Investors and employers are buying into the idea that HealthBridge Inc., a 2017 startup in Grand Rapids, can help reduce health care costs for their employees and keep them from putting off the care they need because of high deductibles.
The company was founded by COO Amy Chambers and CEO Greg VandenBosch, two veterans of the health care benefits industry. When HealthBridge signs a company on as a customer, it negotiates lower co-pays with health care providers, pays them promptly, then provides interest-free or low-interest loans to the employees as they pay HealthBridge back.
That solves a major problem with the high-deductible employer insurance plans that have come to dominate the market. Often, employees will delay needed care because they can't afford the deductible. One result is that as employees delay care, they are more likely to miss work.
Last year, 45.8 percent of Americans under 65 with employer-sponsored health benefits were enrolled in high-deductible plans, according to the U.S. Centers for Disease Control and Prevention's National Center for Health Statistics, up more than five percentage points from a year earlier and up from 25.3 percent in 2010.
According to a nationwide poll by the Los Angeles Times and the Kaiser Family Foundation released last May, 21 percent of respondents said they had had either an individual plan with a deductible of $3,000 or more or a family plan with a deductible of $5,000 or more. Twenty percent had deductibles of $1,500 to $2,999 for an individual plan or $3,000 to $4,999 for a family plan.
Chambers said that other studies show that nearly two-thirds of those with high-deductible plans skipped or delayed medical care or having a prescription filled because of the cost. "Forty percent of those delaying health care make $100,000 or more a year," she said.
Chambers has more than 25 years of experience as an employee benefits attorney. Before launching HealthBridge in 2017, she was general counsel and executive vice president of product development at Grand Rapids-based RespondWell, a telemedicine startup sold to Zimmer Biomet in 2016. Before that she spent 10 years as associate general counsel and vice president of product development for Grand Rapids-based Priority Health, one of Michigan's largest health-insurance plans.
VandenBosch was an early investor and executive vice president of corporate strategy at RespondWell. He also founded Grand Rapids-based MedDirect Inc., which provided revenue management services to health care organizations. It was sold to Ohio-based MedData Inc. in 2012.
HealthBridge raised a series A round of $2.5 million in venture capital in 2017, led by Wakestream Ventures LLC, a Grand Rapids-based investment arm of the DeVos family, and raised a B round of $8.2 million last April, led by ManchesterStory Group LLC, a VC firm in Des Moines, Iowa. It was joined by Magnetar Capital LLC, a $13 billion hedge fund based in Evanston, Ill.
In addition to providing equity, Magnetar also provides debt to HealthBridge to pay employees' costs up front.
Currently, HealthBridge is raising a round of convertible debt of $10 million that it hopes to close this spring. Wakestream, ManchesterStory and Magnetar have all committed.
Chambers said the funds will be used to ramp up sales and expand its client footprint beyond Michigan. She declined to say how many customers HealthBridge currently has or how many employees are covered.
"It's a good management team with mature industry experts," said Mike DeVries, chief investment officer for Wakestream Ventures. He declined to say how much he has invested.
"There's a real pain point. Employers are struggling with how to ensure that employees seek health care when they need it when they're facing high deductibles. And HealthBridge is way ahead of the curve in addressing it. They are hands down better than the rest of the marketplace," said DeVries. "And what I like is they have their own wealth wrapped up in this. It's a great sign for an investor that the founders are writing checks, too. And they know what it is like to work a long, hard day."
HealthBridge is not an insurance provider. At a monthly cost that ranges from 50 cents to $3 per employee, companies can provide HealthBridge's services alongside existing health plans. HealthBridge works with employers and insurance providers to track claims. When a claim comes through, HealthBridge contacts the health care provider and negotiates the cost to the employee.
According to Chambers, 20 years ago, 95 percent of payments to providers on employer-sponsored plans came directly from insurers. Today, health care providers get only 60 percent of payments from insurance companies. The other 40 percent is supposed to come from patients. On average, hospitals wait 180 days for payments from employees and typically end up settling for 50 percent.
Hospitals across Michigan had combined unpaid medical bills of $419 million in the fiscal year of 2017, the most recent year for which data are available.
HealthBridge's business model calls for negotiating directly with providers to lower the cost to the employee but at a higher rate than the 50 percent the provider can typically expect to recover. HealthBridge then pays the provider immediately and collects over time from employees. The terms are three to six months at zero percent interest, followed by seven percent interest for the remainder of the 24-month repayment period.
"Most people want to pay their bills if they have resources to pay them," said VandenBosch. "Health insurance doesn't ensure your health. We all suffer when people need care and don't get it. It's a ridiculous problem, and we need to solve it."
The company's first client was North Ottawa Community Health System in Grand Haven, which last year beta tested HealthBridge's service among its roughly 500 employees.
Jireh Metal Products Inc., a metal stamping plant in Grandville that employs 91, is one of HealthBridge's most recent additions to its roster of customers.
"I learned about what HealthBridge was doing and said, 'I have to be part of this,'" said Mike Davenport, Jireh's owner, president and CEO. "Deductible costs are just so high. How can you help folks manage through it? We have to make sure people are managing their health care appropriately, because a healthy employee isn't going to miss work down the road. Being with HealthBridge will absolutely pay a dividend."
While based in Grand Rapids, HealthBridge established an IT team in the 20Fathoms business incubator in downtown Traverse City after it opened in July 2018. Last August, the IT team graduated from the incubator and moved into the former Chemical Bank building downtown.
There are 18 employees on the IT team and 46 in all. The executive, marketing and customer service teams work at the Grand Rapids headquarters.
HealthBridge Mention in the Article
Amy O'Meara Chambers, JD
Chief Operating Officer
Chief Executive Officer