SpendRule raises $2 million, coming out of nowhere to help hospitals track spending

Last year, Chris Heckler was about to end a five-year non-compete period after selling his last company, a healthcare startup. “I was sitting on the sidelines doing angel investing, and I realized I was too young to retire,” he told TechCrunch. “I wanted to get back to him.”

Meanwhile, Joseph Akintolayo had just sold his fintech company. He also didn’t have any competition, but he was thinking of ideas for a company. He knew Heckler, as Akintolayo had once worked as a consultant on one of his projects.

However, in this downtime, they wanted to come together — Heckler, with his connections, and Akintolayo, with his knowledge of AI and supply chains — to try to build something new.

And the result was SpendRulelaunched last summer as an AI-powered platform that helps healthcare systems track their spending. The company emerged from stealth on Tuesday, with $2 million in funding in a round led by Abundant Venture Partners. Others in the round include MemorialCare Innovation Fund and Zeal Capital Partners.

Currently, if an item has a barcode, health systems use three-way matching, said Akintolayo, the company’s CTO, which links the purchase to the invoice. But too often, health systems have procurement and contracts (such as maintenance, custodial, translation services, or laundry) that lack barcodes or easily identifiable purchase receipts.

Since these types of purchases can often be difficult and complicated to manage, overspending is very common. SpendRule is a technology that ensures hospitals pay only what is negotiated in their contracts. It integrates with and runs on top of the hospital system’s existing ERP software, contract management software, and accounts payable workflows, pulling information from contracts, invoices, internal databases, and vendor data to validate invoices before releasing payment.

It points out discrepancies and tells teams when to pay and when not to pay. Hospitals typically hire an auditor every two years to perform this function or review each invoice manually. It was a daunting task and had to be automated in this current wave of artificial intelligence. Big names like Kettering Health, MemorialCare and MUSC Health are already using the platform, Akintolayo said.

Heckler and Akintolayo only started the company last summer, but were able to finish the tour by Halloween, mainly because of Heckler’s industry connections. “We were able to close that seed round painlessly and use that to grow the team to support customers,” he said. The new capital will be used to staff and further develop the company’s AI infrastructure.

SpendRule considers existing invoice validators as competitors, such as SpendMend and GHX, Heckler said. But again, one key difference is SpendRule’s focus on purchasing services, Akintolayo said, the type of items hospitals buy that don’t have barcodes.

“Our goal is to build a more resilient hospital system,” Akintolayo said. “This is our vision. Protect everyone’s bottom line by connecting their data and helping them make better decisions.”