With a fresh $92 million investment, a company that helps employers bypass insurers to contract with physicians and hospitals for healthcare services is now valued at $1 billion.
Dallas-based Employer Direct Healthcare is the direct-to-employer company, and it announced a $92 million investment from Insight Partners Dec. 19. The deal values EDH at $1 billion, up from its previous $300 million valuation, according to Bloomberg.
EDH was established 12 years ago and works with more than 1,000 employers, more than 3,000 surgeons and physicians, and more than 500 facility partners. It turns a profit by keeping part of the savings generated from its direct contracts between employers, hospitals and/or individual physicians for surgeries, cancer care and other services, bypassing traditional insurance networks at favorable prices. EDH says it has reduced overall healthcare costs for its clients by approximately 2% this year.
SurgeryPlus is one EDH offering, which includes a network of hand-picked and vetted surgeons and end-to-end care navigators for employees. "By contracting at agreed-upon rates, we are able to halve cost per procedure, dramatically reducing your overall healthcare costs, savings you can pass on to your members when they choose a SurgeryPlus provider," EDH says.
The company plans to expand its Cancer Care Direct in 2024, an end-to-end solution where EDH experts review members' diagnoses and treatment plans and connect them to advanced specialists, second opinions and clinical trials.
The investment and $1 billion valuation for EDH come at a time when dynamics between employers, insurers and providers are ripe for change. Average costs for U.S. employers that pay for employees' healthcare will increase 8.5% in 2024 to more than $15,000 per employee, according to a projection from Aon.
"The strong U.S. economy and a general labor shortage have collectively served as a great buffer for payers and providers, but in recent conversations with employers and their advisors, we hear that employers' ability to continue to invest in rising healthcare costs is fraying (one advisor described employers as approaching a 'benefits cliff') and they are willing to consider healthcare cost management options they had not seriously considered in the past," Joyjit Saha Choudhury, managing director with Kaufman Hall, wrote in an Oct. 10 analysis.