A Westminster health technology company is raising a $2.3 million convertible note as it works to give midsize and large companies more control over their health care plans.
Switchbridge has already raised around $750,000 in funding commitments since the round started in May. The convertible note, a form of short-term debt that converts to equity, will be used to bring on nine full-time staff members, mostly by hiring current independent contractors. This marks the first funding round for the company, which has two full-time employees. CEO Aaron Davis hopes to capitalize on the strong appetite among businesses for ways to cut down on health care costs by boosting employee health.
SwitchBridge was founded in 2016 and has already reached around $2 million in annual revenue and has about 100 customers, Davis said.
Davis created the program that later developed into Switchbridge to make his previous job of helping companies enroll in different health care planseasier. After several years, he realized that the data analytics platform could be a standalone product, instead just a tool for his own work. Switchbridge gives companies access to employee health care data to make it easier to understand the insurance their staff needs and comb through the thousands of wellness applications and other products that try to promote employee health.
If a company is paying for a lot of claims around diabetes, for example, SwitchBridge can help them work with a startup offering a diabetes care app. By using insurance data, Switchbridge gives doctors or third-party applications a more accurate view of patient behavior by showing when they've last gone to a doctor's appointment or if they are actually refilling prescriptions, making treatments more effective.
“When you go out to get prescription drugs, the fact that you refill it or not doesn't necessarily get back to the doctor,” Davis said.
SwitchBridge also offers tools for patients to better manage health care. Through the Wellth platform, customers can directly access their medical histories to see when they last had a physical or what vaccines are on their patient record. Businesses own the information through SwitchBridge but they don't see individual employee data, only information on larger trends.
Traditionally patient data is owned by the insurance company, requiring a constant back and forth between insurance providers and businesses to determine what plan works best.
Mid-sized and large businesses often switch health insurance plans every few years to try to get a cheaper option, making it easy for information to be lost between different companies. Even when a company has a single health care provider, it is often hard for doctors to get a complete picture of a patient's health without a central medical record service.
The ballooning cost of health care has led to a strong demand for third-party health care tech companies like SwitchBridge that can lower a company's health care cost, Davis said. Many businesses have found that trying to lower costs by negotiating with insurance companies is futile, Davis said, so they try to reduce the number of insurance claims by improving employee health.
Several other Maryland startups have also started to raise money with a similar business model. The medtech accelerator 1501 Health in Canton focuses entirely on medical technology, with one cohort company Live Chair Health raising $3.5 million in venture capital for a product that gets people more engaged with health insurance.
