CoverSure raises $4.8 million to reduce healthcare costs
America’s notoriously complex healthcare system wastes hundreds of millions of dollars on bureaucracy due to poor data and a lack of transparency. So says Rajasekhar Maddireddy, founder of CoverSelf, a health tech start-up announcing today that it has raised nearly $5 million in seed funding for a platform it says will help solve these problems.
Coverself’s solutions are aimed at both healthcare providers, including hospitals, and those who pay their bills, primarily insurance companies. On both sides, the company warns, outdated legacy technologies and opacity lead to administrative delays and increased costs.
“Do-it-yourself software solutions lead to scattered data and the inability to make real-time business decisions,” says Rajasekhar Maddireddy. “Administrative complexity costs billions every year – an open and collaborative platform can significantly reduce repetitive administrative waste.”
In theory, stakeholders in the US healthcare system are expected to communicate via standardized language, using reference codes defined by industry bodies to ensure that claims can progress quickly and unhindered through automated workflows. In practice, however, multiple errors creep into the process at every stage, causing applications to be falsely rejected or delayed. Additionally, with participants using a wide range of often incompatible software solutions from different vendors, it is often impossible to see where a problem has occurred and take action.
“Current claims integrity systems are very complex and the technologies deployed are outdated,” adds Maddireddy. “Significant software innovation is needed to fix the broken system that is currently creating uncontrollable healthcare costs and waste.”
The scale of the problem is staggering. Of the $4.1 trillion spent annually on health care in the United States, administrative expenses account for a quarter of the bill. Improvements in automated claims processing, data accuracy and transparency could therefore generate huge savings for providers and payers, freeing up cash to fund improved healthcare.
CoverSelf believes its technology could deliver these gains. It provides an open platform through which providers and recipients can exchange information much more efficiently and with visibility. The platform can be customized to each user’s needs – allowing integration with existing processes – and should support innovation.
The startup’s goal is a healthcare payment system where no claim is wrongly rejected or returned with a request for further information. “We believe that when everyone has the data, payment and refund guidelines, and updated datasets, they should handle clean claims on the first pass,” says Maddireddy.
With CoverSure still in the pre-revenue stage, it’s a work in progress. But the company insists its product testing and development work suggests it can move the industry towards that goal. In pilots with large Indian healthcare players, their administrative costs were reduced by an average of 18%.
CoverSelf’s next task is to prove that similar savings are achievable in the United States. The company is in advanced talks with at least two big industry players, Maddireddy said, and hopes to announce deals within weeks.
Today’s funding round is expected to help the company accelerate its go-to-market strategy, with the $4.8 million it raised earmarked for building the platform,… scaling up operations and investing in sales, product and technology teams.
The funding round is led by 3one4 Capital and BEENEXT. “CoverSelf’s payment integrity solution is designed to be easy to implement and maintain, two underrated features given the dynamic nature of healthcare,” said Sonal Saldanha, vice president of investments at the first.
At BEENEXT, Managing Partner Dirk Van Quaquebeke adds: “Anyone who has ever worked in the US healthcare system understands its enormous complexity; we believe CoverSelf has assembled a uniquely qualified team to put this aside and improve healthcare outcomes at discounted prices for patients in the United States.