and financial experience before, during, and after care. Specifically, this funding will enable us to build out more patient engagement use cases, including additional pre-visit functionality and tools for both patients and providers that unlock more pathways to affordability and actionable price transparency — overall, delivering a better experience and outcomes for both patients and providers.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Stay passionate and solution-oriented to help others understand and continue to be excited about the need for your company.
Where do you see the company going now over the near term?
We aim to ramp up our recruiting efforts in order to scale the team in areas like engineering, product, implementations, and partnerships, and we will continue investing in technology that personalizes the patient experience based on the unique needs of each consumer.
Against the backdrop of COVID-19, there is also a greater need to scale in the current climate, not only accelerate speed-to-market to meet and exceed demand, but also make those offerings accessible to as many providers – and subsequently patients – as possible.
What’s your favorite outdoor dining restaurant in NYC
I’m still really enjoying Hudson Clearwater in the West Village, which is very close to our office on Morton Street.
