Why Collective Health chose not to be a health insurer

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The founder of one of Silicon Valley's favorite health startups explains why he chose an unglamorous business

For those employers, Collective Health helps them manage their healthcare benefits, replacing traditional health insurers. It offers online tools for executives to monitor healthcare spending and an app for workers to find a doctor or check their coverage. The goal is to help companies reduce costs and provide a better experience for their workers using updated technology.

Health insurers take in money from monthly premiums, and in turn pay out medical claims on behalf of members. Health insurers have rules around, typically at least 80%. But when it comes to using those rules to lower healthcare costs, from where Diab sits, that doesn't always pan out. Diab likened Collective's role as a TPA to the spot where Amazon sat when it started selling books and other goods online.

 

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