As companies get bigger and bigger, their needs are going to change — including, probably most importantly, their options for health care as their employee base expands and the costs of those plans start to balloon. But the end result is that employees could be presented with a confusing set of plans to pick from without a whole lot of guidance.
There’s where comes in. The startup looks to provide employers with tools that optimize health care costs and simplifies the approach to picking a healthcare plan for their employees. The end product is a screen with around four boxes that an employee can choose a health care plan, which makes sense as companies reach into the hundreds or thousands of employees and the process of signing on gets more and more complex. Lumity said today it raised $19 million in a financing round led by Draper Fisher Jurvetson to help build out efforts to attract customers, which already include Lyft and GoFundMe.
“We take on primary employee support,” Lumity co-founder Tariq Hilaly said. “We deal with all employee questions, we deal with all the enrollment technology, and deal with all the data analytics. We put in place a set of plans that are better for the employees, and essentially reduce the cost of plans without compromising the benefits quality through using things like prescription data.”
One example is prescription data, which Lumity customers can voluntarily submit in order to help plan out their best health care plans. At first, Hilaly and the team weren’t 100% sure that employees would want to opt-in and share that data. But around 90% of the employees on the platform have actually opted into the service, which has given Lumity more data to chew on as it continues to refine its algorithms.
“Data obviously has a flywheel attached to it,” Hilaly said. “The more you get, the better the models, and then the better the outcomes. We’re taking the benefits problem and applying both a technology and a service component. It involves interfacing with lots of different systems. I think that, certainly as the complexity and the breadth of what we do have expanded, the moat around it has expanded.”
The company last raised financing in September 2015, and since then, it’s continued to gather more data on its customer base. That’s a requirement for companies that look to predictive analytics to help manage risk and determine the best health care plans, especially in the face of a lot of potential competition from regional brokers that have a lot of experience and expertise. Lumity has to ensure that virtuous cycle — get more data, create a better experience, and then use that experience to convert new customers — continues if it’s going to stay alive.
Lumity’s pitch is that the company won’t necessarily lock you into a single platform. That’s part of the reason why Hilaly says companies would pick it over a product like Zenefits, which given that it targets the benefits space would likely be one of its strongest competitors. Zenefits, however, targets multiple different employment areas for companies — which makes sense for smaller companies but not necessarily as they grow into larger ones.
“They’ve taken those three things, put them in a bundle, and probably for companies under 100 employees that might make sense,” Hilaly said. “In our market, it starts at around 100 and then goes up, people are less concerned about that all-in-one. They have different needs and systems. They might want ADP for payroll, for example. As they get larger, some may want to use Workday. We don’t focus on trying to build an all-in-one, we don’t focus on trying to lock you into our platform. We focus exclusively on benefits, that’s where you spend the most money.”