Cedar founder and CEO Florian Otto is disrupting medical billing because he clearly knows what he is up against.
Like many entrepreneurs, Mr. Otto’s personal experience led him to create Cedar, but his was more personal than most. In 2015 his wife (then fiancée) had a medical emergency in New York City. Luckily she was soon cleared, but unbeknownst to both of them, trouble was brewing.
While she swiped her credit card at the hospital and thought that was the end of it, they was mistaken. One month later she received her first invoice, which was a stack of papers in medical terminology, with a call to action of logging into a portal. Weeks later the imaging invoice arrived. This time it was a slip of paper directing her to fill in her credit card information and mail it back. Six months later a debt collector call about a bill she never received.
“Right now we’re in the center of New York,” Mr. Otto said. “I can ride with Uber, eat with my phone, everything is personalized with my Amazon account. My Netflix is on demand anywhere, I can book my table for dining online and pay with PayPal, but this is what is happening in health care. The experience is broken.”
That was the impetus for Cedar, where the goal to touch as many patients and to improve their lives as much as possible. Patients receive personalized digital billing based on their preferences and needs. Mr. Otto aims to serve 50 per cent of Americans in the coming years.
There’s plenty of room for improvement, Mr. Otto learned. In the United States, 25 million people would have a clean credit history if not for medical debt averaging $250. That’s right, only $250. While we all read stories of people bogged down with six- or seven-figure medical debt, 25 million people could lead much better lives if not for $250.
“It’s not an ability to pay problem,” Mr. Otto, who has doctorates in medicine and dentistry, said. “People want to pay, people can pay, but what is the problem? These healthcare systems make it extremely difficult for patients to understand you and pay the bill.”
Now here is they key to Cedar’s approach. Mr. Otto doesn’t see a hospital’s competition as another health care center. It’s Netflix. It’s Amazon. They are available on demand, and provide a personalized approach based on your preferences. They communicate with you differently than with me, and their response is immediate. It’s convenient and transparent.
No one wants a bad experience, Mr. Otto said. Patients certainly don’t, and neither do doctors, yet online reviews are rife with complaints, mostly about billing woes. Doctors don’t want to lose a patient because of a confusing and cumbersome payment experience.
Developments over the past 15 years have made the issue of medical debt more acute, Mr. Otto explained. That is when higher out-of-pocket deductibles became prevalent. Add in high levels of regulation and that made things even harder.
Just like banks, medical provider back office technology is more rabbit ears than Netflix. All systems are on premise and likely have their own unique structure. Each location has multiple such systems, each with its own data model requiring its own integration. Paper abounds at a time when everyone else is getting rid of it fast.
Any wonder why it’s taken so long to disrupt the space?
There’s plenty Cedar can still do to provide even better service, Mr. Otto said. Better denial of coverage messaging from providers, providing helpful messaging like expiring coverage and receivables financing are some they are working on.
“There’s a lot of things we can build on top of to guide the patient through this experience,” Mr. Otto said.
The past 15 months has been good for Cedar, which has seen demand soar as taxed health care providers are more open to revisiting all aspects of their operation. They need to get nimble as fast as possible.
Cedar can help during the pandemic and beyond, Mr. Otto said. Their cloud-based service allows messaging to be immediate changed to reflect changing circumstances. Increased compassionate messaging for people suffering hardship is also available. Touchless check-ins allow patients to avoid common surfaces. And like Amazon, they help guide people to a successful checkout.
“Every patient gets a different invoice, with a different message, through a different channel, at a different time,” Mr. Otto said. “Based on how they click through it that triggers different follow-up messages.
“The modern consumer has choice even more after COVID than before, because they’ll move, they’ll do everything remote, they’ll use telemedicine, the different channels. And the healthcare providers they need to be prepared for that.”