This week, we announced our participation in Candid Health's Series C funding round. Candid is a revenue cycle automation platform developed to help healthcare providers simplify billing and streamline the end-to-end health insurance claims process. They are approaching this by tackling the complexity of RCM through an autonomous rules engine that leverages robust data sets to reduce the need for human intervention. Ultimately, their goal is to find (and eliminate) administrative waste so that provider groups can invest more of their time, money, and energy into caring for their patients - and not their back office.
The healthcare billing process, referred to in the industry as revenue cycle management (RCM), is not a “sexy business.” The mechanics are rudimentary and cumbersome, yet it represents a staggering $280B segment of our economy. Despite this huge TAM, innovation in the space has been slow. 25 years ago, athenahealth (which the Oak team invested in) took the first steps to modernize how claims were processed. Since then, the revenue cycle process has become even more complex, and most legacy solutions have struggled to keep up with the pace of change. The market is prime for disruption - and we are seeing a few players, with a deeper understanding of data science and engineering, step in to try.
That was what got us excited about Candid. Unlike other solutions on the market, the Candid platform, built by Palantir alum Nick Perry and Doug Proctor, focuses on data structuring and organization to ensure that claims can be reviewed faster and more accurately.
While this seems like a basic solution, real-time data visibility in healthcare billing is still highly elusive. This is because one of the biggest challenges with accurately submitting claims is keeping track of all the various inputs. For a provider practice with different offices and several providers at each location, this likely means different fee schedules or rosters, combined in a variety of ways, depending on the insurance carrier of the patient. Multiply that by a number of insurance providers, and it’s easy to see why there is such a large administrative burden.
And, the rules change. All the time. Moreover, making sense of the heterogeneous data that insurance companies send back to providers which indicates how claims were adjudicated is another arduous undertaking. Candid helps to streamline and simplify this end-to-end process, enabling providers to more effectively deploy data and automation to close the feedback loop between claim submission and claim adjudication, and giving providers an actual view into their financial performance.
When we spent time digging into the landscape today, the lack of effective software solutions to support billing teams at provider practices was even more surprising. Practices are often forced to rely on institutional memory and manual workflows - resulting in high error rates and endless back and forth with insurance companies.
To tackle this problem, Candid simplified the overall claims process with its approach to structuring and integrating data inputs with thoughtful and scalable data modeling. By building comprehensive data models to unify things like provider rosters, charge rates, and fee schedules, Candid can more easily validate, generate, and submit a claim on behalf of its customers. And, their tooling allows for faster remit processing, giving providers more of a real-time understanding of their financial performance.
Candid’s data model and rules-based engine results in high touchless claim and first pass resolution rates - setting it apart from the incumbents. Their solution offers providers with out-of-the-box, operational tooling and analytics to understand their RCM ops at a level of detail that others can’t. By analyzing claims data at a granular level - such as by payer, CPT code, or provider - Candid identifies where the claims process breaks down and feeds those learnings through their rules engine to proactively surface potential issues, even before the claim is submitted to the clearinghouse. These rules are applied continuously, driving increased cash collections from payers with faster time to collect, helping customers maintain streamlined, cost-efficient RCM teams internally.
Moreover, the structure and organization of this incredibly rich data set is positioning Candid well for unlocking the potential of AI layering. With this Series C investment, Candid will continue to build out its GenAI capabilities. And we think this is where this is massive additional potential.
We see the most meaningful opportunities for AI to enhance billing and post-submission appeals workflows. Both pre- and post-claims submission processes still involve manual workflows that require dedicated RCM and finance teams to manage. By layering workflow automation on top of its rules engine, Candid can drive increased scalability and margins as the business grows, while also capturing increased wallet share with customers by automating these services in a more cost-efficient way. In a future state, AI can even suggest new rules based on insights from Candid’s rich dataset.
And why does all of this matter? Because if Candid can help providers change the way their practices are run, that means there is more time and money available to serve patients. By automating countless mind-numbing, back-office workflows, Candid’s ROI-centric platform frees up providers to do what they do best and helps bring about a more efficient, patient-centric healthcare system.
Nick and Doug are unique in their ability to execute on the vision for Candid. At Palantir, they were asked to solve some of the toughest problems for the company - in the government and healthcare spaces. Their openness to take on hard problems carried over to their approach with Candid. They aren’t afraid to do the work to change hard things. This, coupled with their laser focus on hiring the highest quality talent and their relentless commitment to serving their customers, is a large part of what drew us to the company. They were raised in a corporate culture where smart, ambitious people were given opportunities to tackle tough challenges and the space to succeed - and they are re-creating that in a very special way at Candid. They’ve built a team that shares their values and work ethic - which makes them unstoppable.
We believe in backing exceptional founders at Oak. We also believe that investing needs to look at the broader tech landscape and take those macro factors into account when spending time with companies. While this isn’t hugely unique in the VC space, we believe we are differentiated in how we apply our experience to the investment process.
This was particularly apparent with Candid - and how we thought about athena 25 years ago. athena’s early mission was about truncating DSOs and getting money back to doctors faster. Like Candid, they started with a services-heavy model to build out their expertise and automated elements once they had the basis of data available. athena was able to capitalize on the earlier tech revolution of cloud computing. They saw the opportunity to connect doctors offices to the internet and applied that connectivity to the previously 100%-manual RCM space. With Candid, we are seeing the same vision with Nick and Doug. They are two founders who deeply understand what is needed to capitalize on the AI revolution, and they have built the infrastructure at their company to capitalize on it. We believe they are uniquely positioned to win in a space where step function change is needed to reduce labor and services - and we are humbled to be along with them on their journey.