Blues parent company invests in self-insured employer benefits administration startup

Health Care Service Corporation announced on Tuesday a partnership with a health tech startup that aims to combine third-party administration, navigation, patient advocacy and analytics services for the 17 million members across its network.

As part of the deal, HCSC, a not-for-profit that operates Blue Cross and Blue Shield plans in Illinois, Texas, Montana, Oklahoma and New Mexico, will also make an undisclosed investment in Collective Health. The investment is subject to regulatory approval. Collective Health has so far raised $439 million in funding, according to Crunchbase.

HSCS will begin its relationship with Collective Health in 2022, with the first customers on the platform being self-funded employers in Illinois and Texas. In addition to scaling across the insurer’s business, Collective Health will join HCSC in recruiting new employer customers to enter the payer’s network, said James Parr, senior vice president of sales at Collective Health.

“We’re going to be very thoughtful about how we go after and approach the market together,” Parr said.

Founded in 2014, Collective Health represents 25,000 members across its 60 self-insured employer customers, from industries ranging from tech to agriculture. The San Francisco-based startup operates under a typical, fee-for-service payment model, where businesses pay the company a percentage for all of the claims it manages. In addition to third-party administration, Collective aims to engage users to use their benefits through careful app design and AI-assisted digital nudges. Its backend analytics platform aggregates data on employee health usage for businesses, which it says helps companies more easily administer, pay, plan for, and, ultimately, cut healthcare costs.

“A big part of our value proposition that we bring to the table that employers need is the data insights to understand what’s going on,” Parr said.

With the COVID-19 pandemic changing consumer and provider expectations around care delivery, Parr said the time is right to disrupt the employer-sponsored healthcare space. The startup’s business customers can choose from the more than 90 tech and healthcare professionals it has partnered with—including primary care provider One Medical and chronic care management platform Livongo—and offer their services to employees.

The partnership represents just one recent venture aimed at disrupting the employer-sponsored healthcare space.

On Tuesday, the Cleveland Clinic announced it would be expanding its Center of Excellence program with Eli Lily and Company employees to include cardiac surgery. Last week, AmazonCare announced it would scaling nationwide, and Livongo’s founder announced the launch of a new startup aimed at streamlining employer-sponsored healthcare.

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