Cash-Pay Healthcare Startup Raises $24 Million To Support Explosive Growth

“I just do not see the value of insurance if essentially I’m paying four times more to use it on top of paying a monthly premium and on top of marching towards a deductible,” Edwards said. “It is no longer a good value proposition.”

Cash-Pay Healthcare Startup Sesame Raises $24 Million To Support Explosive Growth

Deb GordonContributor

I write about how healthcare business and policy impact consumers.

Lydia Bruno, a mother of four in Illinois, learned firsthand how expensive a high-deductible health plan can be when you need to use it. 

Nearly a decade ago, Bruno’s family wound up more than $20,000 in debt after her then-nine-year-old daughter needed medication and hospitalization for mental health issues

Her husband’s employer had recently switched to an extremely high-deductible plan with a health savings account, leaving the family to pay all their medical bills out-of-pocket. It took them more than five years to pay off the debt even after Bruno learned how to negotiate with debt collectors and the hospital.

“We were definitely on our own,” she said.

To help consumers like Bruno who pay most or all of their healthcare expenses out-of-pocket, David Goldhill—who famously accused the American healthcare system of killing his father—cofounded Sesame, a cash-pay marketplace for healthcare services. 

Today, Sesame announced it has raised $24 million to expand its in-person and telehealth services, which rapidly expanded to meet increased demand during the pandemic. In total, the company has raised $50 million since its founding in 2019. 

“We are going to make our corner of healthcare—which is quite large and mostly serves people who are very value conscious, very hurt by the third-party payment system, very hurt by the lack of transparency in the system—we’re going to transform that into a normal customer experience,” said Goldhill.

Sesame’s corner of healthcare includes nearly half of American workers, who are enrolled in high-deductible health plans, and nearly 30 million Americans without health insurance. Sesame connects these consumers directly with providers, cutting out insurers altogether. 

“What we think is buying us financial protection is merely adding enormous cost and complexity to things that don’t need cost and complexity,” Goldhill said of the U.S. health insurance system. 

Sesame’s participating providers set their own prices, typically at a 50% to 70% discount off typical cash-pay prices. Prices can dip as low as $15 for a nurse practitioner or $25 to $50 for other appointments. 

Providers can offer discounts because it costs them less to operate without insurance bureaucracy. 

“Physicians are telling us that insurance adds 20, 30, 40 cents of cost to every dollar of their revenue,” Goldhill said. “Why do you want to pay for that?”

Dr. Allison Edwards, a Direct Primary Care provider in Kansas City, opted out of accepting health insurance to avoid these costs and the hassle of working within insurance bureaucracy. 

“The insurance system is so opaque and full of hoops to jump through,” Edwards said. “It’s no different on the doctor side than the patient side. We are equally frustrated with how poor of an experience working with insurance is.” 

Edwards recently got blood work done herself. Using her insurance, she paid $200 for lab fees that would have cost $50 in her own clinic.

“I just do not see the value of insurance if essentially I’m paying four times more to use it on top of paying a monthly premium and on top of marching towards a deductible,” Edwards said. “It is no longer a good value proposition.”

When Sesame launched, Edwards said it was an easy choice to sign on. Her patients, who pay a monthly membership fee for unlimited primary care access and discounted procedures, often pay less for specialist referrals than they would using insurance. 

“People can consent to not only the medical procedure that’s going to happen, but they can also consent to the financial impact that it’s going to have for them,” Edwards said. “[That] allows me to sleep at night.” 

Transparent, cash-based care puts the power back into the patient-provider relationship without red tape and bureaucracy, Edwards said. 

Most consumers don’t feel comfortable without insurance, but some have figured out healthcare hacks to make paying out-of-pocket work.

Katie Clark, a mother of three from Colorado, opted out of traditional health insurance several years ago when her family faced more than $2,000 per month in premiums for poor coverage through a high-deductible health plan. 

Instead, they joined a healthcare sharing ministry—a faith-based alternative to insurance that reimburses members for bills they pay up front. These plans do not need to comply with the Affordable Care Act consumer protections and coverage is not guaranteed. 

As a result, Clark’s family is considered self-pay, which makes some providers wary of treating them for fear of not getting paid. It also requires Clark to put extra energy into navigating the healthcare system. She seeks out providers explicitly open to self-pay patients and uses Healthcare Bluebook to gauge fair prices so she can negotiate effectively. 

“There are times when I’m negotiating bills or working with a healthcare provider that I think, ‘Ugh, this would be easier with regular insurance,’ but then I think back to when I had regular insurance and I feel like I was constantly on the phone then!” Clark said. “I think the health insurance industry is a bit crazy and I do feel a bit like a genius for figuring all this out.” 

Though many people want more affordable coverage, Goldhill thinks it’s hard for most people to imagine, let alone do what Clark has done—find a feasible alternate to traditional health insurance.

He hopes to not only give more consumers access to affordable care, he believes consumers themselves will force or inspire healthcare improvements. 

“If we can be great about serving this customer base, we won’t just encourage transparent, low prices,” Goldhill said. “We’ll also encourage innovation because in the cash market there’s nobody to say, ‘Sorry, you can’t sell that. And you can’t buy that.’”

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