Itiliti Health raises $2 million to streamline rudimentary prior authorization process

By Carter Jones - Reporter

December 09, 2021, 06:00am CST

Itiliti Health has raised $2 million in seed funding to expand its software platform that reduces costs and response times for processing prior authorization for health plans and health care providers.

The round was co-led by Minneapolis-based Bread and Butter Ventures and Nashville-based Altitude Ventures; Chicago-based M25, Denver-based SpringTime Ventures and Minneapolis-based Groove Capital also participated.

Itiliti co-founder and CEO Michael Lunzer said in a phone interview Wednesday the funding will be used to scale the company's sales process. And he added that he's excited about the investment support with a national footprint.

"What that does is help expand the footprint of interaction," Lunzer said. "We now have a lot more contacts in the marketplace."

Lunzer said prior authorization is a complex process that involves three functions: determining the need to prior authorize a procduerre, adjudicating the request and resolving appeals. But each one of these steps forces doctors and insurance administrators to make multiple phone calls and fax documents which adds up to billions of dollars in incremental health care costs.

"Our first product, PA Checkpoint, allows doctors to determine the need for a prior authorization in just 5 seconds, thus eliminating millions of phone calls and emails between doctors and insurance companies," Lunzer said. "We have already processed over a million transactions this year, saving health plans and doctors millions in avoidable costs. Future products will address other elements of the prior authorization process to continue driving unnecessary costs out of the healthcare system.” 

Over the last year, Blue Cross and Blue Shield of Minnesota has saved $5 million in administrative costs by using the service, Lunzer said

Itiliti's customers are health insurers, but Lunzer said health care providers themselves save just as much as the insurers.

Lunzer founded Eden Prairie-based Itiliti when he tasked with finding ways to modernize processes and systems while serving as entrepreneur-in-residence at Blue Cross and Blue Shield of Minnesota.

Lunzer's previous experience includes founding Warm Health, which was acquired by Altegra Health, and then Change Healthcare.

Kurt Hulander, Itiliti's co-founder and COO, also has experience at Blue Cross and Blue Shield of Minnesota. He most recently led the development of its retail centers and several disease management programs.

“We are investing in a seasoned team who brings deep entrepreneurial and healthcare expertise to this deep pain point felt across the industry," said Bread & Butter Ventures Managing Partner Mary Grove. "We appreciate that it’s a solution built through the lens of the payer perspective for payers, and ultimately to benefit providers, patients, and the whole ecosystem."