Iora Health raises $100M to transform the primary care model

The company currently has practices in seven states and doubled its number of patients last year

Whenever we hear about the healthcare system in the U.S. it's always about how expensive and inefficient it is, and those stories sadly resonate with anyone who has been to the doctor any time recently. The system, as it currently stands, is largely broken and simply doesn't meet the needs of so many patients who need help.

It has only been in the last few years that there have finally been healthcare companies willing to try to upend the traditional healthcare model, focusing on wellness, and services that treat every aspect of a person, instead of simply treating illnesses as they come. 

One of those is Iora Health, which works with insurers and employers to create private practices that are catered to specific communities, specifically Medicare patients who are over 65 years old. 

On Monday, the company announced that it raised $100 million. Investors in the round included .406 Ventures, Devonshire Investors, F-Prime Capital, Flare Capital Partners, GE Ventures, Humana, Khosla Ventures, Polaris Partners and Temasek.

This round brings Iora Health's total funding to over $223 million.

The mission of the Cambridge, Massachusetts-based Iora Health is to "treat the whole person" meaning that it creates a deeper relationship with each patient. That means setting goals with the patients, "enabling them to become active participants in their own well-being." 

Each practice that it creates is set up to address the needs of that community. For example, it has created one in conjunction with Dartmouth College, and another in Phoenix, Arizona. The practice in Phoenix caters to older people on Medicare, so it has earlier hours, has more bathrooms, wider waiting rooms and more geriatric doctors.

Each practice features a team consisting of a provider, Health Coach, Behavioral Health Specialist, Team Nurse, Clinical Team Manager and an Operations Assistant, all of whom work with each person. Each practice also includes a telemedicine platform, and a payment system where patients are not billed on a transactional basis, but rather on based on care.

While there are a number of different communities Iora serves, it is older people who are now driving a lot of its growth, Rushika Fernandopulle, CEO of Iora Health, explained to me.

"When we started opening practices in 2012, we tried a number of different models, including partnering with self-insured employers and unions and found some success. In 2014 we entered the Medicare market for a number of reasons, including the ability to serve more people across the country. Medicare is where we see 80 percent of our growth," he said.

The company currently has practices in markets in seven states, including Hartford, Connecticut; Hanover, New Hampshire; Queens, New York; Dorchester, Massachusetts; Aurora, Colorado; and Seattle, Washington. In 2017, the company doubled the number of patients served and it expects to do the same this year. 

Iora patients overall see an average of 40 percent reductions in hospitalizations and 20 percent reductions in ER visits.

"Iora teams see fewer patients than traditional primary care practices. Our providers have panels that are a third the size of traditional primary care panels. We can do this because of our relationship based care model. By providing high impact, relationship based care, we are able to keep our patients healthier, saving on total medical expenses. This often saves the patient money, as well as the health care system," Fernandopulle said.

“The results have been extraordinary. At the member level, we’re seeing a big impact in the first couple of years on outcomes, quality of life, as well as measurable outcomes like readmission rates, healthcare consumption, pharmaceutical consumption. Across all those measurable metrics, the impact is dramatic," Michael Greeley, General Partner at Flare Capital Partners and Board Member at Iora Health, told me.

"My observation is that companies that can tell a story in the near term around cost reduction in healthcare, and then, in the medium term, an impact on quality of life and outcome measures, are able scale quickly, raise a lot of capital. It’s less of a generating incremental revenue story; it’s really around those first two dimensions and, with Iora, the model has shown its ability to drive down cost and increase outcomes. We all say that but now over a couple of dozen practices and 15,000 members we can point to that data. There was a body of work there that got everybody excited. It’s kind of the holy grail.”

Iora will use the new capital to invest in Chirp, its proprietary collaborative care technology platform, or its EMR, which it unveiled back in 2016.

"Chirp enables our teams to care for their patients as individuals and as a population. It is an important part of our care model and one of the tools that we use to actively manage the care of our patients. The new funding will allow us to upgrade our referral management, improve workflows, and allow patients to control their own data in new and exciting ways - for example, storing it on their phone and uploading it to their care team," said Fernandopulle. 

The funding will also go toward expanding Iora's presence in new and existing markets, though the company would not say at this time which market it is looking to expand to.

Overhauling primary care space

Fernandopulle identified three big trends he sees in the primary care space right now, the first being value based care, which he called, "one of the most important and exciting developments in primary care today."

"Until the entire industry moves away from fee for service, we won’t be able to sustain innovations or achieve positive health outcomes at a national level. Iora’s model has proven that value based primary care is successful at scale," he said.

The second he identified is the rise of consumerism.

"The current primary care system is not able to meet the needs of patients very well - it is fragmented, reactive, and doctors don't have the time or tools to optimally serve their patients. We build practices that simply meet the needs of our patients, and serve them well. We see our patients voting with their feet, joining our practices and we hope this encourages other systems to move toward these sorts of models," said Fernandopulle.

Third is the move to digital, which has opened up communication for other industries, and which primary care should also follow suit.

"We need to be like other industries and leverage modern technology to communicate with and optimally manage our patients. Current health care technology is built to improve payment, not care, and so we have had to build our own."

What sets Iora apart from others in the space is that it is a services-based company, and one that has shown actual outcomes, said Greeley.

"It’s really hard to get away from the fact that great healthcare is still ultimately a human to human interaction. What Iora has done really well is, on either side of that human to human interaction equation, they’ve tech enabled those two participants. The doctors have a lot of interesting tools to engage, the members have a lot of tools to be managed, but we can’t escape the human to human interaction," he said.

"This is one of the few value based care models that’s been all the rage the last couple of years that seems to really be working because we now have measurable outcomes data, and you couldn’t make this virtual. We use a little bit of lightweight telehealth solutions but that’s never going to replace the human to human. A lot of investors have shied away from these service models because of the margin structure, or whatever it is, but if you can show real impact on outcomes, and then those patients become less expensive to treat, there’s a virtuous cycle here that the margins structure are quite compelling when you get to that point of impact. I do think the services models can work if you can really point to powerful outcomes and I think that’s what the new investors saw. I’m hoping there’s a resurgence or renaissance around services that this on the front end of ushering in.”

"We will hopefully serve as an inspiration, and wake up call, for the rest of the industry to transform," said Fernandopulle.

"We’re thrilled to have our investors continue to see us as a leading and pivotal player in transforming health care; it’s the country’s largest economic issue and we know we have a winning model. The significant investor interest in this round is validation of the work we’ve done to date, and the opportunity still in front of us. With the patient growth and continued success on our clinical outcomes, we’re excited to invest the $100 million in the care model and continued growth across the country."