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Businesses, individuals looking to save on medical procedures now have the tools to choose
With health care cost skyrocketing, many companies and individuals are looking for ways to control costs and one San Francisco company has been successful in reducing overhead costs up to 10% company wide just by giving employees the knowledge of what their procedures cost before they go under the knife. Castlight Health has announced its largest round of funding to date -- $100 million. This Series D round of funds brings the company to $181 million.
The latest round includes two unnamed investors, T. Rowe Price, Redmile Group and several previous investors.
Castlight has spent the last two years working with private businesses and insurance carriers to create a databased filled with procedures and past prices paid so that employees can shop for medical procedures, much like they do for consumer products like washers and plane tickets.
“We have been working to bring transparency to an opaque system,” said Giovanni Colella, M.D., co-founder and CEO of Castlight Health, in an interview. “There is a huge opportunity to better engage companies and their employees as they make health care decisions if they just have the knowledge.”
In 2008, Castlight Health was created to save companies and employees money by providing a history of what people have paid for a given procedure so that they can shop around for a preferred physician and price. Castlight has made sure to add more than just prices and locations to get services rendered, they also collect medical data such as patient reviews, mortality rates and other claims that would be relevant.
"We started Castlight with the idea from patients move toward consumers rather than passive victims in their own health care choices," Colella told me. "And since prices are signals to the market, this option will exercise pressure to the consumers to shop rather than just do the first thing they say."
With health being a $2.4 trillion industry (for perspective, this is half of GDP of China), the ability to know ahead of time what you are expected to spend can change people's lives dramatically.
United States health insurance premiums increased by an average of 8% between 2000 and 2009, whereas average household income rose by an average of only 2.1%. To combat this increase, many employers are asking employees to pay a larger portion of their health care. Without the proper tools, employees are forced to make decisions based on limited information and little understanding of options, ultimately resulting in lower quality, higher costs and a decline in overall satisfaction.
Over the course of this year, Castlight expects to expand its database to include prescription drugs and enter into every state in the US.
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