Iora Health Redefining Primary Care

As part of the “Healthcare Disruptive Technologies & Innovations” series, Credit Suisse, an international financial services company, https://www.credit-suisse.com hosted a small group breakfast with Iora Health’s https://www.iorahealth.com Co-Founder and CEO, Rushika Fernandopulle, and CFO Dave Fielding in New York City.

Iora uses primary care as a lever to reduce healthcare spending, but Iora management notes unlike a typical practice based on a fee-for-service model, the company is getting paid based on patient outcomes.

The company primarily started with a primary care capitation model, where it was paid a fixed fee for primary care. Eventually, the company moved to what the company calls the global based model where the company takes responsibility for the whole healthcare dollar.

As the company’s business evolved, the clinical model of the company did not change, but the company went from primary care with direct payments from patients to employers paying a primary care “Per Member per Month” (PMPM) which is double the typical primary care spend.

One of the key obstacles in the employer market is retention since there are many large employers that have a high churn of employees and it typically takes 2-3 years for the company to see results.

Iora’s management notes that MA is a great place to adapt their model but there are many dynamics in the employer market which make it difficult. For example, the baseline hospitalization rate in Medicare is 300 per 1,000, but for the employer population, it is 50 per 1,000 with many of the hospitalizations due to childbirth.

The company in selecting markets to enter, now looks at MA penetration rates, levels of avoidable admission rates, physician shortages, plus other factors. The company also works with Medicare FFS patients with the hope of converting them to MA patients eventually.

As for the retention rate of their physicians and health coaches, the company notes that 10 percent of the doctors leave in the first six months. For health coaches, which is an entry level position, the retention rate is roughly two years and the company would like the retention rate to change to three years.

Iora plans to have 50 practices and be in a dozen different markets by the end of 2019. The company believes it can build out 15-20 clinics per year for the next few years. The company is currently not profitable on a consolidated basis but has profitable practices. So far, Iora has raised $240-$250 million.

For more information or to provide feedback, email Research Analyst Jailendra Singh, at jailendra.singh@credit-suisse.com.

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