Announcing our latest investment in Madison-based Self Fund Health.
Soaring health insurance costs have become an immense burden for small and medium-sized businesses striving to provide essential health benefits to their employees. The unsustainable rise in premiums, coupled with escalating deductibles and out-of-pocket expenses, has imposed a significant strain on these companies. They often face a tough choice: either absorb the escalating expenses and compromise their profitability and growth, or pass on the costs to their employees and jeopardize morale and, possibly, well-being. Confronted with this dilemma, businesses are increasingly exploring alternative models that aim to alleviate the financial strain and sustainably provide quality healthcare benefits to their valuable employees.
Self Fund Health offers an opportunity for employers with 50+ employees to reduce health insurance costs while ensuring high-quality care and enhanced patient access. Their comprehensive solution streamlines self-funding for smaller employers with limited HR resources. The platform integrates essential plan components like provider networks, third-party administrators, stop-loss insurers and pharmacy benefit managers into one accessible interface. Once adopted, Self Fund Health facilitates cost savings by guiding patients strategically. This involves incentivizing direct primary care use with zero copay visits or cash incentives and directing individuals toward cost-efficient independent specialists, often 50% cheaper than those within larger health systems. Patients always maintain the option to go to a large health system, but will face higher out of pocket costs than they would going to recommended specialists. By optimizing care costs, employers see direct savings hit their own P&L instead of a large payers.
M25’s excitement in backing Self Fund Health stems from an exceptional team targeting a massive market bolstered by macro trends making it ripe for disruption. Jonathan Baran, Co-Founder & CEO, was previously the co-founder and CEO of healthfinch (acquired by HealthCatalyst in 2020). At healthfinch, he worked on pioneering the concept of an “app” company for the electronic medical record by automating routine clinical workflows on behalf of many nationally recognized healthcare systems. Matt Ohrt, Co-Founder & Chief Healthcare Officer, is most known for his work at Merrill Steel in Wisconsin where he led a healthcare transformation implementing a multitude of healthcare services at no cost to employees. These included onsite clinics, a mobile clinic (converted ambulance), physical therapy, chiropractic, MRI, bundled orthopedic surgeries and a world-class wellness program. Matt is also the founder of the Healthcare Best Practice Group, and has been recognized with various awards.
With Jonathan’s VC-backed health tech startup experience and Matt’s nationally acclaimed expertise in employer health benefit transformations, the team brings a robust skill set. As healthcare costs continue to outpace inflation and patients continue to feel the negative effects of health system consolidation over multiple decades, it’s the perfect time for a new solution that helps both employers and employees to lower costs and improve the quality of care received in return.
“While the Self Fund Health team is still in the early stages of deploying their vision, they are already managing an estimated $10M in annual healthcare spending across their current customer base,” said Abhinaya Konduru, M25 Principal. “We are excited about their momentum and their ability to leverage previous knowledge and experiences to address these pressing issues for small- and medium-sized businesses in the country: the affordability of healthcare and the quality of care.”
The health insurance market is extremely consolidated, with a tremendous amount of inertia in fully insured group plans. Furthermore, there are lots of startups with their own flavor of solution to help businesses control unhinged insurance costs. However, we believe that Self Fund Health has a superior solution and a thoughtful, laser focused go-to-market approach that will allow them to win in an enormous market where a massive company can be built by chipping away even small percentages. Self Fund Health has an exceptional team with a strong desire to improve the way healthcare is purchased and accessed, and we are thrilled to be able to support them through their journey.
About Self Fund Health: Self Fund Health is a self-funded insurance plan for Wisconsin employers, combining great primary care with the free market to manage sustainable success for employers. By choosing Self Fund Health, employers have the opportunity to provide their employees with access to exceptional healthcare while simultaneously reducing their overall healthcare spending.
Learn more: $1 million investment from new partners M25 and First Trust Capital Partners via LinkedIn
About M25: M25 is an early-stage software-focused venture firm based in Chicago, investing solely in tech startups headquartered in the Midwest. Since launching in 2015, M25 has become the most active investor in the region, quickly becoming the preferred seed investor for the next generation of Midwest unicorns. Portfolio companies include Kin Insurance, Loop Returns, Astronomer, Summersalt, SteadyMD, Branch, Authenticx and more. For more information, please visit www.m25vc.com.
