A Platform State of Mind: How Vericred Is Solving The Many-To-Many Problem In Health Insurance
Healthcare consumers and benefits administrators alike expect a digital end-to-end (quote, enroll and manage) experience. How are multisided platforms (MSPs) helping to facilitate digital transactions and improve the experience for users on all sides of the benefits ecosystem? And how has the COVID-19 pandemic been a catalyst for change?
Vericred co-founder and CEO, Mike Levin, explains how the company’s platform is transforming the health insurance and employee benefits engagement and administration process, what to look for when it comes to a VC partner, and how COVID-19 is both impacting employers and increasing the industry’s reliance on digital solutions.
Summit Health (SH): What is Vericred, and how did it get started?
Mike Levin (ML): Vericred is a data company simplifying the exchange of health insurance and employee benefit data. We are building the pipes to enable transactions in this space. When I first considered starting Vericred, I was trying to navigate Healthcare.gov to find a plan in which my doctors participated. What I thought would be a simple process took a half a day to go into each carrier’s website, investigate whether or not my doctors participated in each plan offered by the carrier, understand the benefits packages, consolidate that information, and determine the best plan for my family. It was an awful experience. I would soon learn that the lack of connectivity between carriers and tech was a gating factor to developing modern and efficient user experiences. Vericred is building infrastructure to knock down these data and connectivity walls.
SH: What problem is Vericred solving for, and where does the platform approach come in?
ML: The problem we are solving for is a lack of standards and connectivity in the health insurance and employee benefits ecosystem, that consists of numerous carrier and tech participants. Because of these dynamics, point solutions, where each carrier connects with each tech company, are untenable: there are too many, the connections are too complex and it is simply too expensive. We act as a middleware layer between the carriers and tech companies, and solve an industry-wide many-to-many problem. By that I mean we connect two sides of a network/platform, acting as the translator between the two, and aggregating that data as well.
From a platform perspective, there are lots of many-to-many problems in healthcare and, in particular, health insurance. They include pricing information as regulations require hospitals to improve price transparency, caims, billing and eligibility.
SH: How do you think about product quality when the product is facilitating a transaction between a technology vendor and a carrier?
ML: There are three key aspects of our role: to connect, aggregate and translate. The connections must be easy and leverageable. On the carrier side we meet them where they are today. It is a fool's errand to try to convince carriers to pursue a standard or build to you. On the tech side, we provide modern APIs that are consistent across carriers, so the work it takes to integrate with us is rewarded with access to more and more carriers without additional work. And translation is a key element of our product quality because the carriers are expecting good clean and consistent data and the tech platforms need normalized data across carriers.
SH: Can you describe the value-add for a platform business model in this space?
ML: One of the things we look at is how an interaction with our platform creates new and proprietary data that in and of itself is valuable. This is increasingly important, given one of the main challenges that insurance carriers have across digital platforms is that they’re losing line of site.
When the transaction and quoting process is happening on multiple tech vendors, the carrier can’t see the data journey and follow it through. Vericred provides a line of sight as if those transactions are happening on their own platform, and the related analytics and proprietary data sets become even more valuable than the underlying transactions.
SH: Do you find it difficult to get investors to understand that you’re a platform business and what that means in terms of growth frameworks?
ML: I find it’s binary. You either speak with someone who understands the platform business model or not. If they don’t, it’s a long road to educating them. You need to find a partner who understands MSPs so you can educate them on your business and the application of the platform business model as opposed to what a platform business model is.
SH: Oftentimes, different sides of a platform have different priorities than each other, and users on the same side may compete. Have you ever faced a challenge where one side or user asks for something that could adversely impact another side or user?
ML: Absolutely. We’ve had numerous requests for exclusivity to one partner or another. We’ve also had interest from strategic investors that we think would taint the independence of our middleware role. We’ve always said no exclusives, and no to anything that would taint our model.
SH: What do you want VCs to know about what it takes to build a platform business?
ML: Ultimately, it maps back to the flywheel effect. It takes time for a platform to get going. Or another way of saying this is to get it into orbit. But when you build that initial momentum and get that flywheel going, platforms are very valuable and very defensible.
It’s very hard for a new participant to come in and create the same type of inertia once a platform has crucial mass on both sides. The more a VC understands this dynamic and the platform business model, the easier the road to development will be.
SH: You’ve talked about VC experience being a binary one and the tendency to have differing views on price and subsidization, and value of platform growth. For those companies who are earlier to the game and looking for funding, is finding the right VC fit as important as I think?
ML: It. Is. Critical. The VC needs to understand the vision of the platform and buy into it. This doesn’t mean a VC should be a “yes partner,” but it must be someone who understands what you’re trying to do and the fundamentals of network effects that are so key to MSPs. And who understands that it takes time for the flywheel to spin up.
You can’t, and shouldn’t try to, change your message to every VC – it’s impractical and disingenuous to your model, constituents and the VCs themselves. For your own sanity, it’s better to get to a fast no with someone who doesn’t buy into the vision. They’ll either love it and come in, or not, but you shouldn’t try and convince them.
SH: COVID-19’s impact on healthcare delivery can be felt across the industry, from patients and caregivers, to clinicians, solutions providers and all others who make up the ecosystem. How is the pandemic impacting your constituents, and how has your organization been navigating through?
ML: COVID-19 has been affecting our constituents in a number of tactical ways. Further, we believe that COVID-19 could be a catalyst for accelerating the transition to a digital quote-to-card environment.
First, the tactical. Employers, and especially small employers, are clearly getting hurt. This is resulting in layoffs and furloughs. The former results in 1) fewer group insured lives, which adversely affects carrier and broker revenue, and 2) a need to insure these people in other markets such as the individual market (which benefits the carriers and brokers participating in this market) or Medicaid. The latter has caused carriers to step up and allow furloughed employees to continue to be covered when typically they would not be allowed to do so. And finally, simple issues like payments (cutting checks) is harder as everyone is locked down, so carriers that didn’t accept credit cards are now moving to do so.
Our tech partners are responding in a number of ways, which we detailed previously.
Strategically, we believe COVID-19 and the resulting lock down could be a catalyst for accelerating the digital transformation of this space. Typically group “open enrollments” have been conducted in person. They cannot be. And Medicare Advantage plans are often sold face-to-face. Because these types of in-person events cannot occur right now, there MUST be a digital solution.