Health
$2.2 billion startup Transcarent Building ChatGPT for health insurance
Transcarent co-founder and CEO Glen Tullman.
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Livongo co-founder Glen Tullman has promised that his latest startup Transcarent will use AI to help people navigate and pay for healthcare services, but it could just be a Band-Aid on America’s growing $4.5 trillion healthcare bill.
By means of Katie JenningsForbes staff
Glen Tullman believes that telehealth, as we know it, is dead. According to the venture capital investor and serial entrepreneur, the future is not based on video, but on text. “All the virtual care we do now is all moving to chat,” he said ForbesThis estimates that within three years, 80 to 85% of all telehealth interactions you have with your doctor will be written.
It’s a bold prediction from the same man who sold his last company Livongo, which made diabetes care management easier, to telehealth giant Teladoc for $18.5 billion at the dizzying market highs of 2020. As of Tuesday’s close, Teladoc had a market cap of 2. 2 billion dollars. , which Tullman blamed on “poor leadership” and an expensive, labor-intensive structure due to the demand for video visits. Text-based care and insights, with the help of the latest advances in generative artificial intelligence, will create a “gigantic shift,” he said.
Now he’s teasing a new AI chatbot built on the same technology that powers ChatGPT, as part of his latest venture Transcarent, which announced a $126 million Series D versus a $2.2 billion valuation earlier this month. The bot will focus on answering questions about health insurance that pop up regularly more than half of Americans, such as: How much should I pay for this doctor visit? What is my deductible? Can you help me find a doctor? It’s part of Transcarent’s goal to become a one-stop shop that can help the average American navigate America’s opaque and often infuriating $4.5 trillion healthcare system.
Transcarent, which offers an app with 24/7 chat-based primary care services, lower-cost drug options, referrals and second opinions, has raised $450 million since its founding in 2020 from investors including Tullman’s firm 7wire Ventures and General Catalyst. It also works directly with health care systems to get better rates for major health events such as surgeries and cancer care.
But experts say Transcarent’s business is more of a band-aid than a silver bullet, even though there is a growing market – Grand View Research estimates it at $10 billion – to help people find and pay for health care services. The only reason this possibility exists is due to the dysfunction of the US health care system, Ge Bai, professor of health care accounting and policy at Johns Hopkins University, told me. Forbes. “It exploits a structural weakness of the current healthcare system, namely the extreme complexity and information disadvantage of patients,” Bai said. Navigation services are more of an “adjustment” than a “fundamental change,” she added, but there is so much waste in the system that “even a small adjustment can still make a difference.”
Most healthcare navigation services rely heavily on human call centers, which incur high labor costs. That’s where Tullman sees the greatest potential for his new AI tool: cutting costs in half. The bot is currently built on top of OpenAI’s large language model GPT-4 and includes internal specialized models that can determine if a user has asked a medical question or is experiencing an emergency, at which point a human should take over.
Tullman said companies currently pay $10 to $15 per employee per month for human-based navigation services, while he plans to offer them for $5. “This is truly a generational step,” Tullman said. “We went from boring navigation, which wasn’t really interesting, to one place where we could get all your care.” Transcarent will offer the tool to its customers in January 2025.
Those customers are largely employers, as Transcarent focuses on a specific type of health insurance: self-funded plans. According to 2021 Department of Labor estimates, approximately 134 million Americans receive health insurance benefits through their employers, in an arrangement in which the employer picks up the tab for its employees’ total health care costs.the most recent data available). Those costs have been rising steadily, rising 7% to $8,435 in annual premiums for a single employee by 2023, according to health policy research organization KFF. These ever-increasing costs have created an entire industry dedicated to helping employers reduce their overall employee spending through their healthcare options.
“This market is a bit of a niche market right now,” said Chris Whaley, a professor of health policy at Brown University Forbes. “But as health care costs continue to rise and many employers face inflationary pressure, this will most likely really increase.”
In his attempt to crack this market, Tullman faces a mix of startups, such as Carrum Health and Included Health, and established companies, such as Quantum Health and publicly traded Accolade Health, which had 2023 revenues of $360 million and a market of $577 million. cap at close on Tuesday. In the fourth quarter, Accolade was also EBITDA positive for the first time — a good measure of the company’s operating profitability, even as it posted a $7.5 million loss for the year, Bai said. Tullman said Transcarent is not yet profitable and was “approaching” $100 million in revenue by the end of 2023.
“These are all background noise until someone has an event that requires help navigating the health care system.”
This new health benefits bot builds on Transcarent’s experience with an AI bot that helps its doctors with patient admissions, which it bought for $100 million in 2023 from healthcare AI startup 98point6. Along with the bot, Transcarent also acquired 98point6’s physician group and employer customers, as well as what Tullman called a “golden asset” that has not yet been made public: 1 million patient-physician chat conversations over five years. That data is now being used to validate the new tool and conduct safety testing.
When Forbes demonstrated a prototype of the AI tool, the chatbot was able to determine when someone was seeking medical advice. When the bot asked a question about shoulder pain, the bot recommended speaking to a virtual physiotherapist or having an orthopedic consultation. When asked about suicidal thoughts, it was also recommended to talk to someone. Ben Nguyen, a doctor and chief product manager of Transcarent, said that if the bot was asked anything about self-harm in a real-life situation, that chat would be immediately escalated to a human.
It also successfully answered simple health insurance questions, such as how much money was left before reaching the deductible and how much an in-network primary care visit might cost. But it grappled with some complex questions and hesitated when asked to find a Spanish-speaking orthopedic surgeon in the Bay Area, recommending a psychiatrist instead. (It could, however, legitimately recommend a Spanish-speaking endocrinologist in the Bay Area.)
Competitors could simply come up with their own GPT-4-based versions of the same type of chatbot, but Tullman isn’t worried about copycats. While there may be a common perception that building AI tools with basic models is fast and cheap, he said it is still pricey. From the computing power to all the training and validation needed to get the bot working properly and safely for customers, building a comparable bot would still cost millions, which Tullman believes will be too high a barrier for competitors.
Even if the bot functions well technically, there is still a major hurdle: will employees actually use it? Healthcare consultancy Mercer, a division of MarshMcLennan, estimates that 46% of companies with 20,000 or more employees already offer some form of advocacy or navigation solutions to their employees, but adoption varies widely from company to company. “One of the age-old challenges is that none of this really matters until it really matters,” says Jonathan Pas, partner at MercerWELL. “These are all background noise until someone has an event that requires help navigating the health care system.”
Transcarente customer Pilot Flying J, the gas and convenience store chain acquired by Berkshire Hathaway earlier this year, said Forbes Approximately 53% of the company’s 19,000 eligible employees and dependents have downloaded the Transcarent app, and 77% of those are active users. Diana Morgan, director of benefits and wellbeing at Pilot, believes this is partly driven by the premium discount Pilot offers to people who sign up, but it’s also about giving people “more power to understand what’s happening to their health. ”
For Tullman, it’s about making that experience as frictionless as possible, similar to his Livongo playbook. He didn’t invent blood glucose monitoring; he acquired the hardware and made it much easier for diabetics to manage their insulin levels, combining this with perks like free test strips. With Transcarent, he has similarly bought other companies to put together the necessary components to make things seamless for patients. “This is what Amazon is creating for healthcare,” he said. “It’s one place where you can get all your care.”
