Meet Sami, the record-breaking Brazilian insurance startup aiming to make value-based care work

Health insurance startup Sami's forthcoming app

This morning, São Paolo health tech startup Sami announced a $15.5 million funding round, the largest Series A on record for a Latin American health startup. The two-year-old company, which has hitherto focused on population health data analytics, also announced its transition to become a health insurer.

Although leadership plans to start in Brazil (where one needs only a nationwide license rather than the state-by-state certification the U.S. requires), they have their sights set on disrupting the global insurance market, including the United States. 

"We want to be a global company," Dr. Vitor Asseituno, cofounder and president, told Healthcare Finance News. "We have developers in India. We have introduced people in the U.S. We have a lot of advisors in the US. We have investors in New York. ... But first, we're tackling the Brazilian market, because we believe it's less competitive. It's a big opportunity: Eight players control 80 percent of the market."

There are a few different indicators that this new insurance upstart may be worth taking seriously. For one thing, their investors – Valor Capital and Monashees this round, and Redpoint eVentures and Canary in the company's $1.3M seed round – represent four of the five most active funds in Brazil. And they're not strangers to the space: Redpoint is also a backer of insurance startup Bright Health.

Sami is also working with Alan Warren, former Google VP, creator of Google Drive, and former CTO of Oscar Health, and with Sérgio Ricardo dos Santos, former CEO of Amil, the largest healthcare organization in Brazil until it was acquired by UnitedHealthcare in 2012 for $4.3 billion.

For his part, Asseituno ran Health 2.0's Brazilian operation before founding his own events company in the digital health space, Live Healthcare, which was ultimately acquired by Informa. He has been studying the space for some time.

'Not fixing healthcare'

The central thesis of Sami is the notion that large, entrenched health insurers aren't capable of instituting value-based care at scale because of perverse incentives. And even new health insurance startups like Oscar Health have fallen into that same trap.

"We have studied Oscar, and Oscar got our attention first. But after some point we heard, for example, from the [former] CEO of Aetna that he said that Oscar was a pig with lipstick," Asseituno said. "But why is Oscar a pig with lipstick? They put out like a nice app with telemedicine and they start selling it. But they're not fixing healthcare. They're just like give you a better experience for the user and selling more plans."

In fact, Asseituno said, much of Oscar's line of business is still fee for service. And he's skeptical of the feasibility of a pivot.

"Now that you have like 400,000 lives, you want to move to value-based?" he said. "So you have the same problems as United or Aetna or any other player – like you're big, you have thousands of contracts, in fee-for-service, and now you want to move to value-based?"

The problem with that proposition, Asseituno says, is that when a payer comes to a large existing client and proposes a switch to value-based care, there's a lot to lose. A miscalculation can lead to massive shifts in bread-and-butter revenue, for both the hospital and the health system.

"As a startup, if I come to your house and say I'm a new insurance, new kid on the block, .... every penny I bring you will be new money for you," he said. "And I want to do a value-based pay that you want to do also, because you believe there's going to be the future, but you couldn't find someone to pilot yet. For me and for you, it's less risky for you to do a pilot with me, than to do a pilot for a big payer, that if you made a mistake on the KPIs – and you probably will because everyone is learning about it and what [are] the right KPIs and value, and the right payment model for every complexity – if we do that wrong, if I'm large, it's going to be a problem."

Technology at the center

But despite Oscar having failed so far, in Asseituno's view, to master value-based care, the startup has seen quite a bit of success from other parts of its novel approach and there's a lot to be admired about it. Asseituno believes that Clover Health has a better approach in terms of changing provider incentives, but Sami hopes to pair the best aspects of that approach with the sexier aspects of Oscar, such as the glossy user-experience and telemedicine benefits.

In fact, he says, the two aspects are highly interrelated.

"If you have a traditional physician that receives fee-for-service and you tell him that you have to call the patients back when they don't come to visit, because you are doing chronic disease management, and you have to pick up phone calls, and you have to do telemedicine, the doctor will say, 'But you just pay me for the visit. Why would I pick up phone calls that I'm not paid for? Why would I answer messages, or emails, or telemedicine? So you have to change the payment model to use digital tools. Otherwise, you're going to be the most expensive call center in the world."

For its initial launch in São Paolo, Sami is partnering with another Brazil-born health startup, GymPass. Members who sign up early will get free access to GymPass for a year, which includes more than 55,000 gym locations and 46 health apps. And Sami is looking to deepen the partnership with some of those apps in order to have a closer relationship with plan members.

"People talk about social determinants of health, but very few people are really betting on that," Asseituno said. "Maybe Kaiser, that is building homes for Medicare, ... but very few other people are really betting on having a broader view of health other than having good doctors, and good physicians, and good hospitals. So we are really trying to go beyond that and having a more holistic approach in terms of health."

A tough road ahead

Asseituno believes it will be a boon to start in Brazil, where the opportunity is large and a large rate of medical inflation creates built-in growth. But while many Brazilians do buy private health insurance, the country also has a public option, unlike the U.S. 

For Sami, breaking into the complicated, crowded market of the United States will be no easy feat. And even Sami's predecessors like Oscar and Clover have struggled to gain the level of traction they currently enjoy.

But Asseituno and his team – not to mention his investors – are optimistic, looking to the example of Nubank, a Brazilian fintech company worth more than $10 billion.

"What we usually tell people is that we are a Nubank for health insurance because [of] what they did in the banking industry, creating a digital bank that doesn't have branches, it doesn't have like ATMs. … We tried to bring this concept to true health insurance to say we want to be one of the pioneers of digital health insurance. We want to give you a digital experience that works, that solves your issue, that is cheaper."