Health care startup plans to double workforce

nextHealth-logoAfter raising $8.5 million from investors, a Denver startup that aims to save health insurers money by steering customers toward more cost-effective treatment is putting a premium on hiring.

Within the next year, NextHealth Technologies is planning to at least double its headcount from the 15 full-time employees it has now, said the VP of Marketing Melissa O’Connor.

“We are investing primarily in analytics and engineering talent and we want to continue to grow,” O’Connor said.

The startup disclosed the raise in an Aug. 18 SEC filing and announced it had raised the money from Norwest Venture Partners and other investors. O’Connor said that brings the firm’s VC haul to about $10 million.

NextHealth, which has an office on Larimer Street downtown, sells its services to health insurers looking to retain customers that spend less on health care and to save money on customers that spend the most on health care.

The startup has 10 customers covering nearly 3 million people, O’Connor said, including United Healthcare, Blue Cross Blue Shield companies and Colorado Access.

NextHealth reminds consumers to take pills on time, get a flu shot, stay in-network or avoid the emergency room when an appointment with a general practitioner would do.

NextHealth provides services to health insurers, reminding its clients to take medications and seek cost-effective treatment.

NextHealth provides services to health insurers, reminding its clients to take medications and seek cost-effective treatment.

The company calls these reminders nudges. To show insurers that a nudge saves money, NextHealth sets the reminders in a way that creates a randomized controlled study, not unlike the design used in some drug trials.

For example, some women in the same age group might receive flu shot reminders via text message, while others in the same demographic get a phone call and a control group receives nothing.

Then, NextHealth can check claims to see if women receiving a text message were more likely to get a shot than those that got a phone call, or if women with a list of places offering shots were more likely to make the trip than those who didn’t receive a reminder.

NextHealth can see if another demographic – say, men of a different age group –  respond best to the same message, or to a different one.

O’Connor said health care clients sign an annual contract for NextHealth’s software, with fees varying on a per-user, per-month basis. Insurers also can hire NextHealth to manage their nudges. For that service, the startup calculates how much an insurer has saved by using NextHealth and charges a commission up to 20 percent.

O’Connor said insurance companies face a choice between hiring a team to build software that manages customer data or to purchase those services from a third party.

“Pretty overwhelmingly, they’re more interested in buying,” she said. “It’s far less expensive.”

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