Aledade raises $64M to build out its value-based care model

Steven Loeb · April 20, 2020 · Short URL:

The company works with independent practice to develop Accountable Care Organizations

Everyone knows that the American healthcare system is too expensive, while also providing patients with far less in return than people receive in other systems. The question has always been how to change that, and over the last few years the answer seems to have finally become clear: "value-based care," which is when caregivers are paid on the basis of quality versus just for providing a service.

The idea is, essentially, to incentivize the physician to give the patient quality care because it "more aptly aligns incentives across health care to focus on the most important thing: patient health," Farzad Mostashari, MD, CEO and co-founder of Aledade, explained.

"By taking responsibility for their patients' health and total costs, primary care practices can focus on doing what’s best for their patients and be assured they’ll be rewarded for their work. The current public health crisis paints a clear picture of the failures of fee-for-service, as practices cannot rely on all revenue coming from in-person, in-office visits with patients to stay afloat," he said.

"Rather, in a value-based system, they have a more stable source of revenue, they have a network they can turn to for support, and they can use all of the resources that are central to primary care, such as better patient data and methods to keep patients healthy like telemedicine, phone calls, and even drive thru care."

The problem is cost and outcome can be solved; part of the problem with the American healthcare system now, though, is that the key players that can have the biggest impact on changing it, independent primary care practices, are either closing or being bought by larger systems.

"These practices, family doctors, many who have been serving their communities for generations, are the quarterbacks of our health care system. We need to empower them," said Mostashari. 

That's why Aledade partners with those practices in order to build Accountable Care Organizations (ACOs), which focus on a value-based care model through Medicare, Medicaid, and commercial insurers. The idea is to reward these practices for keeping their patients healthy, for following up with them when they leave the hospital, and for keeping them out of the hospital altogether.

"It’s work that’s good for patients, good for doctors, and good for society," Mostashari explained.

The ACO model is also having an impact on investors: on Monday, the company announced it raised a $64 million Series C funding round led by OMERS Growth Equity along with California Medical Association, and returning investors Meritech CapitalEcho Health Ventures, CVF, and GV. With this latest funding, the company has raised nearly $200 million.

When a practice decides to partner with Aledade, the company provides them with a few different things, including a technology solution that helps them identify and focus on their high-risk patients, as well as with on-the-ground support from its team that helps the practice adapt to new workflows.

"Finally, we offer regulatory and policy guidance to make sure that these practices know how to navigate these programs and have a voice speaking up for them in policy and payer discussions," Mostashari explained.

The company's partner practices have received more than $47 million in shared savings revenue to date.

"These practices earned these payments by delivering high-quality care that keeps their patients healthy. For example, in the most recently available Medicare results from 2018, Aledade’s Medicare ACOs reduced patient stays in skilled nursing facilities by an average of 17 percent and hospitalizations by an average of 6 percent," said Mostashari.

Aledade's ACOs are especially proving their worth during the coronavirus pandemic, by not only helping them to keep patients out of the hospital and emergency room, while also using data analytics to gain insights on population health so they can be proactive when it comes to their most at-risk patients.

"Primary care all across the country is in crisis. Fewer people are going to the office, leading to drops in revenue, and shortages of personal protective equipment mean that many practices have to close or furlough staff to protect their communities. And much of the support they’ve gotten from the government has come in the form of loans, which doesn’t help the long-term financial picture," said Mostashari

"As a company, we’ve kept finding new ways to help them, including procuring large shipments of their most needed PPE, providing expert guidance on the rapidly changing policy and regulatory landscape, developing and distributing patient-facing COVID-19 content, and helping more than 275 practices launch telemedicine visits."

Aledade now partners with more than 550 independent practices and 7,300 providers in 27 states. Its ACOs care for more than 840,000 patients and manage more than $7.5 billion in health care spending through 38 Medicare and 42 other value-based contracts. Aledade has seen its own revenue grow by over 60 percent annually, along with nearly 50 percent annual growth in its patient base and total health care spending under management.

This new funding will allow the company to continue growing its existing and new ACOs, as well as its value-based contracts with Medicare, Medicare Advantage, Medicaid, and commercial health plans. 

"We are investing the capital in growing our impact. In order to do that, we need to work with more doctors to deliver better health outcomes at lower costs. We will partner with more practices, sign more commercial contracts with health plans, and take on a greater share of risk in order to deliver more savings for our physician partners and our business," said Mostashari.

Aledade is operating in a fast changing healthtech space, one that is moving "beyond checking-the-box, to actionable data insights that can inform care decisions, as well as a recognition that data can change actual workflows for providers."

The ultimate idea is to create "a health care system where independent, primary care practices across the country are empowered to deliver high-quality, coordinated care to their patients; where they’re rewarded for improving outcomes and lowering costs, thereby helping them stay stable as small businesses," said Mostashari.

"Their success is our success."

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