This past fall, UnitedHealth closed on its $13B acquisition of Change Healthcare, after clearing a Department of Justice suit to block the merger on antitrust concerns. The acquisition represents one of the largest outcomes for a health tech startup, yet at times, the role Change plays in the healthcare ecosystem is opaque.
In its simplest form, Change operates a clearinghouse and manages pre- and post-payment integrity for financial transactions between healthcare providers and payors. For a sense of scale, the company sees 15 billion healthcare transactions a year, touching one third of patients in the US.[1] This initial offering enabled Change to reach across the entire healthcare ecosystem, from clinical decision support and pharma solutions to cost transparency and risk adjustment. If you navigate Change’s “what we do” section of their website, you’ll find 33 different areas of focus and 192 different products.*
After wading through these categories and offerings, we were struck by how many are being addressed by early-stage founders today. It reminded us of Andrew Parker’s 2010 post, “the spawn of craigslist,” which presciently illustrated the unbundling of Craigslist into several large standalone businesses (Airbnb, Indeed, RedFin, Etsy, among countless attempts across the categories).
Similarly, we think some if not most of these categories are big enough to support large, venture-scale businesses. For instance, with $4.3T or ~$13k per American spent on healthcare annually, we believe revenue cycle management remains a huge opportunity, despite scaled players in the space. At an estimate of up to 10% of annual healthcare spending, payment integrity represents a ~$430B opportunity in an area we believe is ripe for a tech-first solution to today’s backward “pay and chase” model. Value-based care enablement, risk adjustment, and cost transparency tooling all aim to take on percentage points of spend as well, to name a few big opportunities. In short, we think many of these areas have large addressable markets with limited tech penetration to date.
We’ve done our best to create a comparable graphic below. We expect several large standalone companies to unbundle a piece of Change Healthcare’s offering. The below is intended to be illustrative, not comprehensive — we certainly welcome suggestions or additions!
If you’re building in the space, we’d love to hear from you no matter the stage — leave us a comment, engage with us on social (Ellie Wheeler, Sharla Grass, and Tyler Olkowski) or reach out directly at tyler.olkowski@greycroft.com!
*Some products are repeated under Change’s broader umbrellas of “Payments and Revenue Cycle,” “Clinical & Imaging,” and “Patient & Member Engagement.”
Disclaimers: Companies noted throughout are not all Greycroft portfolio companies or affiliates and are intended as a curated list of providers in the relevant spaces. For a complete list of all Greycroft’s portfolio company investments since inception, please visit www.greycroft.com/investments. It should not be assumed that investments made in the future will be comparable in quality or performance to the investments made by Greycroft, or that the investments identified will be profitable. Past performance does not guarantee future results.
* Denotes a Greycroft portfolio company. This is not a solicitation of an offer to purchase securities and may not be relied upon in connection with the purchase or sale of any security.
This publication has been prepared solely for informational purposes. The information contained herein is only as current as of the date indicated and may be superseded by subsequent market events or for other reasons. The information in this document has been developed internally and/or obtained from sources believed to be reliable; however, Greycroft does not guarantee the accuracy, adequacy, or completeness of such information. Greycroft does not assume any duty to, nor undertakes to update forward looking statements. Nothing contained herein constitutes investment, legal, tax or other advice nor is it to be relied on in making an investment or other decision.
