- Iora Health, a startup that’s created a new kind of clinic that charges a monthly fee, is seeking to raise new funds as it expands its reach, according to two sources familiar with the round.
- The round, which has not closed yet, is expected to bring in more than $100 million, according to the sources.
- Iora works with “sponsors” — mainly employers or private health plans for the elderly (known as Medicare Advantage) — that cover a monthly fee for primary care. Iora also builds out care teams of nurses and other health professionals that can help the doctors within the practice.
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Iora Health, a startup that’s created a new kind of clinic focused on caring for the elderly, is raising a new round of funding to expand its reach, according to two sources familiar with the round.
The round, which has not closed yet, is expected to bring in more than $100 million, according to the sources. They asked not to be identified because the information isn’t yet public.
A spokesperson for Iora declined to comment.
The company most recently raised a $100 million series E round in May 2018. In total, it’s raised more than $250 million from investors like GE Ventures, Flare Capital, F-Prime Capital, Khosla Ventures, Temasek Holdings, and Humana.
The funding will help Iora expand its presence in the US and as it prepares to care for traditional Medicare patients in addition to those in private Medicare Advantage plans, following a new initiative from the Centers for Medicare and Medicaid Services, according to one of the sources.
Iora is already expanding its footprint across the US. Iora has more than 30 clinics, and it plans to open another 16 over the rest of 2019 in states such as North Carolina, Georgia, and Colorado, the company has said.
How Iora works
The company is helmed by CEO Rushika Fernandopulle, who 15 years ago had a radical idea.
A primary care doctor by training, he had been treating patients in the standard, insurance-backed way. But he started to realize that wasn’t working, and insurance wasn’t covering what he wanted to do for patients.
“Working in the system, you have to be blind, deaf, and dumb to not realize that the system is broken,” Fernandopulle, told Business Insider in an April interview.
So he decided to create something new. The practice was initially called Renaissance Health and was based in Arlington, Massachusetts, outside of Boston.
There, Fernandopulle gave patients a proposition: He could charge them around $40-$50 a month and wouldn’t take insurance. In return Fernandopulle could give them longer doctor’s visits, follow-up calls, and more hands-on care to keep them healthier.
Since then, Fernandopulle has gone on to found Iora Health, which works with “sponsors” — mainly employers or private health plans for the elderly (known as Medicare Advantage) — that cover a monthly fee for primary care. Iora also built out care teams of nurses and other health professionals that can help the doctors within the practice.
Iora says the approach is working. In one group of Medicare patients, Iora says it reduced hospital admissions by 50% and emergency room visits by 20% over 18 months.
Doctors care for a group of about 500 to 700 patients, depending on where they practice and the health of those patients.
Under the new CMS initiative, which is voluntary for doctors, companies such as Iora could stand to get more business from those in traditional Medicare plans. The Centers for Medicare and Medicaid Services (CMS) said in April that it’s expecting to include about 25% of Medicare participants in the new model, or nearly 11 million people.
The changing way people are going to their doctor
Iora is one of a number of new primary care models looking to change the way we go to the doctor.
Over the past few years, models like venture-backed Iora Health, family-owned ChenMed, and private-equity-backed Oak Street Health have picked up steam in their approaches to caring for elderly Americans, boosted by the growth of private Medicare plans, attracting hundreds of millions in funding.
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And venture-backed primary care startup One Medical is reportedly gearing up for an initial public offering, which could determine whether public markets are as interested in the model.
And others are 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.