Serif Health launched in November 2021 with the goal of improving healthcare price transparency. Productizing that concept and identifying our target customer segment took a lot of work this spring. Here’s how we landed a $2.5 million dollar seed round and found our niche - to ease the often painful provider/payer contract process - midway through YC. 

Starting off, we identified most frustrating challenges in U.S. healthcare is not knowing how much a procedure will cost ahead of time. About 50% of Americans delayed or skipped care last year because of concerns about potential cost¹. We both personally experienced exploding healthcare premiums and deductibles, cost uncertainty, and surprise medical bills while trying to find our own healthcare options as entrepreneurs. We saw that recent laws made healthcare pricing data publicly available for the first time which created a unique opportunity to build new healthcare tools that were never before possible.

So, we took a very pain-point centric approach to start, talking with potential users and customers - from patients to doctors and healthcare executives - and performing dozens of user interviews. We quickly mocked up and user-tested price calculators, pricing comparison reports, SEO-able hospital price transparency landing pages, and other product concepts. Our core business thesis was to scale and sell price transparency compliance tools for hospitals atop price transparency disclosure files.

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YC Winter ’22 and Healthcare Price Intelligence

Our company was admitted to the Winter ’22 batch of Y Combinator. Our goal for the batch was to validate our assumptions and hypotheses around a compliance market niche and start to grow sales. However, as we pitched the product and discussed the business model with healthcare consumers and industry professionals, we came to realize that consumer-facing price discovery tools do not effectively move the needle in terms of market impact. We learned from several hospitals that the typical patient-facing hospital price transparency page only receives a few dozen views per month, that patients typically lack the knowledge to effectively search pricing data organized by clinical codes and terminology, and that the vast majority of patient care selection is influenced by a provider (typically directly, via referral) or the patient’s insurance company (indirectly, via network status, prior authorization and coverage denials). Patients rarely ignore their care provider, and providers are often unaware of the costs to their patients when making referrals. Worst of all, most hospitals already had a compliance solution they believed to be 'good enough'.

Pilot CEO Waseem Daher once advised me: 'build painkillers, not vitamins'. After a month of hustle and hard work, we confirmed that 'better' compliance tools were effectively a vitamin. So, we went back into user research mode with clinicians and clinical operations teams and explored areas where transparent pricing data had the potential to impact behaviors. Throughout this exploration, one particular pain point was repeated over and over by the provider teams - more than any individual patient case, they struggled with the overall provider / payer contracting relationship (i.e., establishing the rates insurance companies pay hospitals or other healthcare providers). Commercial and government payer contracts are essential for operating at reasonable scale, but most providers we talked to felt lost and frustrated by a process that dictates the majority of their top line revenues.

Universally, providers believed that payer contracting was an opaque process full of burdensome documentation and a high degree of information asymmetry, resulting in a large leverage imbalance during negotiations. Many providers with existing payer contracts were unable to calculate their expected reimbursements based on the contract itself, and most believed they were not being fairly reimbursed for their services. Payers, conversely, need to keep insurance premiums and medical loss ratios in check despite every provider expecting (or demanding) top-of-the-market reimbursements and a raise each year.

Basic market intelligence data is something every provider group should have going into these negotiations, and something we knew we could build atop the datasets we'd already constructed. While a sizable product pivot, it was a good one - the pain point is more acute, the potential impact is larger, and we can get traction faster by avoiding the long sales cycles associated with hospital procurement.

We honed in and quickly built the first version of our price intelligence analytics portal so providers can benchmark fee-for-service insurance reimbursements relative to their peers. We launched the first version of the product at the end of February and the response from the provider community was strong. Some cold outbound sales messaging received responses in less than a minute! By the end of the YC batch in March, we were able to secure letters of intent from customers including a national surgical center operator, several large physician groups, and a telehealth startup. We participated in the YC Demo Day at the end of March and recently closed a $2.5 million dollar seed round.

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What does the Serif Health product look like?

The product is a hosted SAAS portal. Provider reimbursement rates can be compared by health plan and facility within geographic regions to identify key opportunities and focus areas for contract negotiations. As an example, below is a regional distribution of facility reimbursements for endoscopic knee procedure in the New Jersey region. Note the huge variance in reimbursement rates for this knee procedure - from under $800 to over $11,000!

Macroeconomically, this sort of price transparency should result in reduced price dispersion (with identical information, prices for similar services from similar providers are likely to converge), increase meaningful differentiation amongst market participants, and result in a market where patients can get meaningful price estimates or real-time quotes for the care they need before they receive it.

What’s next for Serif Health?

We're starting with price intelligence, but our vision is to build infrastructure for transparent healthcare pricing and efficient contracting. We believe that better market analytics and simpler contracting can reduce the price disparities that exist today, and better align incentives to help patients get quality care while enabling providers to be fairly reimbursed for their expertise and services.

We are working closely with our pilot design partners over the next several months to improve our price intelligence product. If you're interested in joining our pilot customer group, investing in Serif Health, or partnering with us, please get in touch via our contact form.

We're excited for the journey ahead!

~Matt and Rafiq, co-founders @ Serif Health

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Acknowledgements

Many thanks to YC Group Partners Surbhi Sarna, Nicolas Dessaigne, and Jared Friedman, whose advice guided us through the batch, as well as the founders of our peer companies in our section: Invert Bio, Sophys Health, Tuva Health, Spot, Pyrls, HypaHub, and Whitelab Genomics. We couldn't have made the progress we did without their help.

Additional thanks to Pilot CEO Waseem Daher for continued entreprenurial guidance and direction throughout our founder journey.

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1. Kaiser Family Foundation. Americans’ Challenges with Health Care Costs - https://www.kff.org/health-costs/issue-brief/americans-challenges-with-health-care-costs/

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