Medallion founder and CEO Derek Lo.
Medallion had a great first quarter in 2022. The San Francisco, California-based healthtech startup, whose software automates back office operations and compliance, doubled its customer base and revenue in the six months since raising a $30 million Series B, according to founder and CEO Derek Lo. With nearly 200 customers, mostly other digital health startups, the next push is to sign up big incumbents – mainly hospitals and health insurers – to use Medallion’s software to cut through these time-consuming bureaucratic hurdles. Looking at a much longer sales cycle ahead coupled with the possibility of an economic downturn, Lo started talking with Medallion’s existing investors and everyone agreed the best defense is a good offense.
Even though Medallion has barely touched its Series B capital, the company raised a preemptive $35 million Series C co-led by Spark Capital and GV to ensure a more than three-year runway as it looks to scale up its hospital and insurer business regardless of what happens in the broader markets. Salesforce Ventures also joined the round along with existing investors Optum Ventures and Sequoia. The funding brings Medallion’s post-money valuation to $350 million, up from $200 million in November.
“We want to ensure that we have enough capital to grow the way we want to even in a recession,” says Lo, 27, who is an alum of the Forbes 30 Under 30 Healthcare list. “Medallion is necessary software that ensures healthcare companies stay in compliance and can more cost effectively manage their clinician network.”
Reducing friction and lowering administrative costs are key for many of Medallion’s customers. The humdrum work of figuring out the unique licensing procedures for doctors, nurses and other healthcare workers in each state, enrolling with insurers and performing background checks for credentialing requires time, manpower and money. “In a world where people are looking for places to save money and focus on the things that are really strategic for them, outsourcing this provider network management stuff to a vendor like Medallion makes a ton of sense,” says Will Reed, general partner at Spark Capital.
Medallion’s key sales pitch is reducing what Lo calls “time to productivity,” which he defines as “how long it takes a clinician, either newly hired or an existing clinician, to essentially jump through any necessary credentialing and compliance hurdles” before they can start seeing patients. Medallion, which charges fees based on the total number of providers, estimates it has saved its customers around 250,000 hours worth of bureaucratic headaches.
That’s why Equip, a San Diego-based startup that provides virtual specialized treatment for eating disorders, signed on as a customer rather than hiring and training an in-house team to handle these administrative functions. “Everyone in healthcare talks about access. And access is great, but what really matters is access to care that works,” Erin Parks, cofounder and chief clinical officer of Equip said in a statement. “Because Medallion was able to power our growth from 8 to 50 states in less than 6 months, we were able to get back to focusing on treating young people and their families with evidence-based care.”
Signing up new digital health customers can take a month or two, says Lo, but the average time to get to contract with a health insurer or hospital is usually six months at the fastest and can take up to 2 years. Medallion has already made some inroads signing on new customers including Longevity Health Plan of Florida, a special Medicare Advantage plan for people living in skilled nursing facilities. The company is also growing its sales team and building out specific workflows for what’s known as hospital privileging, a credentialing process specific to health systems. Current employee headcount is around 150, which could grow to 200 by the end of the year.
Having the backing of Salesforce Ventures as a strategic investor is also key to Medallion’s future aspirations. The San Francisco-based cloud giant already provides customer relationship management and database tools to large healthcare companies, but it doesn’t offer niche workflow automation services like credentialing. That creates a cross-sell opportunity, Lo says. “We truly want to build a public-scale company, and to do so we’re definitely going to need to increase the surface area of the product to be able to better serve health systems and payers,” he adds. “We think that there’s absolutely an ocean to grow in.”