Anomaly Secures $17M Funding to Revolutionize Healthcare

Anomaly Secures $12 Million to Tackle Healthcare Billing Inefficiencies

Anomaly, a firm focused on streamlining medical billing processes, has announced the completion of a $12 million Series A funding round on Tuesday. Established in 2020, the company is addressing a long-standing and substantial issue: the prevalence of wasteful expenditure within the U.S. healthcare landscape.

AI-Powered Irregularity Detection

Anomaly’s core offering is a platform engineered to pinpoint discrepancies in medical invoices. This capability is powered by an AI-driven system, developed through analysis of extensive claims data sourced from both insurance providers and healthcare organizations, according to Jacob Shiff, co-founder, president, and COO of Anomaly.

This extensive training enables the software to proactively identify potentially incorrect claims or detect patterns in billing practices that contribute to financial waste.

“Our primary objective, in collaboration with insurers and healthcare providers, is to leverage technology and specialized healthcare knowledge to minimize friction between these parties, ensuring accurate payment from the outset,” Shiff explained to TechCrunch.

Funding and Investors

This latest funding follows a previously undisclosed $5 million seed round closed earlier this year, bringing the company’s total raised capital to $17 million.

The Series A round was spearheaded by RRE Ventures, with participation from Link Ventures. Additional investors include Madrona Venture Group, Declaration Partners, and Redesign Health.

Plans for Growth

The newly acquired funds will be allocated towards expanding the Anomaly team, currently comprised of 12 employees, and broadening the company’s reach through partnerships with additional insurance companies and healthcare systems.

“Conventional approaches to improper payments have typically been outsourced and reactive,” stated Kyle Tatz, head of new ventures at Redesign Health. “Anomaly’s commitment to collaborating with payers and providers to ensure correct payment the first time distinguishes it within the industry.”

The Scale of the Problem

While inefficiencies in clinical care contribute to healthcare costs, a significant portion of wasteful spending stems from administrative issues. A 2019 JAMA analysis indicated that over $300 billion annually is lost due to inefficiencies related to medical billing.

This study, conducted by a team of economists and led by William Shrank, chief medical officer of Humana, highlighted “administrative complexity” as the largest contributor to this waste – representing the burden of unnecessarily complicated paperwork.

Tatz describes this $300 billion figure as “an indicator of the substantial market opportunity for improved solutions.”

A Comparison to Other Industries

“Consider this: if you received your credit card statement each month and 10% of the charges were inaccurate, that’s the current reality in healthcare,” Shiff noted.

However, research into effectively addressing this paperwork problem has been limited. The aforementioned study found a lack of concrete evidence demonstrating cost savings through reduced administrative complexity.

Potential Solutions and International Comparisons

Some have suggested that transitioning to a single-payer healthcare system could be the most effective way to address this issue. Others point to the fact that countries with private healthcare systems often manage to maintain lower administrative costs than the U.S.

A March 2018 JAMA study comparing healthcare spending in the U.S. to 11 other high-income nations – including the United Kingdom, Canada, and Germany – revealed that the U.S. allocated approximately 8% of its GDP to “administration and governance,” while the other nations averaged 3%.

Anomaly’s “Precision Payments” Approach

Anomaly refers to its strategy for tackling this financial vulnerability in healthcare spending as “precision payments.” When a provider submits a claim to an insurer, Anomaly’s system can review it for errors.

If discrepancies are detected, the provider receives immediate feedback highlighting the issue – a feature of the company’s Anomaly Prevent product.

The company’s second product, Anomaly Recover, identifies past overpayments that might otherwise go unnoticed.

Industry Connections

Shiff refrained from disclosing the specific insurance companies and healthcare systems currently utilizing Anomaly’s services. However, he confirmed the company has established relationships with key industry players.

The company’s board chairman is Jeff Alter, the former CEO of United Healthcare’s commercial division and currently the executive vice president of IngenioRx and Anthem Health Solutions.

Anomaly is currently collaborating with two “regional payers in the Northeast” and a “healthcare system in Florida.” Shiff did not share specific metrics regarding cost savings or claim simplification achieved through these partnerships, describing the results as “meaningful” in terms of financial impact.

The Timing for Innovation

The complexity and error-proneness of medical billing are well-known. Tatz believes the time is ripe for addressing these issues due to a “growing awareness among healthcare stakeholders” of AI’s potential to reduce waste, coupled with the fact that healthcare costs are “reaching a critical point.”

“We’ve observed that payers and providers are increasingly seeking solutions like Anomaly that minimize administrative waste and friction, representing a readily achievable area for cost reduction within the healthcare ecosystem,” he concluded.