Mostashari startup draws $30M in second round

New funds expected to help company expand
By Bernie Monegain
10:50 AM
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Aledade, the ACO company that former ONC chief Farzad Mostashari, MD, started a year ago after stepping down from the government post, just landed $30 million in a second round of funding.

Mostashari says the company will use funds to expand service offerings and engage private health plans

Aledade's stated mission is to make it easy, profitable, and low-risk for independent primary care physicians to manage the new health care economy as the Industry shifts from a fee-for-service model to one focused on outcomes.

The funding round was led by ARCH Venture Partners, and includes an additional investment from Series A investor Venrock.

[See also: Former ONC chief launches startup.]

The funds will support Aledade's work in establishing new accountable care organizations and expanding existing ones.

The company will also continue to build prevention-focused applications and practice-centered software platforms for partner practices; initiate value-based arrangements with commercial health plans and hire additional team members to help primary care practices deliver better care and better health for patients at lower cost.

Over the next three to five years, as much as half of the annual $3 trillion spent on healthcare is scheduled to move into value-based payment arrangements, such as ACOs that reward positive outcomes for patients and high-quality healthcare.

"There is a revolution happening in healthcare, and we are finding that doctors across the country are ready to embrace this change, but need a partner to help them get there. Aledade is that partner," said Mostashari in announcing the new funding. "We’re helping independent physicians achieve better outcomes for their patients – and be compensated for it. The demand for our services has been overwhelming. This funding will help us reach more doctors, and continue to provide them an expanding array of services to better run their business and care for their patients."

One year after the company’s launch, Aledade has expanded its national footprint from New York, Maryland, Delaware, and Arkansas to include West Virginia, Louisiana, Kansas, Mississippi, and Florida. The company is on course to triple the number of covered Medicare beneficiaries in Aledade ACOs from approximately 25,000 last year, to more than 75,000 in over 100 physician practices by the end of 2015, according to Mostashari.

[See also: Mostashari's startup to help build ACOs.]

"Aledade combines a world-class team at the forefront of the health care industry, with deep connections to primary care physicians, regulatory savvy, proprietary EHR and claims data analysis, and one of a kind technology products," said Robert Nelsen, co-founder and managing director of ARCH Venture Partners, in a news release. "The company is uniquely positioned to help lead the U.S. health care system, with primary care physicians at the center of their patients’ care."

"Aledade has successfully started to scale its unique ACO model, and is poised for explosive growth in its next stage of expansion," added Kristina Burow, managing director at ARCH.

Over the past year, physicians in Aledade ACOs have transformed their practices, according to Mostashari. Aledade ACO practices have increased preventive care visits by 400 percent and vaccination rates for patients by 250 percent. All Aledade ACO practices offer same or next day appointments for patients with urgent needs, and 95 percent of Aledade ACO practices provide 24 hour-a-day, 7-day-a- week patient access to an on-call physician. To manage all of this, all Aledade ACO practices have access to the company’s proprietary cloud-based technology and analytics platform.

Today’s funding announcement reflects an accelerating trend across the healthcare industry, away from a fee-for-service system and towards one focused on outcomes and value. In January, HHS Secretary Sylvia Mathews Burwell announced that Medicare will shift 50 percent of Medicare reimbursements towards alternative payment models such as  ACOs by 2018, echoing a goal set by a coalition of private-sector payers. Most recently in April, a bipartisan majority in Congress voted to give doctors a 5 percent bonus for participating in alternative Medicare payment systems like ACOs.

"Aledade’s ACO allows doctors to focus on health, not finances," said Jennifer Brull, MD, medical director of Aledade’s Kansas ACO, in a news release. "Doctors often dispense medical advice – through email or over the phone – that doesn’t require patients to come for an office visit. While this saves the insurance company money, to date doctors haven’t been paid for it – even though it leads to healthier patients. Our ACO rewards doctors for keeping their patients healthy – which is what we want to do in the first place."

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