The startup that could disrupt the American health-care system

by Vijay Govindarajan and Ravi Ramamurti

Sharon Callahan was fifty-five, and she was sick and tired of feeling sick and tired. Forty years of smoking had left her with a case of chronic obstructive pulmonary disease (COPD) so severe that to be on time for a 10:30 doctor’s appointment, she would have to start getting ready at 6:30. Just getting out of bed often left her short of breath, and getting fully dressed could take an hour. Walking to her car took another hour, and then she had to drive into Boston and sit in the waiting room until the doctor could see her. In Sharon’s world, a doctor’s appointment was an all-day affair, and there were way too many such appointments. Over the years Sharon had accumulated a dispensary’s worth of treatments to help her breathe more easily: inhalers, steroids, an oxygen tank in her living room. If those treatments helped at all, it wasn’t apparent to Sharon, who had also been diagnosed with diabetes, hypertension, acid reflux, and osteoporosis. She had twenty-seven open prescriptions and was taking more than a dozen pills a day. She had survived a minor heart attack and a blood clot in her lung, and her doctors were now concerned about squamous cell lung cancer.

That year, Sharon spent nine months in hospitals and rehab and bounced around from cardiologist to pulmonologist to endocrinologist to internist to gastroenterologist — twelve specialists in all. None of these specialists conferred with the others, and her primary care physician seldom saw her anymore. Like many of the chronically ill, Sharon was stumbling through the hallways of specialty care, pretty much on her own, racking up $200,000 in medical bills a year.

It was Sharon’s daughter who recommended that she try Iora Health, a new primary care practice that took a different approach, one that borrowed liberally from the task-shifting practices observed in developing nations by company cofounder and CEO Rushika Fernandopulle. In Fernandopulle’s view, reducing unnecessary emergency-room visits, surgeries, and medications— all of which resulted in overutilization of health care by patients like Sharon — was the key to simultaneously improving the quality of health care and lowering costs dramatically.

A Doctorpreneur Is Born

As a student at Harvard Medical School, Fernandopulle was frustrated by the inefficiencies and outright failures he saw in the American medical system. How could the United States spend more than twice as much on health care as other free-market democracies and yet have worse outcomes?

Most galling was a number so small it was frequently overlooked: 4 percent. That was how much of every US health-care dollar was spent on primary care, Fernandopulle’s chosen field of medicine. Four percent. To Fernandopulle this meant that 96 percent of every health-care dollar was being spent on problems that primary care failed to address. The conventional primary care model seemed ridiculous: greet patients, ask a few questions, run some simple tests, and then pass the patients on to higher-paid specialists who collected a fee for every service they performed. It was the same system that left Sharon wandering the hallways of secondary and tertiary care. No wonder primary care was low paying, carried little prestige, and was chronically short of doctors.

And yet Fernandopulle knew that many of the chronic conditions that so overburden secondary and tertiary care — obesity, diabetes, hypertension, alcoholism, heart disease, emphysema, and others — can be addressed very powerfully by education and prevention efforts at the community level and in the primary care office. He had seen intensive interventions work in health-care systems outside the United States — in the Caribbean, in Africa, and in Southeast Asia. A big-picture thinker by nature, Fernandopulle resolved to put the primary back in US primary care. He was twenty-five.

According to Fernandopulle, “I went into health care to help people, and it was clear that our current system doesn’t allow us to do this. Indeed, I think it is immoral that we allow such crappy care despite spending such an obscene amount of money. Our goal isn’t just better care for our patient, but to raise the bar and challenge everyone to dramatically up their game.”

Not yet a doctor at the time, Fernandopulle was already thinking like an entrepreneur and challenging the competition. His goal was not just to carve out a bigger niche for primary care physicians but to disrupt the system, to wrest control of some of the dollars currently tied up in the overbuilt, overbilled, and overmedicalized segments of the US health-care system — secondary and tertiary care — and reinvest those dollars in primary care in ways that could save significantly on downstream spending.

For the past seven years he has done just that, building Iora Health as a network of primary care practices that caters both to the healthy and to the chronically ill, using a model that relies on (1) intensive task-shifting from doctors and nurses to health coaches, (2) a capitated flat-fee payment system, and (3) a custom-built IT platform that puts patients’ needs over billing codes. Fernandopulle predicted that if participating health plans would double their spending on primary care, they would save three to ten times that on specialist visits, diagnostics, procedures, drugs, emergency-room visits, and hospitalizations.

And he was right. Five years after its launch, in 2011, Iora had reduced hospitalizations for its members by 40 percent and cut total health-care spending by 15 percent to 20 percent — far beyond the 4 percent needed for breakeven. Other measures of success— including clinical outcomes and patient and staff retention — were equally impressive. In late 2017, Iora had twenty-four locations in eight cities, employed four hundred people, and had attracted nearly $125 million in venture capital. It was a fast-moving enterprise that sought to turn the American health-care-delivery system on its head, putting primary first.

Iora Health embodies the principles of task-shifting, leveraging technology, and moving toward a hub-and-spoke network. Most remarkably, Rushika Fernandopulle is one of the most purpose-driven individuals we’ve met. Under his leadership, Iora has the potential to disrupt the American health-care system more forcefully than any of the established US health-care players.

Task-Shifting: Health Coaches

The most novel members of the Iora team were the health coaches, the cheerleaders and facilitators who helped to execute the doctor’s treatment plan in frequent, personalized, one-on-one encounters with patients. They were the face of the practice, encountering patients dozens of times a year. Their job was to proactively manage each patient’s health and intervene the moment trouble arose, especially with chronic-care patients, whose biggest — and costliest — issue was compliance (or, really, health problems associated with noncompliance). And while some competitors assigned health coaches only to their sickest patients, Iora assigned one to every patient. Fernandopulle wanted each patient to be as healthy as he or she could be in the long run.

