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Farzad Mostashari Launches New Startup Company Aledade – A Physician-Led ACO in a Box

Posted on June 18, 2014 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

I know when I first heard that Farzad Mostashari landed at the Brookings Institution after leaving his position as National Coordinator, I couldn’t imagine it being Farzad’s long time home. However, it was a really smart short term landing spot that would give him the opportunity to prepare for his next adventure.

We just learned that Farzad is now entering the startup world with the launch of a new company called Aledade which partners with primary care doctors to form ACOs. In a blog post introducing the startup, Farzad said “The world of start-ups may not be the usual path for those leaving a senior federal post, but it’s the right decision.” I’m not sure the career path of former senior federal employees, but I think the startup world is going to fit Farzad really well. Plus, who would you rather have leading your ACO efforts than Farzad?

Maybe we should have been able to predict this move if we’d listened closely to Neil Versel’s interview with Farzad Mostashari at HIMSS. As Neil comments, “Always the champion of the little guy in healthcare, Mostashari also brought up the notion of physician-led ACOs, or, as he called it, the “Davids going up against the Goliaths.””

Aledade has received $4.5 million in investment from Venrock and the company is targeting four areas of the country: Delaware, Arkansas, Maryland and the metro New York area (not surprising considering Farzad’s past connection to NYC).

What’s also interesting is that Aledade is building their financial model on a performance model. They aren’t requiring any up-front cost to physicians and instead are opting to make money when the physicians realize savings. I’ll be really interested to see how this works out in practice. Many of the savings that ACOs have realized could be considered fuzzy math. Although, maybe Aledade will just take a percentage of the additional ACO payments the physician ACO receives.

I’ll be interested to see what technologies come out of Aledade. I can’t imagine them launching a full EHR and so they’ll have to integrate whatever they do with dozens of EHR companies. This will be a tremendous challenge. Will they build the technology in house or just partner with an outside vendor?

I’ve heard Farzad say that the move towards value based reimbursement was happening quicker than most of us realize and that the fee for service and value based reimbursement models can’t happen at the same time. The launch of Aledade is a great example that he’s not just paying lip service, but he’s fully committed to this change.

VC Investment in Healthcare

Posted on April 25, 2012 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

There’s a real change happening right now in the venture capital healthcare investment world. In a recent article on NPR they highlight one piece of the change that’s happening with VC investment in healthcare:

The share of venture dollars flowing to seed and early-stage investments in biotechnology and medical devices has plummeted since 2007, when investors pumped $3.6 billion into 332 deals in which a price was disclosed, according to data compiled for Kaiser Health News by FactSet Research Systems. Overall venture investing declined by nearly one-third as the economic recession set in.

Many might look at this and say that this is a bad thing for healthcare. I think this this is a good thing for healthcare. One reason why is described in the same article:

“If you come in with [a device] that’s 10 percent better and twice as expensive, it’s hard to get anyone to care,” said Bryan Roberts, a Palo Alto, Calif.-based venture capitalist at Venrock, a Silicon Valley company that invests in firms working on health services, medical devices and drugs.

I think it’s healthy that we’re no longer investing twice as much money in something that delivers only partially better care. Sure, we still need companies innovating and looking at how that 10 percent better care can have an extra 0 on the end and be 100% better care.

Plus, I think we’re seeing a shift in healthcare investment into a large number of smaller companies who can innovate as opposed to larger sums of money into medical device and biotech companies. In some ways we’re seeing the costs associated with a startup company in healthcare starting to come down the way they did in the IT side of things.