KENTWOOD — A Grand Rapids-area health care fintech firm plans to use a recent capital raise to support growth into new markets around the country.
Kentwood-based HealthBridge Financial Inc. this past spring closed on the first $14.1 million of a $22 million capital raise, according to a filing with federal securities regulators. HealthBridge has since secured additional investments to complete the capital round, said CEO Greg VandenBosch.
Backed with the additional capital, HealthBridge intends to move beyond West Michigan and into other regions in the state and the U.S. such as New England and Oregon, VandenBosch said.
“One of the big objectives we had in 2021 was to start to do business outside of our geographic region. The investors really want to see that,” he said.
Venture capital firm 4490 Ventures, which invests in technology companies and has offices in Madison, Wis. and Chicago, was the lead investor in the equity offering.
HealthBridge works directly with companies to provide employees an option to pay off the out-of-pocket portion of a medical bill. HealthBridge pays the care provider a percentage of what a person owes, and then works directly with the patient on a payment plan, enabling them to pay the amount over time.
Care providers get immediate payment without having to put time and effort into collecting from people with high-deductible coverage or who owe a copay, while employees have an option to pay off their medical debt over time and possibly without interest. Employers can offer HealthBridge as an employee benefit in concert with high-deductible coverage.
The success of the capital round demonstrates the need for the kind of service that HealthBridge provides, VandenBosch said.
Market needs solutions
The move by many employers over the years to lower-cost, high-deductible health plans has created a collection issue for doctors and hospitals, and places strain on individuals and families who struggle to pay medical bills. That has provided the market opportunity for companies like HealthBridge and its investors.
“We’re in a space that needs a lot of investments. We’re in a space where the market is telling us there needs to be solutions, and we think we’re the group to deliver them,” VandenBosch said.
An annual survey by the San Francisco-based Kaiser Family Foundation shows that an employer-sponsored family health plan cost $21,342 in 2020, more than a quarter of which is now paid by the employee. More than eight of 10 people have a deductible built into their coverage.
Since 2009, the percentage of covered workers with an annual deductible of $2,000 or more for plans covering a single person increased from 7 percent to 26 percent in 2020 across all employer sizes, according to the Kaiser Family Foundation’s 2020 Employer Health Benefits Survey. Among small employers, the percentage of workers enrolled in a one-person plan with a $2,000 or more deductible increased from 16 percent in 2009 to 42 percent in 2020.
In 2020, the average deductible built into a high-deductible health plan nationally was $4,552 for family coverage and $2,303 for an individual plan, according to the Kaiser Family Foundation.
‘Peace of mind’
Founded in 2016 by VandenBosch and partners, HealthBridge conducted a 2019 pilot with several hospitals to validate the platform before moving fully into the market in 2020. The company presently works with more than 3,000 hospitals and doctors, VandenBosch said.
Bronson Healthcare in Kalamazoo is among the latest health systems to sign with HealthBridge. Working with HealthBridge follows Bronson’s goal of “trying to make access to health care easier for our patients and our communities,” said Ryan Horn, the health system’s vice president of revenue cycle and payer contracting. Bronson signed an exclusive three-year contract within its market with HealthBridge.
“We saw this relationship with HealthBridge as a way to accomplish that mostly because it gives those families and households that are maybe income-constrained another option on how to pay for health care,” Horn said. “A big barrier to access is just apprehension to seek services when patients need it because of the cost related to it. To us, that was really attractive to kind of give those families peace of mind.”
The pandemic clearly slowed HealthBridge’s progress for much of 2020 as “not a lot of people wanted to make changes to anything during COVID,” VandenBosch said. That began changing toward the end of the year as prospects “we had been talking to for some time started to make decisions,” he said.
“As we wrapped up the fourth quarter, we saw changes in the way people were thinking about innovation and investment and how they’re going to address some of the challenges our industry is facing around access and affordability,” VandenBosch said. “The last thing that both providers and payers want is to have people skip care when they ought to get care. That’s really what we’re helping overcome.”
HealthBridge previously raised $8.2 million in 2019 and initially planned to pursue a new capital round in early 2020. The onset of the COVID-19 pandemic forced the company to put the capital raise on hold until late in the year, VandenBosch said.
In the interim, the company’s existing investors “stepped up big time” to support the company during the pandemic, he said.
VandenBosch believes the pandemic actually “shined a spotlight on the value proposition we’re delivering to the marketplace: Making sure people get the right care at the right time and making sure that providers are being paid what they deserve and bringing benefit back to the health care benefit,” he said.
The pandemic “slowed us down,” VandenBosch said, “but it brought awareness for our mission.”