Startup Collective Health has reached a valuation of about $1.5 billion after raising $280 million in new funding in the latest sign that investors are eager to bet on private healthcare companies. 

A stethoscope sits on an examination table in an exam room at a Community Clinic Inc. health center in Takoma Park, Maryland, U.S., on Wednesday, April 8, 2015. Led by the American Medical Association, three of the top five spenders on congressional lobbying have waged a campaign to urge Congress to revamp the way Medicare pays physicians and end the cycle of \”doc fix\” patches. Senate leaders predict quick action on House-passed legislation when Congress returns April 13 from its two-week recess. Photographer: Andrew Harrer/Bloomberg

Collective Health, founded in 2013, offers employers a way to knit together various health benefits — medical, prescription drug, dental, vision, as well as other specialized offerings — on a single technology platform. Among its new investors is Health Care Service Corporation, a major seller of Blue Cross Blue Shield health plans, as an investor and business partner. HCSC’S self-insured employer clients will be able to opt-in to use Collective Health’s systems, giving them a more complete view into what they pay for health care.

Globally, investors put $31.6 billion into healthcare ventures in the first quarter, according to researcher CB Insights, a record high. The average size of digital-health deals jumped 45 percent from last year, to about $46 million in the quarter, data from investment firm Rock Health show. Collective Health’s recent investments bring its total fundraising to about $720 million.

Health care “needs to become like anything else that you buy for the enterprise: a primarily data driven-decision,” Ali Diab, Collective Health’s co-founder and chief executive officer, said in an interview. “Benefit leaders, finance leaders, and executives have not had the ability to make true data-driven decisions in terms of what kind of health care they procure for their populations, and they need to be able to do that.” 

Employers using Collective Health still rely on insurance carriers to contract with networks of medical providers. But the company takes over some functions that traditional health plan administrators perform, like claims processing and customer service. Collective Health also analyzes claims data to recommend treatment options to members.

The San Francisco-based company has more than 500 employees and serves about 300,000 members across more than 55 companies, Diab said. Customers typically have at least 1,000 employees, and are self-insured – that is, they pay the medical costs for their health plans directly, and rely on insurance carriers only for administrative functions like contracting with doctors. Collective charges clients a per-employee-per-month fee for its service. Customers include Live Nation, Pinterest and Red Bull.

HCSC, a 16 million-member insurer that operates Blue Cross Blue Shield health plans in Illinois, Montana, New Mexico, Oklahoma, and Texas, was searching for technology that would improve the experience of both clients and their plan members.

“Health care is rather fragmented today, so we were looking to eliminate the fragmentation and really try to make giant steps in terms of technological improvement in the minds of our members and employers,” said Kevin Cassidy, HCSC’s chief growth officer.

The deal with the insurer will accelerate Collective Health’s reach with large employers, said Mohamad Makhzoumi, who leads the global healthcare investing practice at venture firm New Enterprise Associates Inc.

NEA first invested in Collective in 2014. A the time, Diab had no customers or even a beta product – simply “a really nice slide deck,” Makhzoumi said. Even with hundreds of thousands of members now, Makhzoumi said the challenge ahead for Collective Health is whether it can reach a scale needed to get the attention of the largest companies in market.

“It’s kind of like, wake me up when you have a million lives,” he said, adding that he believes the company will get there.