- Opkit is a company that recently launched an automated health insurance verification platform. This is the story behind the company.
Opkit is a company that recently launched an automated health insurance verification platform. Launched by early engineers from Brex, Opkit is focused on telehealth companies and virtual medical practices that experience this problem more acutely than brick-and-mortar healthcare providers. Through a streamlined interface, automation, and modern APIs, Opkit enables telehealth companies to quickly verify patients’ insurance and fetch relevant benefits, including copays and deductibles. To learn more about Opkit, Pulse 2.0 interviewed CEO Sherwood Callaway.
Sherwood Callaway’s Background
Callaway is from Raleigh, North Carolina and his dad is an orthopedic surgeon. Growing up, Callaway spent a lot of time around his dad’s practice/clinic where he learned about medicine and the business of healthcare.”
“As a kid, I was very interested in computers and spent most of my time playing video games and browsing the Internet. I eventually went on to study History at a nearby liberal arts school (Davidson College in Charlotte, North Carolina),” said Callaway.
And while at Davidson, Callaway spent a summer in San Francisco attending a web development bootcamp called “Dev Bootcamp”. This was in 2014 and it was one of the first-ever software engineering bootcamps.
Callaway exclaimed that he “absolutely loved it” and immediately decided that he wanted to become a Silicon Valley engineer. From that point on, his focus was on coding.
After graduating in 2016, Callaway quickly moved out to San Francisco where he joined Crunchbase as a frontend developer. After Crunchbase, Callaway joined Brex where he met now-co-founder Justin Ko.
“Justin and I both joined Brex relatively early (first 100 employees) and were lucky enough to experience ‘hypergrowth’ with Brex over the course of 2019 and 2020” Callaway added. “In late 2019, we volunteered to relocate from San Francisco to New York to start Brex’s second headquarters, which is how we ended up in New York and became roommates.”
Ko and Callaway were living together in New York during the pandemic and both were working remotely for Brex. From that point, they wanted to create a startup together and it seemed like the perfect time to explore startup ideas.
“Because my dad was a doctor, most of my ideas were related to streamlining administrative workflows for providers,” explained Callaway. “A problem that stuck out to me was the process of collecting and verifying patients’ insurance when they check-in for appointments. We now know this is called ‘insurance eligibility and benefits verification.’ This process seemed extremely inefficient and slow. At my dad’s office, there are lots of full-time employees who do this job full-time, and I knew from my own experience as a patient that many times the results are ambiguous or inaccurate. I mean, how many times have you been to an in-network doctor only to later discover that they were out-of-network? I figured there must be an opportunity to build a software tool that improves this process.”
Later, Ko and Callaway joined the Y Combinator startup accelerator and made friends with other founders who were building telehealth companies. This is how they discovered that insurance verification is even more difficult for telehealth companies. And with Opkit, they hoped to solve insurance verification for telehealth first and then bring their software to traditional, brick-and-mortar practices.
Opkit’s Core Products
Opkit’s main feature is the ability to perform electronic eligibility checks, or inquiries to insurance carriers about specific patients’ plans. The results of an eligibility check tell you whether the patient’s plan is active or inactive and whether it includes relevant benefits, meaning copays, deductibles, out-of-pocket maximums, etc. But eligibility checks are just the “atomic unit” at the center of their platform, Callaway told me. Opkit has many features built-up around eligibility checks that make it easy for telehealth companies to verify and track patients’ insurance on an ongoing basis. For example, the company can run eligibility checks automatically for patients with upcoming appointments and notify you of changes to their plans.
Opkit also includes useful features for collecting insurance details from patients like a patient-facing card-upload experience. And this means you can use Opkit to automate the entire insurance verification process end-to-end, from collecting the patient’s insurance info to loading it into a system of record to determining their eligibility and benefits.
“The only thing the end-user needs to do is log in to Opkit to view the eligibility results,” Callaway explained.
From the beginning, the team invested heavily in X12, a decades-old technology standard that is used by the healthcare industry to facilitate real-time eligibility checks and claims submissions. X12 is known for being old but, it is also ubiquitous. And the U.S. healthcare system runs on X12.
“Any company that wants to build insurance eligibility software needs to make this technology a core competency… I’m proud to say that my co-founder and I are both experts in it,” Callaway pointed out. “Past generations of healthcare software companies, including EHRs, haven’t invested in X12. They built basic integrations and that’s it. At Opkit, we saw there was an opportunity to go further and build powerful insurance eligibility features on top of X12. We also saw that there are new technologies coming out that can be combined with X12 to make the insurance verification process much better. For example, open APIs, big data, machine learning, and even AI.”
The company’s customers are really happy with the automation features, but they would like for it to be easier to move data in and out of the system. And this is why they are currently focused on expanding their library of out-of-the-box integrations to include more productivity tools, databases, and EHRs.
Y Combinator Experience
“Y Combinator helped a lot with this process. From the start, we knew we wanted to apply for Y Combinator, so our early goal was to develop the idea and product to the point where we could fill out a compelling application form. The YC application served as an early framework for how to think about our business. It forced us to answer essential questions like ‘who is your customer’ and ‘what problem are you solving,’ Callaway acknowledged. “Later, when we joined Y Combinator, they helped us incorporate the company and taught us how to raise venture capital. I’m a first-time founder, so it was great to have lots of support with the administrative side of things. This allowed me and Justin to focus on building our product and talking to customers.”
Funding Milestones
Along with the recent product launch, the team recently announced the completion of the seed round, which came in at over $1 million and included some big-name investors. The team is also still getting inbound from other investors and it is possible that they might revise the fundraising plan to accommodate a larger seed round, but that’s just a possibility.
Differentiating From The Competition
Opkit competes mainly with legacy incumbents such as health insurance clearinghouses and Electronic Health Record systems. And these tools were built for traditional, brick-and-mortar healthcare providers.
“The insurance verification features offered by EHRs and clearinghouses do not work well for telehealth companies and tech-forward healthcare providers, which have different needs,” Callaway observed. “Broadly speaking, clearinghouses and EHR systems are clunky, manual, and segregated. Opkit is streamlined, automated, and integrated. Our software is much easier to use, requires less clicking and manual data entry, includes many automation features that eliminate manual work, and has an open API and integrations with essential third–party tools.”
Callaway believes that Opkit’s platform and technical leadership are major differentiators that will enable them to stay ahead of the competition. The product the team launched on March 7 is just their “minimum viable product”- which is going to get better very quickly. And the company has one of the most technical founding teams of any healthcare software company. So this means they know what can be built and what cannot and how to build the things that can.
Future Company Goals
Opkit has a vision of making the use of your health insurance as easy as using your credit card. And this means transparent, accurate, real-time patient payments for covered medical services.
“If you’re familiar with Stripe, Opkit is aiming to build ‘Stripe for healthcare,’ a payment portal that allows you to enter your health insurance info alongside your credit card info and instantly calculates the amount you are responsible for paying based on your insurance plan,” Callaway shared. “We like this vision because it is simple, crystal-clear, and also revolutionary. If it existed, the US healthcare system would be vastly more efficient and patients would never have to worry about whether their insurance will cover a doctor’s visit. Opkit is in a great position to do this because our software already has a provider- and a patient-facing component. We are like the ‘virtual front desk’ for telehealth companies.”
