Tech startup Stellar Health wants to reward doctors for providing better care. See the presentation it used to raise $60 million from General Atlantic and the founders of Oak Street Health.
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Stellar Health raised $60 million from General Atlantic and the cofounders of Oak Street Health.The startup uses data to make care recommendations to doctors and pays them for taking action.The funding round is the latest sign that investors are excited about value-based care.
See more stories on Insider's business page.Stellar Health, a technology startup that helps doctors provide better care and pays them for it, just raised $60 million in a round led by General Atlantic.The raise is the latest sign thatinvestors are betting on companies driving the shift toward value-based care
, or when doctors are paid for the quality of the care they provide. Traditionally, doctors have been paid based on the number of patients they see and the services they order.Point72 Ventures and Primary Venture Partners also invested, along with Mike Pykosz and Geoff Price, the founders of the primary-care clinic chain Oak Street Health. headtopics.com
Three-year-old Stellar Health, which reached profitability earlier this year, has raised $75 million total with the latest funding round, CEO Michael Meng said.Michael Meng, the CEO of Stellar Health.Stellar HealthThe idea behind Stellar Health is simple: Pay primary-care doctors to provide all the services that improve health, and you'll get the healthcare outcomes you want, Meng said.
The startup's software uses data from medical claims, hospital admissions, and labs to analyze patients' risks and suggest actions doctors can take to improve care, like ordering an overdue health screening or referring the patient to a specialist.
When doctors complete the recommended actions, Stellar Health cuts them a check. So far it's paid out $10 million in rewards to the doctors it works with, Meng said.Stellar Health makes money from the health insurers and health systems that are on the hook for the quality and cost of patients' care. They pay to give primary-care doctors the software, and they stand to benefit from higher quality scores and lower costs, Meng said.
Robbert Vorhoff, a managing director at General Atlantic, said that while some other approaches to driving value-based care with technology have had trouble getting doctors to change how they operate, Stellar Health had succeeded in getting doctors to actually use its tools. headtopics.com
According to Stellar Health, 80% of the doctors on its platform are using it weekly.Here's the presentation Stellar Health used to raise the $60 million Series B funding. Some slides have been omitted.Stellar Health uses data to suggest ways that primary-care doctors can improve care and pays them to take action.
Stellar HealthThe startup has formed more than 60 partnerships with insurers and health systems like Highmark Health and Harvard Pilgrim Health Care. It's working with 3,300 doctors managing 400,000 patients, according to updated figures the company provided Insider.
Stellar HealthThe US healthcare system is slowly shifting toward paying providers to keep patients healthy, a concept known as value-based care. Traditionally, doctors and hospitals have been paid based on how many patients they see and the volume of services they deliver.
Stellar HealthStellar Health wants to make it easier for doctors to provide high-quality care. "We actually pay for the activities that generate a lot more value," CEO Michael Meng said.Stellar HealthOther companies like Oak Street Health are transforming how their own doctors get paid. Meng said Stellar Health wanted to use technology to change how doctors outside of those companies practice. headtopics.com
Stellar HealthStellar Health's platform includes an app that fits into a doctor's electronic health record and recommends actions to take based on a patient's medical claims and other data. Stellar Health tracks doctors' performance and rewards them for taking action.
Stellar HealthThe app's recommendations are based on a patient's data from medical claims, hospital admissions, and other sources. Stellar Health makes sure those recommendations are simple and surfaced at the right time, Meng said.Stellar Health
Stellar Health's customers are health insurers and health systems participating in value-based contracts. They stand to benefit from improved scores on quality metrics and lower costs. They pay a flat subscription fee and a percentage based on a performance metric, like cost savings, to provide doctors with Stellar Health's software.
Stellar HealthDoctors earn "Stellar value units" for each recommended action they complete. One value unit is worth $1. At the end of each month, Stellar cuts a check to each doctor based on how many value units they racked up. They generally earn $1,000 to $4,000 in bonus payments, Meng said.
Stellar HealthWith the new funding, Meng said, Stellar will invest in its product and engineering teams so it can expand to new markets.Stellar HealthIn the longer term, Meng wants to position Stellar Health to connect the doctors on its platform with other healthcare services and therapies. "We want to keep them engaged so we can become the gateway or platform to make sure all people have access to all those things," he said.
Stellar HealthStellar Health is led by executives with backgrounds in healthcare and technology. Meng spent 10 years investing in healthcare at the private-equity fund Apax Partners.Stellar HealthStellar Health is growing quickly. Before the pandemic, the company worked with doctors who used its software to care for 20,000 patients. The company expects to reach 500,000 patients by the end of this year.
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