Iora Health: Redefining Primary Care
Iora’s unique take on primary care – focused on customer service as good as Southwest Airlines and Zappos – shows promise but is its innovative model scalable?
Iora Health redefines primary care and shows strong promise to be the first innovative primary care model that scales successfully. Iora is extremely effective at aligning its business model with its operating model by restructuring the traditional payment and delivery systems in primary care.
Business Model: Capitated Payment and Share of Savings for Primary Care
Iora’s business model revolves around providing primary care services to a population of patients. Iora partners with large companies, unions, and health plans to provide primary care to its employees, members or beneficiaries. Rather than using traditional fee-for-service payment model, Iora charges a flat fee per patient for its services and, in addition receives a percentage of any savings achieved if they are able to provide care for their population at a lower cost than traditional primary care providers. Their hypothesis is that by providing more comprehensive primary care, patients will be healthier and therefore less costly to care for overall. Incentives are aligned: if patients are healthier (i.e. stay out of the hospital), then payers achieve their goal of minimizing costs and Iora receives a portion of these cost savings.
Business and Operating Model Alignment: the Key to Iora’s Success
Other new models of health care delivery have a similar business model to Iora, including the much talked about Patient Centered Medical Home model and Accountable Care Organization, but these have shown little promise because they have not fundamentally changed their operating models. Iora is so successful because its operating model is aligned with its business model. It achieves its goals – the “triple aim” of improving patient experience, clinical outcomes, and affordability of care – through its unique delivery model. At Iora, a team of providers, including a physician, a nurse, and a health coach, cares for each patient. The health coach knows the patient best and heads up the team, alerting others when they are concerned about their patient. In most primary care practices, doctors lead the team while caring for a panel of 2000 patients. At Iora, each doctor cares for around 1000 patients and each health coach has only a few 100, allowing for significantly increased patient interaction. More frequent contact with patients, especially from a coach they know and trust, leads to improved preventative care, earlier diagnoses, and far superior patient adherence to treatment – all resulting in healthier patients and decreased health care costs.
It’s all about customer satisfaction
The health care industry has been slow to embrace patient satisfaction as a key to success, but Iora recognizes the value in patient experience and strives to be an excellent customer service company – comparing itself to Southwest Airlines, Starbucks, and Zappos. Unlike other health care providers, Iora has a flat organizational structure. Every staff member, from health coaches to physicians takes turns answering the phones in the office. Each clinic has daily meetings, run by a rotating staff member, where the most complex or sick patients are discussed. It is not unusual for a physician and health coach to talk to a patient for 45 minutes on the phone about why they are not taking their medications – and then to solve the problem. In other clinics this level of customer service is just not possible: there are no resources for these actions because organizations cannot bill for them.
Great, but can it scale?
Iora defines itself as a business that is meant to scale. There have been several innovative and successful new primary care models, but few have grown beyond 1-2 clinics. Iora, on the other hand, had 11 clinics at the beginning of 2015 and is planning on adding 10 more this year. It has hired a franchising expert from Au Bon Pain as one if its chief executives to aid in growth. Because its business model depends on scale, the directors have made several operational decisions that would not make sense in a single clinic. The most fundamental decision was to develop an in-house electronic health record. This record focuses on user interaction – for both patients and providers – rather than on complex billing codes as most other EMRs do. Because they have dis-intermediated the payer process, they no longer require billing for each service provided, and therefore can focus on providing (and documenting) the services that result in improved outcomes, rather than high reimbursement.
Iora represents a culture change within the health care industry: its focus on customer satisfaction and employee engagement is unique. Outside investors agree that it has the potential to compete on a national level – Iora raised $28 million in venture capital funding earlier this year for a total of over $40 million invested. With net promoter scores higher than Apple and employee satisfaction consistently high, all while achieving greater than 10% cost reductions and 35% decreases in hospitalizations, it certainly seems that Iora has found a magic formula to achieve the elusive “triple aim.”
Resources:
Iora Health Website: http://www.iorahealth.com/model/
Zakaras, Michael. Why Our System Talks Up (but actually fears) Disruptive Innovation. Forbes Magazine. http://www.forbes.com/sites/ashoka/2015/10/23/why-our-health-system-talks-up-but-actually-fears-disruptive-innovation/
Sanger-Kats, Margot. Company thinks it has answer to lower health costs: customer service. New York Times. March 27, 2015. http://www.nytimes.com/2015/03/29/upshot/small-company-has-plan-to-provide-primary-care-for-the-masses.html?abt=0002&abg=1&_r=0#
Hernandez, Daniela. Is a health coach better than an overworked doctor? Wired. Nov 9, 2013. http://www.wired.com/2013/11/wired-data-life-iora-health/
Hugely interesting topic! Indeed, Iora Health is a hot topic among the VC community ($ 28MM Series C funding.)
You posed exactly the right question – How scalable is the model? Can quality be ensured in a franchise model?
I would love to hear your thoughts on competitive threats (how will large providers systems react to Iora expanding?)
Great review! Very interesting to see this very innovative approach in a high risk, high reward start-up that could potentially change how care is delivered across the country.
Your segment on the health coach left me with several questions. How do patients trust the health coach; are they credentialed professionals in the health care space or are they solely facilitators who have patients follow best practiced outlined in a 3-ring binder? It would be interesting their data on how people respond to the coaches. Is the patient/heath coach contact initiated primarily by the health coach? Is the health coach on call? Operationally I see the creation of the health coach as a smart strategic move to manage the care of the patient, but see it as a potentially life threatening issue if the person has no health care background and is unable to see major issues that only a trained individual could see. That seems like it would be a litigiously ripe situation. Moreover, with potentially 300 people per coach, and if the coach reached out to 5 people per day, then you’re looking at about 3-4 points of contact per person per year if you use 262 annual work days. For the “invincible” population of 18-35 year olds, what incentive do we have to want to keep such a high level of contact with that person if I am using health care services on average once every few years? That seems to detract from the level of satisfaction rather than increase it. However, if this service is primarily geared for the older population, that can make sense particularly if it is skewed towards the older demographics (50+ yrs of age) where screenings are key to minimizing long-term cost and to ensure that medications are being accurately and routinely filled and consumed. Operationally and business wise, this seems to make a lot of sense.
I do see tremendous value in the “non-billable” activities that Iora prioritizes, like getting a doctor or health coach routinely on the phone with an ailing patient to walk through taking medications and resolving barriers to successful adherence. I think this is one of the biggest failings of the current health care system, because it financially incentivizes parties not to act on the best interest of the patient but rather to expand the income base through more robust billing for individual services.
It is extremely interesting to see that their operating model included creating their own EHR system; it makes sense strategically but extremely risky as such a small organization. I would be very interested in seeing if they could operationalize connections to large EHR systems like Epic or Cerner given that not all patients with Iora will be prevented from hospitalization. They will need to integrate with these systems to get information regarding their patient’s care at those organizations. I could also see not a scaling issue, but a major competitive threat from these software systems as well as organizations like Cleveland Clinic and Kaiser Permanente who excel at creating independent subsidiaries in the start-up mold. These startups would have the full financial backing of such organizations, have access to their contracting systems and contacts, and have access to the full process of care from PCP to hospice and everything in between.
Great write-up!