This Startup Raised $40 Million To Build A ‘Mini-Kaiser Permanente’ And Lower Employee Healthcare Costs
Andy Ellner and Jeff Greenberg first met while working at Brigham and Women’s Hospital in Boston. While the two doctors loved practicing primary care, they realized there was something deeply flawed about a model that required patients to take half a day off of work for an appointment once or twice a year, when what they really needed was continuous engagement in order to change their behaviors. Plus, if you add a specialist to the mix, it could take weeks or even months to navigate referrals and get an appointment.
“Traditional primary care in the way that it’s evolved in the U.S. as being siloed off, it doesn’t make sense anymore,” says Ellner, who also started the Harvard Medical School Center for Primary Care. “A lot of the value opportunities were breaking down the boundaries between primary care, specialty care, behavioral health, urgent care, and offering a continuous technology-enabled service.”
To tackle these issues, the duo started virtual primary care startup Firefly Health as a side project in 2016, later bringing on healthtech investor and entrepreneur Fay Rotenberg as president in 2019 prior to launching to customers. Also joining that year was Firefly’s executive chairman, digital health rabble-rouser Jonathan Bush (who’s also Rotenberg’s husband). Bush had previously cofounded electronic health record and billing software company Athenahealth.
The Watertown, Massachusetts-based company began selling its solution to health insurers to help better manage certain patients on a per member per month basis, and started adding offerings like behavioral health care and expanding virtual access to specialists. With $40 million in Series B funding led by Andreessen Horowitz announced Wednesday, Firefly is now going after the employer-sponsored market.
“Our mission is to provide half-priced health care that’s twice as good,” says Rotenberg, who is now Firefly’s CEO. This new offering will be a full health plan benefit along the lines of Oakland, California-based vertically integrated health insurer and services provider Kaiser Permanente. The idea is to get fully-insured small business owners, who are being crushed by rising employee healthcare costs, to switch to a self-insured pooled plan administered by Firefly with the promise of a reduction in their overall healthcare costs.
With its thousands of initial customers, who are mostly in Massachusetts, Firefly has already been able to demonstrate a 52% reduction in emergency room admissions, which is where the highest cost care takes place. The company also increases engagement with patients , who interact with their Firefly clinical team more than 41 times a year. More interaction means better managed conditions, which translates into lower costs. Firefly saves an average of 30% on employee healthcare costs by moving patients to lower cost settings and reducing unnecessary referrals and specialist costs.
“This notion of a mini-Kaiser is something that’s been really hard to replicate in the last several decades in the history of healthcare, but that’s now possible,” says Andreessen Horowitz general partner Julie Yoo, who is also joining Firefly’s board. “It’s in large part due to the role that technology plays to essentially create a cost structure that is competitive around that model.” Existing investors Oak HC/FT and F-Prime Capital also participated in the round. Firefly has raised $57 million to date and was valued at $190 million following the latest funding round.
Firefly employs primary care doctors, nurse practitioners and behavioral health specialists who see patients virtually. The company then contracts directly with physical facilities, including urgent care centers or specialty groups like Dana Farber Cancer Center and Joslin Diabetes Center, to provide both physical care and virtual consultations. Given that most health insurance contracts are dependent on patient volume, why would a top-tier facility contract with a tiny startup that doesn’t have a ton of patients? Two words: Fast payment.
Firefly has an in-house customer relationship management technology called Lucian, which manages everything from clinical care coordination and task tracking to administrative billing functions. This means partner providers get paid in near real-time for seeing Firefly clients instead of the backlog of weeks or months for reimbursement from health insurers. It also allows the partner institutions to expand their geographic footprint through virtual consultations with Firefly members.
Firefly’s first full benefit customers will go live at the end of the third quarter, with the majority of contracts starting at the beginning of 2022, says Rotenberg. The company’s current geographic footprint includes Massachusetts, Maine, New York and New Jersey, and will expand into Connecticut, Ohio, Florida, Texas and North Carolina over the course of the year. “This funding is about building out and scaling and launching that full benefit,” says Rotenberg, who expects Firefly’s membership to hit as many as 30,000 members by the middle of next year.
Bush says there’s tremendous potential to tap into the “giant pocket of people who are massively overpaying” for their healthcare, calling rising health insurance premiums “the biggest and most manageable existential threat to the Republic.” With this venture, he sees an opportunity to make a difference. “I’ve been looking for places to put money and time that are most likely to practically and tactically move that number,” Bush adds. “Firefly represents to me the single best shot at that.”
This piece was written by Katie Jennings on Forbes.