Aledade
Aledade CEO Farzad Mostashari
- We're starting to get a better understanding of the financials of primary care companies looking to go national.
- When One Medical filed to go public, it reported that it had 397,000 members and operated in 77 locations as of September 30, 2019. For the first nine months of 2019, One Medical's net loss was $34.2 million, and the company took in $199 million in revenue over the same period.
- Business Insider got an exclusive look at some of the financials for Aledade, a six-year-old venture-backed startup that works with independent primary care practices to get paid based on how well they care for patients rather than based on how many visits they have.
- Aledade CEO Farzad Mostashari told Business Insider the company plans to grow its revenue from $76 million in 2019 to an expected $150 million and profitability in 2020 - and said it's working with more than 550 practices who manage the care of 840,000 people.
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When One Medical filed to go public with the Securities and Exchange Commission in January, its filing gave a comprehensive look at the financials driving a primary care provider with national ambitions.
According to One Medical's filing, the firm had 397,000 members and operated in 77 locations as of September 30, 2019.
The company's net losses deepened as membership climbed, the filing shows. From 2017 to 2018, losses widened from $31.7 million to $44.4 million. For the first nine months of 2019, One Medical's net loss was $34.2 million, and it took in $199 million in revenue over the same period.
For the most part, primary care organizations tend to be privately held organizations, or a part of a larger public healthcare company, making it tricky to get a clear picture of where One Medical's financials sit among other primary care businesses.
To get a better sense, we got an exclusive look at the financials for Aledade, a six-year-old startup that works with independent primary care practices to get paid based on how well they care for patients rather than based on how many visits they have.
Aledade CEO Farzad Mostashari told Business Insider the company plans to grow its revenue by 97% between 2019 and 2020 to an expected $150 million and profitability.
Aledade's approach to changing how primary care is delivered and paid for
The Washington, D.C.-based startup's revenue for 2020 will exceed the amount of funding the company's raised, Mostashari said, which is about $136 million from investors including Venrock, GV (which also backed One Medical), and ARCH Venture Partners.
"We don't need to raise a lot of capital," Mostashari said.
In 2018, the startup took in $41.5 million in revenue, a figure that jumped to $76 million in 2019. In 2020, it expects to grow revenue by 97% to $150 million. In 2020, it's planning to work with 550 practices who manage the care of 840,000 people, about half of whom are covered through Medicare contracts.
Aledade's model has a number of key distinctions from One Medical's. For one, Aledade doesn't own the primary care practices. Instead, it works with independent primary care practices and helps them set up contracts that get them paid based on how well they care for patients rather than based on how many visits they have, setting up what's known as accountable care organizations.
That means the revenue Aledade takes in doesn't account for the full revenue a primary care practice like One Medical might take in.
"Our revenue is just the portion of savings that we've created and the health plan has shared with us," Mostashari said.
Say, for instance, a primary care practice is given a certain amount of money from a health plan to care for a patient based on a contract Aledade helps facilitate. Should that practice keep the patient healthy such that the practice only spends about 80% of that money on the patient when they expected to spend 85%, Aledade gets a portion of the money saved.
It also means Aledade doesn't have to spend as much building new brick and mortar practices, which can be an expensive process for companies like One Medical.
"They have to raise hundreds of millions if they want to grow," Mostashari said.
Prior to starting Aledade, Mostashari worked as the national coordinator for Health IT at the Department of Health and Human Services.
Taking primary care national
Aledade isn't alone in looking for new ways to provide and pay for primary care on a national level.
In the past few years, a crop of companies has been gaining steam with new approaches to primary care. And investors have taken an interest in the model, pouring hundreds of millions in funding into some of the companies.
Read more: Meet the 8 companies changing how doctors get paid and building the future of medicine.
Rather than getting paid for each visit or procedure that a patient needs, startups are looking to change the way primary care is practiced, in many cases working to get paid a large fixed sum each month to take care of all of a patient's health needs.
In many cases, that means seeing fewer patients a year - hundreds, rather than thousands - offering additional services, or making the process of getting an appointment more convenient. It's also meant that some models have focused in on certain populations, such as caring for seniors 65 and over who are enrolled in Medicare Advantage plans or patients that are enrolled in Medicaid as well as Medicare.
Health systems are also taking note. For instance, health systems including Utah-based Intermountain Healthcare and Pennsylvania-based Geisinger are taking similar approaches with some of their primary-care doctors. The federal government is planning to pay for care for some Medicare patients in a similar way too.
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