Stony Brook's Softheon explores new AI frontiers in health care

Softheon Inc. is moving to expand its digital health care business beyond Obamacare and Medicaid marketplaces in the wake of its merger with an artificial-intelligence startup.

The closely held Stony Brook company acquired NextHealth Technologies in a June cash and stock deal whose financial terms were not disclosed.

Among the biggest wild cards in providing efficient health care, according to NextHealth, now a Softheon subsidiary, are "unpredictable and seemingly uncontrollable" humans, who often eschew wellness and care-management programs. That creates an opportunity: Steering patients toward more efficient health care options could save tens, or hundreds, of millions of dollars on medical and operational costs.

"Between the two companies, we touch roughly 60 million Americans," said Eric Grossman, former chief executive of Denver-based NextHealth and now chief commercial officer of Softheon. "Softheon is the front end for buying subsidized health insurance," referring to its Obamacare and Medicaid work. "Once you get to the health plan, that was the end. With NextHealth, you impact the member journey when I'm healthy [or] when I'm sick. It takes the member journey further."

NextHealth's technology is designed to help its health insurance clients understand which members to target and how to tailor messages that nudge them toward more efficient care.

"We're expanding our technology platform to create a 360 [degree] view of individuals," said Eugene Sayan, who continues as chairman and CEO of Softheon. "Instead of waiting for [patients] to have an episode and check into the emergency room, we want to have that conversation much earlier, [creating] more of a health care system instead of a sick-care system."

Sayan founded Softheon in 2000. It now has about 250 employees after adding roughly 50 from NextHealth. Combined annual revenue is about $100 million.

The technology company found its niche when it was hired to create the online platform that would let Massachusetts residents enroll in what became known as Romneycare. That health care program, passed in 2006 during the administration of Gov. Mitt Romney, was a precursor of the Affordable Care Act. The ACA, widely known as Obamacare, was signed by President Barack Obama in 2010. The ACA was created to provide health care coverage to low-income Americans.

These days, Softheon provides online services for ACA and Medicaid-related programs in Colorado, Connecticut, Indiana, Mississippi, Massachusetts, West Virginia and New Mexico. The company plans to launch a platform for Medicare enrollment by year's end.

Since the inception of the ACA, Softheon has processed 20 million enrollments and more than $25 billion in health insurance premium payments. Health insurance giants, including UnitedHealthcare, Humana and Aetna, are among the more than 90 carriers served by Softheon.

Obamacare has been a political flashpoint since its inception with many Republicans objecting to it as an entitlement program where the government redistributes wealth and intrudes on free markets.

Still, Katie Keith, director, health policy and law initiative at Georgetown University Law Center, said that the ACA marketplaces have been growing in recent years.

In 2022, the ACA marketplaces enrolled 14.5 million people, a 15.1% increase over the 12.6 million in 2016. During the 2022 open enrollment period, new sign-ups increased 20% to 3.1 million versus  2.5 million in 2021. 

"The irony is the marketplaces are on their strongest footing ever," she said. "I think enrollment is in a position to grow and grow. Even insurance company [vendors] that left the marketplaces early on have come back."

Sayan, who received a bachelor’s degree in electrical engineering and telecommunication from Istanbul Technical University and a master's in computer science from the New York Institute of Technology, said the dot-com market crash of 2000 and the Great Recession of 2008 provided indelible lessons.

"We were founded right before the tech bubble," he said. "Our lessons learned from that period were: Build something the customer loves and stay focused  and grow organically and live within your means."

Sayan said he applied those lessons when he made the NextHealth acquisition "with our own money: cash and stock."

By Ken Schachter

kenneth.schachter@newsday.comkschach

Ken Schachter covers corporate news, including technology and aerospace, and other business topics for Newsday. He has also worked at The Miami Herald and The Jerusalem Post.