‘The Bigger Risk Is Doing Nothing,’ Florian Otto of Cedar on Transforming How We Pay for Healthcare

Florian Otto founded Cedar with the vision to modernize the medical billing process and enable the industry to better help more patients. 

“While healthcare costs continue to rise, the end-to-end healthcare experience for patients has not significantly improved,” he says. “Why should companies like Nordstrom, Nike, and Best Buy have a better ability to leverage data and cater to consumers’ preferences than a medical practice or health system?”

Cedar, a healthcare financial platform improving the consumer financial experience in healthcare, is making that personalization and intuitive product experience possible. The company reaches more than 300,000 patients a day through more than 35 healthcare provider partnerships, and it recently scored $200 million in Series D funding from Tiger Global Management. Florian, a former physician, veteran of ZocDoc, and a top 50 healthcare technology CEO for two years running, continues to positively change the world of healthcare through innovation. 

Primary’s Sam Toole sat down with Florian to talk about innovating in a very risk-averse industry, staying on-mission, and why he’s bullish on the ongoing “consumerization of healthcare.”

See a deeper dive on our new digital publication, First Edition.

Given the often long sales cycles of enterprise healthcare, how did you position Cedar in the early days? 

If you look at other companies in consumer industries like retail, commercial banking, and air travel, they typically use one technology platform for enterprise functions and another for customer engagement. Cedar aims to be that “customer-facing” technology layer in healthcare to better engage consumers, analogous to what electronic health record systems are to clinicians and provider staff.

However, this kind of disruptive innovation can present a challenge in a large enterprise market. Hospitals and medical institutions, overall, are very risk-averse—and understandably so. Speaking from personal experience, physicians are trained not to take any chances when someone’s health is on the line, but instead to follow a proven pathway. It takes some time to get people that take a leap of faith. To get there, you first need to clearly articulate your vision and where you want to go with your product. Secondly, you need to find leaders in the field who agree with your mission. Instead of being afraid to break something, we're looking for people that realize that something is broken already and that the bigger risk is doing nothing. We are extremely lucky to partner with forward-thinking healthcare organizations who are working with us to meet increased consumer demand for a better healthcare experience.

Taking raising capital out of the equation, what’s a piece of advice you’d want to give to new healthcare founders on day one? 

My advice is twofold. First, be solution-oriented: Metrics are invaluable, but you need to be solution-oriented and excited about what you’re creating to help others understand the need for your technology. We can discuss the latest numbers and use them to illustrate our points, but that will unfortunately only hold people’s attention for so long. Having a passion for what you're creating is compelling and can help win over those who may be on the fence. Second, consider who your product is intended for: Take a step back and see how your technology fits into the bigger picture—who are you creating it for? Whose lives will it improve? That’s one of the most important lessons I’ve learned in my role as a founder and innovator. 

Unlike some other industries, there are so many nuances to the healthcare industry. In the early days, how did you think about building your team? How has that changed as you’ve scaled? 

We’ve always known that strong technology and commercial talent are necessary for success. In order to build our first flagship product, Cedar Pay, strong engineering talent was a must, and my cofounder Arel has always done an amazing job of leading our “Makers” side of the organization. At the same time, we also invested in our commercial function—sales, marketing, etc.—so that the market was aware of the value we could bring. 

While we started with a lot of generalists, as we've scaled, we’ve been able to expand our team of experts, growing the depth and breadth of knowledge within our teams. In fact, in the wake of our Series C in June 2020, our Series D in March 2021 and our acquisition of OODA Health in May 2021, we’ve more than doubled in size—helping us to meet the growing demand for our products. 

As Cedar scaled, what was the key turning point in discovering product-market fit? Any learnings you can share with other entrepreneurs about getting to that key milestone?

There was no real turning point for us, as our addressable market need has always been there. That said, the need has grown significantly, being driven by the increased prevalence of high-deductible insurance plans and growth in patient-cost sharing.

Since 2016, Cedar has provided a smarter, more efficient way for hospitals, health systems, and medical groups to manage the patient payment ecosystem and create a personalized financial experience, while also dramatically improving billing operations. Now, through payer and provider alignment, Cedar is the only complete solution to the challenges faced by consumers when paying for care, radically transforming the healthcare financial experience for everyone.

One thing I would share with entrepreneurs, and one of the ways we got Cedar to where it is now, is to stay focused on your mission. There are so many interesting things out there to work on and do, but I have to stop and ask myself—“does this solve the problem? Is this grounded in Cedar’s mission?” If the answer is no, I go back to focus on tasks that are calibrated to move Cedar’s work forward.

In Cedar’s case, we certainly anticipate product demand continuing to increase for a scalable, end-to-end healthcare financial platform that can once and for all solve today’s medical billing and administration challenges. We will always keep our mission to enable exceptional patient experiences and transform healthcare at the root of what we do along that journey.

Cedar’s platform is helping Americans and providers more easily manage the financial aspects of healthcare. How do you see the “fintech meets healthcare” landscape continuing to shift in the coming years?

One of the biggest issues Americans experience within their care journey is navigating out-of-pocket costs. Care is becoming virtual, which COVID-19 has accelerated in numerous ways. The care itself and administrative side are all becoming more digital which will continue to force that innovation. This is where fintech can help—providers can streamline the payment process by putting all bills in one place, using plain language billing code descriptions, and offering more ways to pay. 

Now more than ever, too, these tools enable providers to engage with patients through empathy. For example, in the context of COVID-19 and the financial fallout, it is now critical for providers to offer payment plan options, connect patients with charity care if needed, and create a user experience that is easy to navigate and reduces frustrations rather than create more during financially and emotionally difficult times. 

The last year has fundamentally changed the face of healthcare, any predictions on where some of the largest opportunities for change are today?

While healthcare costs continue to rise, the end-to-end healthcare experience for patients has not significantly improved. This is somewhat ironic, considering healthcare is often far less personalized than what you get in less life-critical industries like retail. We talk about the “consumerization of healthcare” repeatedly, but that promise has left many wanting more.

Why should companies like Nordstrom, Nike, and Best Buy have a better ability to leverage data and cater to consumers’ preferences than a medical practice or health system? The retail approach should be leveraged across healthcare, offering personalized experiences that give patients the “superior experiences” they expect and deserve, without necessarily increasing costs further. With consumers fed up with rising costs, everyone in the healthcare ecosystem should take the concept seriously.