Yuvo Health raises $7.3M to support Federally Qualified Health Centers

There are only 1,400 FQHCs in the country, leaving 20 million people without access to care

The pandemic exposed the gap between the inequities in the healthcare system. For example, all of the people who rely on Federally Qualified Health Centers (FQHCs), and the number of people who can't access care.

There are about 4,000 Medically Underserved Areas across the US; these are specific designated districts where there are not enough primary care services to support the population. Those patients are mainly served by FQHCs but there are only 1,400 of those in the entire country. As a result, there are 20 million people in the US who have Medicaid or are uninsured that do not have access to an FQHC.

Yuvo Health is on a mission is to support these institutions, specially helping them transition towards value-based care in order to help them compete. 

"The underlying problem we're trying to solve for is health care access; in particular, access to primary care services for underinsured and uninsured individuals. The main impetus for us is a good number of our founding team happened to be in those communities; either we were uninsured or on Medicaid and, for many of us in those communities, our only access point to primary care is FQHCS," Cesar Herrera, the company's CEO and co-founder, told me.

In order for an FQHCs to get funding, he explained, they have to reside in an MUA and provide services for Medicaid and uninsured individuals on what's called a sliding scale fee basis, meaning they can't deny any patient due to their inability to pay. In most cases, the amount they make is not enough to support the underlying cost for delivering care for their populations.

"They are amazing institutions that are dedicated solely to providing primary care services for those that can't afford it, either Medicaid or uninsured, but there are not enough of them. And the revenue sources for them are not sustainable to help them grow," he said.

Yuvo Health, which launched in early 2021, acts an an aggregator to ensure that FQHCs have enough capacity to grow and meet the unmet demand for primary care services for those populations by helping them transition towards value-based care. 

On Tuesday, the New York City-based company announced a $7.3 million seed round of funding led by AlleyCorp, with participation from AV8 Ventures, New York Ventures, and Brooklyn Bridge Ventures, as well as angel investors, including Dr. Melynda Barnes, Chief Medical Officer at Ro. 

Value-based care is when caregivers are paid on the basis of quality versus per service; the main benefit for FQHCs to transition to this type of care is the additional revenue that comes with, Herrera told me.

In their current state, though many FQHCs do not have access to that value-based care revenue and he outlined three barriers that stand in the way of that, the first being that most FQHCs individually are too small to qualify for value-based care contracts.

"All managed care companies will have a specific minimum number of attributed lives in order to qualify for a contract. It could be like 2,500 or 5,000 attributed lives but many FQHCs, because they're just smaller, don't have the number of lives alone to actually contract with a managed care entity," he explained.

Yuvo solves for this by establishing a global contracting vehicle where multiple FQHCs can take advantage of the contracts that the company establishes; Yuvo negotiate those contracts on behalf of those FQHCs so then they're benefiting from their collective scale in those negotiations. 

The second barrier is taking on downside risk, as FQHCs are regulatorily prohibited from doing so; since Yuvo is not an FQHC, it can take on the downside risk for them, so it enables them to take advantage of those contracts. 

Finally, there's the infrastructure necessary to support the contracts; while there are many venture-backed organizations that are raising tens of million of venture capital in order to establish that infrastructure, FQHCs don't have access to that VC money in order to actually build that infrastructure. They're also too small, in most cases, for that infrastructure to make sense for them, so Yuvo provides it for them. 

"We are building that infrastructure and we can spread that cost across multiple FQHCs. So, that's how we're able to then support those FQHCs and those really critical barriers that would have otherwise prevented their access to value-based care," said Herrera.

On top of supplying them with that infrastructure, Yuvo Health also provides an educational platform for FQHCs; the company has set of informational webinars that it will be holding all throughout January for FQHCs. Its inaugural How-To Guide is called Value-Based Care for FQHCs: Finding Success and Sustainability in a Rapidly Evolving Financial Environment. 

Yuvo Health will use the new funding to triple its 10 member team over the next year, and to expand geographically; right now it's operating in downstate New York, which means New York City and Long Island, along with Westchester and Rockland counties. The plan is to expand to the rest of the state of New York, as well as markets in the mid-Atlantic and Midwest.

It will also use the funding to build out its technology tools and platform, including its data interoperability platform, its population health metrics and solutions, and then some key areas around care coordination, particularly patient engagement and transitions of care.

Along with the funding, it was also announced that Dr. Brenton Fargnoli, Managing Partner at AlleyCorp Healthcare Fund, has joined the board of directors at Yuvo Health.  

"We're really excited about Brenton. He has a lot of experience as an entrepreneur himself. The work that he's done at AlleyCorp has been in incubating specifically digital health healthtech ventures and there's a lot of experience that he brings to the table around value-based care in other markets that are very translatable to the work that we do," said Herrera.

"He has a really great focus and intention on serving the Medicaid space, which is predominantly where our populations and communities are served by. There's a lot of really great value add that will support us as we grow."

That will help with the ultimate vision for Yuvo, which is to see more individuals on Medicaid having access to FQHCs. That will include not only supporting the existing ones by getting them access to more sustainable revenue, and increasing their capacity, but to also help create more FQHCs in Medically Underserved Areas that otherwise didn't have them before. 

"That 20 million patient number is a really grim reminder but also a really important number that we will attach to us in anything we do, and we want to bring that number down as much as we possibly can over the next 10 years," said Herrera.