Silicon Valley's largest tech accelerator is funding an experiment in crowdfunded healthcare

Crowdfunding gets a lot of attention when it gives rise to oddball games and novelty technology, but Silicon Valley’s largest startup accelerator believes the real bet is on crowdfunded healthcare.

Y Combinator, the company responsible for launching Airbnb, Dropbox, and Reddit, has announced that it will invest in Watsi — a nonprofit that has brought healthcare to more than 11,000 people in 24 countries through nearly 22,000 online donations.

Sam Altman, president of YC, explains that Watsi’s approach to healthcare avoids a huge number of operational inefficiencies. A recent report from the World Health Organisation calculated that 20-40% of all health spending worldwide gets wasted. But Watsi’s crowdfunding model makes transparency a top priority — each patient’s received donations and healthcare provider are logged in a master spreadsheet available on Watsi’s website.

“Funding individual patients encourages more people to donate, but it also results in patient-level data that makes it easier to identify fraud, evaluate the quality of care, measure health outcomes, etc.,” Watsi co-founder Chase Adam told VentureBeat, adding the project is an attempt to use data to rethink how healthcare is funded.

Watsi expects to launch its trial within a couple months and have it last through 2017.

When a family visits a hospital that has partnered with Watsi, but the patient can’t afford to pay for the necessary care, a staff member will ask if they want to put their case on the site. If he or she agrees, the site’s donors will then have the opportunity to make online donations straight to the patient. Funds will be transferred to the hospital’s bank account and directly fund the patient’s treatment.

As a patient receives care, the hospital will update donors on his or her progress. Treatments won’t cost more than $1,500, and the partner hospitals will specifically choose cases that have a high degree of treatability. The company has also created a general fund that people and companies can donate to if all patients on Watsi have already been funded. In those cases, the company will give “100% of every donation to a patient as soon as one is available.”

Watsi has raised $7.5 million in funding since it started working with YC four years ago. YC’s new investment in the nonprofit (an undisclosed sum) will let Watsi continue to build its online platform and better look for wasted expenditures, such as unnecessary tests or ineffective treatments.

By creating a leaner form of healthcare, which attempts to lower medical costs by promoting transparency and spotting fraud and errors in real-time, Watsi believes it can reduce the public burden of caring for the ill. Instead of bearing exorbitant, hard-to-understand bills, recipients of Watsi donations would receive fully crowdfunded care.

During the experiment, one of Watsi’s primary goals will be to expand the treatments it can fund while still keeping costs low.

If the trial shows that direct-to-patient donations can indeed fund effective healthcare at a fraction of the usual cost, Watsi will make the software available to governments for official use. And if trials in the developing world show promise, the system could expand to places like the US, where healthcare costs continue to rise.

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