There’s been a growing movement towards outcome-based healthcare payments as value-based care moves to the forefront of the discussion on how to contain ballooning healthcare costs. However, implementing true value-based healthcare is a challenge. In order for care teams to be incentivized to understand the full extent of a patient’s condition to provide comprehensive care plans, they need to track various records across disparate sources, introducing a logistical hurdle in terms of workflow. Stellar Health is a point-of-care platform that provides practitioners with an actionable checklist of recommended actions to improve patient outcomes and compliance based on clinical and behavioral data, broken into simple steps. The platform also includes an analytics suite and structured incentive payment program, both of which are designed to meet the needs of payors, providers, and healthcare systems by ensuring that providers are providing optimal care and being compensated for such while payors can rest assured that costs are contained and patient outcomes are optimized. Stellar currently has over 60+ collaborations, covering 300K patients across 20 states.
AlleyWatch caught up with Stellar Health Cofounder and CEO Michael Meng to learn more about the future of value-based care, the company’s strategic plans, latest round of funding, which brings the total funding raised to $75.1M+, and much, much more.
Who were your investors and how much did you raise?
General Atlantic, Point72 Ventures and Primary Venture Partners helped us raise over $60M for our Series B round of funding.
Tell us about the product or service that Stellar Health offers.
Stellar Health partners with both payors and providers to develop a tailored incentive program to reward the completion of value-based care actions. The Stellar Application is a web-based, point-of-care tool, that delivers a simple checklist of recommended clinical actions to practices based on each patient’s medical history. The app’s recommendations are based on a patient’s data from medical claims, hospital admissions, and other sources. The Stellar App features a user-friendly interface to display the information to providers at the point of care and offers step-by-step guidance at the right time while treating the patient. Providers are rewarded with an incentive structure that promotes the completion of granular actions.
What inspired the start of Stellar Health?
At Stellar Health, we strongly believe that value-based care is the only way to make healthcare costs and outcomes sustainable for all Americans going forward. Throughout years of healthcare experience, we saw that one of the biggest obstacles in the adoption of value-based care is that the actual doers of the work, the doctors and staff on the front lines, were not incentivized nor rewarded for their value-based care work in an easy-to-understand, tangible way. When we pinpointed that, and fixed it with technology, great outcomes began to happen.
How is Stellar Health different?
Other companies are creating next-generation brick and mortar primary care centers, with providers and care teams focused on delivering value-based care. While these companies have been successful in generating value, they require full vertically integrated provider groups and physical space. Stellar Health is leveraging technology to scale, to support doctor and staff adoption of value-based care by fitting into their existing workflow. We care a lot more about behavior change, engagement with our app, and usage or actions taken which is very different from most other point-of-care solutions out there.
What market does Stellar Health target and how big is it?
Stellar targets the primary care value-based care market which is easy a $200 billion market within the overall Healthcare spend of almost $4 trillion.
What’s your business model?
Stellar Health activates primary care in value-based care in a way that existing solutions do not. Stellar’s business model combines technology, behavioral economics, and monthly payments for value-based actions in an innovative solution not offered in the market by anyone else. This is achieved through breaking down value-based care outcomes into discrete actionable steps, and incentivizing providers and office staff to complete them and close care gaps with ‘Stellar Value Units’ (“SVUs”). SVUs (purposely framed similarly to the relative value unit ‘RVU’), are translated into real dollar amounts that are paid out to providers and their staff in near real-time to train behavior and drive trust in Stellar’s product and the relationship with the payor client.
What are your post-COVID office plans??
We are in a hybrid operating model.
What was the funding process like?
We ran a pretty tight process approaching 30 – 40 of the most well-known VCs in healthcare. Many of them had been following us for a while and so the conversation naturally led into funding for Series B. We had several interested parties and ultimately were fortunate to have more than a handful of term sheets show up
What are the biggest challenges that you faced while raising capital?
I think one of the biggest challenges is keeping your eye on the ball of operating and leading the company while managing a separate job that is fundraising. People are right when they say that fundraising is like holding a whole other job at the same time as running the business.
What factors about your business led your investors to write the check?
Strong product-market fit, very clear market demand. Extraordinary volume (patient lives managed) growth and therefore revenue growth. A clear scalable business with strong sustainable unit economics. And I’d like to think a pretty strong team and leadership.
Strong product-market fit, very clear market demand. Extraordinary volume (patient lives managed) growth and therefore revenue growth. A clear scalable business with strong sustainable unit economics. And I’d like to think a pretty strong team and leadership.
What are the milestones you plan to achieve in the next six months?
Breaking over 500,000 patient lives managed and helped on our platform. Really making some further improvements and strides on the product. Scaling the business and team by double in this 6-month time period.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Now is as great a time as ever to be raising capital, it is quite available so if you’re thinking about going out to raise, you should do so. I also think the New York ecosystem is really maturing, and so story and talent here are about as great as it has ever been.
Where do you see the company going now over the near term?
Continue scaling and delivering value. We plan to double the team in size and continue to look for great talent in every function, whether it is Engineering, Product, Ops, Sales, HR, etc. We need to maintain the high level of service and quality results that we have always delivered for all of our stakeholders; customers, providers, users, and employees.
What’s your favorite outdoor dining restaurant in NYC?
I really like Hillstone in NYC, kind of a funny pick potentially, but have had a lot of fun and good food there.