Iora’s health coaches typically came to patient care with no prior medical training at all. In their previous lives they worked at places like Sears and Home Depot and Dunkin’ Donuts. Iora surrounded primary care physicians with health coaches, freeing the physicians up to do well the things that only doctors can do.

To members of the medical establishment, these health coaches might look like losers. Some had only high school degrees. But they had cultural fluency. They lived in the neighborhoods where they worked, they spoke the patients’ languages, and they understood the patients’ difficulties. They had “emotional intelligence,” and to Fernandopulle, that was what mattered. He recruited for empathy and trained for skill, and he set a very high bar. In fact, of the 25,000 applicants for health-coach jobs, Iora hired only about 250. “It’s a 1 percent acceptance rate,” Fernandopulle pointed out. “It’s harder than getting into Harvard!”

The work was hard, too. It required imagination, compassion, humor, and doggedness, and it defied an easy job description. Health coaches did some work that doctors did, like reviewing charts and meds. They did some work that nurses and techs did, sometimes taking vital signs or drawing blood. But mainly they did work that no one else in primary care did. They developed a “worry score” for every patient. They followed up on every sick visit. They took diabetic patients to the grocery store and helped them shop for food. They did med checks, led Zumba classes, and ran smoking-cessation clinics. They served as confidants, cheerleaders, and friends — dispensing high fives and tough love in equal measure.

Fernandopulle loved to tell their stories. In Atlantic City a coach programmed the clinic’s phone number into all the patients’ phones, so they wouldn’t make needless calls to 911. A patient in the same practice came in with out-of-control diabetes and such severe hypertension that she wasn’t even going to work. Six months later, everything looked fine. When Fernandopulle asked if his medical skills were responsible for the improvement, she told him he had nothing to do with it: she just didn’t want to let her health coach, Millie, down. In Las Vegas a health coach helped a hypertensive teenager give up Cheetos and lose fifty pounds before football tryouts.

And in Revere, Massachusetts, a health coach visited Sharon Callahan at home and helped her throw out most of her meds. Fernandopulle had reviewed Sharon’s voluminous medical chart and determined that twenty of her twenty-seven medications were costing her money but doing her little good. She could also reduce the number of specialists she was seeing from twelve to two, eliminating most of the medical appointments she so dreaded. Fernandopulle persuaded the remaining specialists to call him with an update after each appointment with Sharon, and Sharon trusted the coach to manage the rest. For the first time in years, Sharon felt comfortable with her medical care.

Iora hired four health coaches for every doctor, paying them a fifth of a doctor’s salary and half a nurse’s. Because some of the more menial tasks were handed off to the health coaches, doctors and nurses could be more productive. There were cost savings here, to be sure, but that was not why Fernandopulle did it. He did it because the coaches were better at what they did than anyone else on the team — and because they loved it. Iora’s approach was not just cheaper. It was also better.

Liam Donohue told the story of an Iora holiday party at which health coaches stood up to speak about the personal rewards of their job. “These people were so excited that their skill set could have relevance in improving someone’s life in a really meaningful way,” recalled Donohue. “People got up and wept. They were literally crying as they described patients they had helped. It was incredibly moving and very different from a lot of [ health-care] companies I’ve seen. The sense of purpose and reward from primary care just flows through the company.”

Task-Shifting: The Big Picture

Fernandopulle saw the health coaches as Iora’s pivotal players, levers that switch the tracks for all that follows. In fact, Iora was all about task-shifting. Fernandopulle thought primary care was caught in a downward spiral — accorded just 4 percent of total health-care spending and with insurers ratcheting down payments, which meant that primary care visits would have to be even shorter, making care worse and hospitalizations higher. It made no sense. Iora’s strategy was to turn this vicious cycle into a virtuous cycle, by investing more in primary care with well-designed systems, IT, and culture. He wanted to keep specialists away from routine cases and people away from hospitals, thereby lowering total health-care costs and freeing up even more resources for primary care. In other words, at the system level, Iora shifted much of the work of patient care from the secondary and tertiary segments of the delivery system back to the primary care office. Within that office, Iora also shifted work, from the primary care physician to a care team that included not only a doctor and nurse but also, typically, a health coach and a social worker, and perhaps also a mental-health counselor, a nutritionist, and a patient advocate. These were examples of “down-shifting” and “share-shifting” of tasks, and they served to make Iora Health practices less hierarchical and more collaborative than most physicians’ practices, as well as more cost-efficient.

The health coaches added something like “in-shifting” to the mix, bringing traditional community-health supports into the doctor’s office. Their job titles were new, but much of what the health coaches offered was like old-fashioned advice from the corner grocer, or the old family remedy your auntie talked about, or the gruff encouragement of a high school coach, or the reassurance of a rural general practitioner during a house call. Iora was recapturing the social context of health as experienced by earlier generations in America — and by many in developing countries today — and recreating that social connection within the primary care physician’s orbit. The shifting of tasks added cultural capital to the Iora primary care tool kit, while also contributing to local job creation.

The effect of all this task-shifting at Iora was a reduction of overall costs for the payers, better delivery of care and better job satisfaction for the providers, and improved health outcomes for the patients.

Vijay Govindarajan and Ravi Ramamurti are the authors of Reverse Innovation in Health Care: How to Make Value-Based Delivery Work, from which this article is excerpted.