Heating Up in Healthcare Investing: Cost Transparency Firms Reel In $400M Since 2010

September 18, 2013

healthcare investing trend cost transparency

Originally published on MedCityNews.com.

healthcare investing trend cost transparency

Originally published on MedCityNews.com.

Some of the most prominent healthcare investors including New Atlantic Capital, HLM Venture Partners, Venrock and Cleveland Clinic have plowed some $400 million into price transparency companies since 2010.

A new analysis from research firm CB Insights breaks down the trending “cost transparency” segment in healthcare into four sub-categories:

  • insurance transparency for businesses and employers, which includes companies that help employers and employees to learn about and manage health plan costs.
  • insurance price transparency for consumers, which revolves around products that reduce price complexities for consumers in selecting or managing their health plans.
  • price transparency for the healthcare industry, or companies that work with providers to market patient costs and services or capture patient billing.
  • prescription drug price transparency, including any companies that provide transparency solutions for consumers’ pharmaceutical needs.

A majority of the $400 million that CB insights calculated based on 49 deals since the beginning of 2010 has come in the form of later-stage deals.  Castlight Health alone is responsible for $160 million of that.  Add GoHealth’s $50 million investment from Norwest Equity Partners last year and Change Healthcare’s recent $15 million Series D, and the total is already at $225 million.

More companies came out of the woodwork in 2012, though. Nearly half of the deals last year came at the seed/angel stage, according to CB insights. As those companies have matured, the investment dollars have followed in the form of seed or Series A rounds, which account for two-thirds of the deals so far in 2013.

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Maxwell Health ($2M) and PokitDok ($4M) are examples of that, and there’s a slew of interesting startups that are likely to continue to attract VC interest. eLuminate Health, for one, has some interesting technology that loops consumers, physicians and testing centers into the referral process. Another interesting company, ClearHealthCosts, spun out of an entrepreneurial journalism program in New York with the goal of becoming a Kayak.com for consumer healthcare costs.

[Image credit: Flickr user John Lemiuex]