In this interview with Farzad Mostashari, I explore why he decided to found the company and what he hopes to achieve. It is an ambitious vision, but one with a lot of passion (and money) behind it – two important keys to success!
Below are some excerpts from my TDWI Radio interview with Dr. Farzad Mostashari, former National Coordinator for HIT and Visiting Fellow at the Brookings Institution, discussing the launch of his new VC-backed company, Aledade. Aledade’s mission is to partner with independent primary care physicians to make it easy and inexpensive for them to form and join Accountable Care Organizations in which “doctors are paid to deliver the best care, not the most care.” Click here to listen to the full interview.
First of all, what does the name mean?
According to Wikipedia, an alidade (note different spelling) is “a device that allows one to sight a distant object and use the line of sight to perform a task.” Farzad says the name was chosen because, in celestial navigation, two things are constant: the North Star and the horizon. You point the alidade to the north star and use it to keep on course. So, Aledade (pronounced “al ee dayd”) signifies the founding team’s desire to “keep our eyes on the stars, but our feet on the ground” — always keeping our sense of true north – and not getting distracted by the day to day stuff we will have to navigate as we attempt delivery system reform.”
How did you decide to found this company?
“While at Brookings, I was able to do a nine-month healthcare “walkabout” talking to a variety of stakeholders including health plans, purchasers, hospitals, independent physicians, technologists, and others. This gave me a 360-degree view of what is happening in healthcare – what are the trends and what are the gaps.” After this experience, he says, he “needed to found Aledade.”
“For the first time in a long time,” he notes, “there is almost virtual consensus to move away from the toxic reimbursement method of paying for stuff, known as the fee-for-service system. There is pervasive frustration – patients, doctors, payers, purchasers, health plans – everyone is frustrated.” The other thing he came away with is how hard it is for everyone whose current income depends on fee-for-service to go through the transition of volume to value. He quotes Lisa Suennen (The Venture Valkyrie), saying these folks have “one foot on the old business model’s grave and the other foot on their new business model’s banana peel.” Or, as Farzad says, it’s like having a foot in each of two canoes.
“But,” he continues, “there is one group in healthcare that I think could do amazingly well during the transition, and that is primary care providers…Primary care services are the one piece of the healthcare sector that we need more of…and we want to help be the drivers of the transition.”
Exactly how are you going to help these docs change their business models?
Aledade will help independent primary care physicians form and join Accountable Care Organizations (ACOs). “ACOs are a new care delivery model in which doctors are paid to deliver the best care as opposed to the fee-for-service model that encourages them to do more care.”
But, Farzad says, “these independent doctors don’t have the capital required to make the needed investments to form an ACO. When you talk with these docs, they will tell you they don’t have much money left over at the end of the year. So, it is hard for them to come up with the million dollars in startup funds needed to build out the ACO infrastructure (IT, additional staff, legal costs and so forth).”
That’s where Aledade comes in. They are going to provide the startup funding so the docs don’t have to put anything in at the beginning. And, they are going to give them the business architecture, ACO structure with all the legal agreements and contracts, help them get an Executive Director, a Medical director and so forth. They will also provide boots on the ground for practice transformation assistance.
Aledade only wants to work with physicians committed to doing the hard work to transform their delivery of healthcare. Although the practices don’t need to come up with a big chunk of change to get started, they do have to pay Aledade a monthly fee. This, Farzad says, is so they can “weed out tire-kickers.”
Do you think it will be difficult for these independent docs to accept the tenets of ACOs? Will they be willing to give up some independent decision-making to meet the needs of the group?
“These are physicians that had many opportunities to be employees, but they have resisted. They now realize if they want to stay independent, they have to band together. They need to be able to have some of the tools that larger practices have. They have to be able to demonstrate value so they can be part of networks, so value setting can be done better, and so they can be in control. It is touching to see how getting back into control of healthcare resonates so deeply with them.”
“These are senior, experienced, competent physicians. I am not going to teach them anything about taking care of patients. Instead, I am going to give them actionable data and I am going the help them make decisions based on a much broader view of cost data than they have ever seen before. They really haven’t had a view of redundant and unnecessary care.” Farzad thinks the physicians will figure out how to solve the problems if they are given the data. “Too many,” he says “think you need to micromanage these physicians, but you don’t.”
Let’s close by talking about your competitors. How are you different?
Evolent, XG, and others that are providing services to help ACOs are “going after people with deep pockets, like health and hospital systems.” Aledade, on the other hand, is “going after people without the most resources…but in terms of keeping people healthy, I want to put my efforts with PCPs.”
“Some of the competitors are only providing a piece of the puzzle – consulting, capital, technology – but we are providing the whole thing. We are going to make this as turn-key as possible so you don’t have to cobble it all together while still seeing 30 patients a day. We are going to provide these doctors with a trusted team that knows how to execute, knows the regulations, has insight into the future of healthcare and understands technology.” In terms of competitors, Farzad closes by saying, “I hope there will be more groups like us because the true adversary is the reimbursement system…fee-for-service is really the enemy.”
To listen to the entire interview, click here.