Irvine-based Alignment Healthcare LLC is emphasizing coordination and management in an effort to cut healthcare costs.
The approach has gotten some initial traction—the startup said last week that it raised $125 million in funding from Greenwich, Conn.-based General Atlantic LLC.
General Atlantic is a global investment firm with more than $17 billion under its management.
Alignment will use the money to support its operations and expand to new markets, including some moves it said it will announce in coming weeks.
It partners with hospitals, health plans and primary care doctors’ groups to streamline medical care for chronically ill seniors participating in Medicare Advantage.
The company says it wants to improve the healthcare system and reduce costs through coordination and cooperation among service providers. It points out that 80% of U.S. healthcare spending comes from the 20% of the population who are chronically ill seniors.
“The United States has the best hospitals, doctors and technology in the world, yet our health system for those needing ‘sick care’ is not efficient,” John Kao, Alignment’s founder and chief executive, said in a statement.
The company’s business model “enables integration by creating alignment across all parties so that the consumer’s healthcare experience and clinical outcome both improve,” Kao said. “We’ll connect the dots. This is population-based management—one patient at a time.”
Alignment provides patient care through a closed-network HMO model that can be branded under partners’ names if desired. Patients aren’t responsible for deductibles or co-payments.
“It’s kind of like concierge medicine in an HMO format,” Scott Reid, Alignment’s chief development officer, said in an interview last week.
Reid said the model could be adapted to other markets, including large employers.
Extensivists
Alignment’s HMO provides care at medical offices with dedicated doctors, nurses, nurse practitioners, and medical assistants, with an emphasis on “care for the whole person.”
Its doctors practice what’s known as extensivist medicine, a relatively new discipline that focuses on high-risk patients.
Extensivist doctors are internal medicine or family medicine physicians who coordinate care exclusively for patients with multiple complex medical problems.
Reid said the use of extensivist doctors will help Alignment reduce the average length of hospital stays for its patients and continue to manage care after discharge, whether at home, a rehabilitation center or another facility.
The company’s business model also emphasizes what Reid called earlier detection of “acute episodes related to their chronic illness.”
He gave an example of a diabetic patient who develops a toe abscess—a condition that if left untreated could lead to amputation, which he called “a very costly procedure.”
He said Alignment’s patients get free pedicures once a month in which their toenails are trimmed and their feet are inspected for abscesses.
“If there’s an abscess, we treat it immediately,” Reid said, adding that Alignment’s nurses and nurse practitioners are certified in wound care.
“By doing that … we can reduce amputation rates by about 80%,” Reid said.
Alignment patients are monitored wirelessly at home as part of their care plans.
Their weight, heart rate, blood sugar and blood pressure information are relayed to “command centers” in Alignment’s clinics.
General Atlantic
General Atlantic came to Alignment’s attention through the latter’s charitable arm, the Alignment Foundation, which works with local hospitals and faith-based organizations to run free weekend clinics for low-income seniors.
Mariners Church, a nondenominational evangelical congregation in Irvine, is an Alignment partner.
Reid said General Atlantic also has a philanthropic family funding bent, which he said was a “magnet” for Alignment.
Alignment doesn’t expect to raise additional funds, although General Atlantic is capable of doing so, according to Reid.
“I think that the $125 [million] will launch us and we’ll be self-sustaining,” he said.
Alignment is prerevenue and has 20 workers.
It plans to hire more as it moves into new markets, Reid said.
It also has a rosy outlook on its growth prospects because “there is nobody in the marketplace that does what we do,” Reid said.
Kao founded Alignment in 2013. He was previously president of Downey-based CareMore Medical Enterprises Inc., which he and other investors acquired in 2006.
Indianapolis-based WellPoint Inc. bought CareMore in 2011 for about $800 million.
Kao also spent time with TriZetto Group Inc., a provider of healthcare billing software that was founded in 1997 by OC healthcare industry veteran Jeff Margolis. New York-based private equity firm Apax Partners Inc. took TriZetto private in 2008 for $1.4 billion.
Kao’s background also includes serving as chief executive of PacifiCare Ventures, the e-commerce unit of PacifiCare Health Systems Inc., which is now part of Minneapolis-based United HealthGroup Inc.
