Bringing Transparency to Healthcare Transactions: Menlo Ventures Invests in Rivet
When you rent an apartment, buy a car, pay for education, you know exactly what you are going to pay. Why then, when you go to a doctor or pay for healthcare, do you not know what you will owe? It’s a big unknown: 18% of GDP—a whopping $4 trillion—is spent on healthcare.
That unknown has a crushing impact on American consumers who are increasingly drowning in medical bills and debt. Insurance coverage costs around $20,000 a year for the average family of four. But the burden of upfront payment now lands on consumers, who must pay their deductibles before benefitting from insurance coverage. The (average) annual deductible for that same family of four is now more than $8,000—a 3,200% increase over the past two decades. And who hasn’t felt that feeling of dread as you open a bill from a doctor to find a charge several times higher than what you thought you might owe?
Doctors suffer, too: They don’t know what they will be paid for their services because a single healthcare provider may accept dozens of insurance providers, each with thousands of different billing codes. And, how can they know what to charge patients when they don’t know where each patient is against their deductible. Underbill, and it’s VERY tough for a doctor to collect the remainder from that patient, with a second bill. Overbilling, even by 25 cents, creates a manual process for the back office that requires mailing a paper check to the patient.
Siloed systems create friction: The electronic healthcare record (EHR) vendor + revenue cycle management system (RCM) don’t “speak” to the payers’ internal databases around contract management and patient eligibility. Because our systems of record do not speak to each other, the entire healthcare system suffers under a heavy load of administrative paperwork, delays and inefficiency.
At Menlo, we saw this friction as a huge pain point for both providers and patients, so we spent a long time looking for companies working to fix it. When we met Ted Ferrin, CEO of Rivet, we knew he and his team were onto something special. Today, I’m happy to announce that Menlo Ventures is leading the Series A investment in Rivet.
Rivet built a product that lifts the curtain on the dark art of healthcare pricing, giving healthcare providers the ability to communicate the exact cost of an upcoming procedure to patients. Patients love it because they know the cost upfront and can make informed buying decisions. Providers love it because they have a much higher rate of collection when the patient understands costs in advance.
If it’s possible to create “screaming market fit,” Rivet is the example. The customers we spoke to saw ROI on day one, with Rivet driving new revenue to practices. Ultimately, we believe that Rivet can build on that beachhead in the patient estimate flow to unlock (even more) massive orthogonal opportunities within payments and broader RCM automation. And, over time, Rivet is building a highly valuable system of record around proprietary billing data, which will let it further automate heretofore manual processes.
It all comes down to the team. Ted really understands the healthcare transaction ecosystem and has been thoughtful in building the company on a stable foundation with an amazing culture. His ability to attract top talent is the mark of a great CEO. Other companies have tried to demystify healthcare pricing, but, as one Rivet customer put it, “those entrepreneurs weren’t alumni of the best-run RCM firm in the country” as Andrew Harding, co-founder of Rivet is. Andrew’s healthcare expertise, pair well with Rivet’s world-class engineering team led by Paul Draper, former Chief Architect of Lucid. When you add Ted’s track record build hyper-efficient sales teams, Rivet has the skillset to transform how healthcare transacts.
We are excited to join existing investors Lux Capital and Pelion Venture Partners in locking arms with the Rivet team to build an RCM platform designed for its actual users, doctors, and patients.