When it comes to navigating U.S. healthcare, primary care physicians know all too well that it can be a pain in the neck (pun intended).
But they’re often too overworked and under-resourced to provide more than the most basic support for patients.
VillageMD aims to improve the quality of care by easing the burden on primary care doctors. VillageMD Co-founder and CEO Tim Barry explains that focusing on the most costly chronically ill patients helps reduce pressure on the entire healthcare system.
Founded in 2013, the company announced its $100 million Series B round in September.
Here Tim explains the history and the mission of his company — and how VillageMD is leveraging tech with a human touch to offer better care.
Inspired by a government act
Scott: What opportunity did you see that convinced you it’s gotta be this?
Tim: If you think about the world of insurance historically, it’s all based on pooling: you look at your pool of risk and you try to figure out, is my risk going to get more or less? And then you price it accordingly. And after you price it, you pray that the risk comes in less than what you priced it at.
The Medicare Modernization Act (MMA) of 2003 was the first time that the government said, if you have a thousand people or you have a million people that are your insurance pool, and they are two times sicker than the rest of the pool that’s out there, we’re going to pay you two times more. As opposed to, if you have a pool of people that are 50 percent as sick as everybody else, we’re going to pay you 50 percent less.
Insurance companies have had a 60 or 70 year run of failing to deliver better clinical outcomes and reduce the costs of healthcare. So when this came into being in 2003, and started to be introduced in 2006, the lightbulb went off. I realized that if we’re going to actually deliver a different kind of result, we have to take better care of sick people. That’s about as duh of a comment as you can make to anyone who’s not working in the healthcare industry: but we have a fee-for-service healthcare system where everyone is feasting off of the fact people ‘need’ more and more healthcare. We’d watched a decade of the industry starting to realize that if we’re going to have better outcomes, we’re going to have to care for people who have chronic disease differently.
We started in Houston with 13 primary care providers and then spent the better part of the first two years of the business just proving that we could grow — that PCPs want to be part of a model that is focused on delivering better healthcare, as opposed to referring to specialists or feeding a hospital. From there we went to Indianapolis, and we’re now in eight markets. There are 2,600 PCPs that we work with, and we’re on a good roll.
Tech plus a human touch
Scott: What is the difference from a patient standpoint, or as a clinician: what am I going to experience working with you versus what I’m used to?
Tim: Over 80 percent of the total spend in our $3.5 trillion-dollar healthcare industry is tied to patients who have chronic disease. And what is that person going through? They are experiencing the healthcare system four to five times per year through a doctor’s visit that is a 15 to 20 minute encounter — so it’s a fairly small amount of time they’re spending with the doctor, in spite of the fact that they’re living with that disease or set of diseases 24 hours a day, seven days a week.
So for us, the most important thing that we do is we leverage all the data to identify those patients who are sickest and most in need of a different kind of experience.
That experience is a combination of extra human touch as well as leveraging technology so that we can work with them to help them understand that we’re with you 24/7. If you wake up at 3 AM and you’re not feeling well, we’re available to you. We talk to you, and if we’re convinced that you’re about to have a really acute episode, we’re going to ensure that you get seen by one of our docs, and if necessary that you go to the ER. If you’re hospitalized, there’s someone there that’s a trusted advisor to work with you, to say, it’s okay: here’s what I think it is and here’s what our plan is. When you get discharged, we ensure that you get transportation home. We’re going to come and see you within 24 or 48 hours of you being homebound. We’re going to communicate with your next of kin to make sure they understand what’s going on. All these things don’t happen today in our healthcare system.
The other interesting part is physician satisfaction. Physician satisfaction has hit its lowest point over the last 30 years. They feel that they’re not able to spend the time with their patients to solve their problems. So one of the reasons technology is such a key component for us is that we’re automating things so they can get back to focusing on the patient. And now they have other resources: we’ve got 825 employees embedded in these clinics to help the doctors extend the reach of care they can provide to their patients.
There are nurses, social workers and pharmacists, and people who help them understand the data and see the patients that we should be focused on. So now they feel like they’ve got a team of people working on their behalf to help deliver the best care they can for their patients.
Scott: As others start to recognize that this is the right way to go, what are your differentiating mechanisms?
Tim: Unfortunately I don’t think that the healthcare industry is going to jump on this en masse, so I think we are six to eight years in front of many others — and I actually think we will end up being 16 to 18 years in front before every provider in this country is focused on care delivery. Part of it is that they’re running hospitals, specialty clinics, skilled nursing facilities, and all of those things get paid when they do stuff, so I think it’s going to be really hard for people to think differently for a really long time.
The ways that we think about building that element of differentiation are twofold. One is a cultural aspect. When people come to work at
VillageMD, they understand that 1000 percent of what we do in terms of physical capital, resources etc. is focused on the physician and the patient. So there’s a maniacal focus on that culturally.
The second thing is that we invest six to eight percent of our revenue in technology R&D. We’ve built a tech platform called docOS: we’ve integrated with 45 different electronic medical records, 80 different payer claims systems, 100 hospital systems, pharmacy systems, utilization management systems. We’ve created a comprehensive platform that now allows us — like iOS on your iPhone — to partner with other entities who have interesting applications that can plug into docOS and work in an integrated, seamless way.
So you think about all the different innovation that’s happening in healthcare around technology and applications: in many ways it’s awesome. What Glen [Tullman] and his team have done at Livongo I think is fantastic, but it’s not integrated into the way care delivery works inside of an organization like ours is. I think they’re going to enjoy some great success, but it won’t be as good unless it’s truly integrated into a comprehensive system. That’s what we’ve built through docOS. It not only allows us to create better patient experiences, it allows us to create a whole different kind of experience for the provider and the care team inside of the clinic.
I’m not a doctor, I can’t treat anyone’s disease: but I can create an enablement vehicle so that more and more primary care docs know that they can deliver the best care they possibly can.