Iora Health, a Cambridge startup aiming to "reinvent primary care" with a novel model for payment and delivery of care, plans to open its first Boston area primary care practice at the start of 2013, CEO Rushika Fernandopulle said in an interview.
The practice will include two sites, at the Lahey Clinic in Burlington and at the Dorchester headquarters of the New England Regional Council of Carpenters, Fernandopulle said. The 20,000-member union is initially sponsoring the new practice for use by a portion of its members, he said.
The practice will follow the model of Iora Health's two existing primary care practices, which opened early this year in Las Vegas and Hanover, N.H. The model focuses on spending more on primary care, with the goal of drastically reducing overall health care costs and improving health outcomes down the line.
Iora's approach involves a "completely different" payment model and delivery model for primary care, said Fernandopulle, a Harvard-trained medical doctor.
"What everyone else is trying to do is improve existing practices, making incremental improvements," he said. "We figured out that maybe what we need to do is start from scratch."
Instead of going through a health insurer and paying for each employee's visit to a primary care doctor, employers pay a flat monthly fee for each employee who joins an Iora practice. No claims need to be filed, saving on administrative costs. But the costs are still about double the average for primary care — $50-$60 a month rather than $25-$30 — so that the practice can spend more time working with patients to improve their health, Fernandopulle said.
Iora practices do that by pairing every patient with a health coach, who stays in close contact between doctor visits and is available in-person and by email, text and video chat, he said. The practices typically employ two primary care physicians and eight health coaches along with other staff.
Iora has also developed its own IT system to better keep track of how patients are doing and alert the practice when patients are getting into health trouble, Fernandopulle said. Patients are also allowed to see and write in their medical records, he said.
Iora Health, founded in early 2011 and venture funded with $6.25 million last October, is the successor to Renaissance Health, which Fernandopulle founded in 2004. That company helped to set up a handful of primary care practices in the U.S. with a similar delivery model, including practices in in Atlantic City and Seattle.
The result, after one year, was an average 48 percent drop in emergency room visits and a net spending reduction of 12.6 percent in Atlantic City and 20 percent in Seattle. Outcomes should be even better with the Iora-run practices, Fernandopulle said. "I think we've gotten better at the model, because we've done it several times," he said.
The two current Iora-run practices are each sponsored by one employer, which offers access to the practice as an option to employees. The Las Vegas practice, which opened in January, is sponsored by the Culinary Health Fund and serves 800 hotel and restaurant workers. The New Hampshire practice opened in February and is sponsored by Dartmouth College, with 600 patients currently. Both practices are ahead of Iora's projections for patients joining, Fernandopulle said.
Iora expects to open its third practice, in Brooklyn, in October or November, with the sponsor being the Freelancers Union, he said.
The Massachusetts practice, meanwhile, is expected to open just after Jan. 1, he said. Iora Health has signed a letter of agreement with the Lahey Clinic to use their site in Burlington and with the Carpenters union to sponsor the practice, though additional sponsors will likely sign on to use the practice, Fernandopulle said.
Unlike the other Iora practices, the Massachusetts practice will start out only serving patients which have serious health problems, he said. Blue Cross Blue Shield of Massachusetts, which provides insurance for the Carpenters union, is helping to identify the patients, Fernandopulle said.
"With the carpenters, when you have so many people, it makes sense to start with the sickest group of people," he said. "And if you take any population, 10 percent of the population ends up responsible for two-thirds of the spending. These are the people with multiple chronic conditions, and they're the ones that don't do well in the current system."
Iora also plans to regularly send a "clinical SWAT team" — consisting of a physician and health coach — to visit with "the sickest of the sick" patients at their homes or rehabilitation centers, Fernandopulle said.
"Those people are too sick to come into a primary care practice, so you have to go to them," he said.
The goal for Iora Health is to see how things stand a year from now with the four practices before looking to accelerate the scaling, Fernandopulle said. If all goes well, Iora would like to build 100 practices in the next five years, he said.
"An awful lot of people spend a lot of time talking about fixing health care, and writing about it," Fernandopulle said. "We're actually just doing it."
Still, he said, "we’re just in the beginning — we're less than a year old from our Series A ... We're taking it slow at the moment because we want to get it right."
Iora's venture backers are .406 Ventures (represented by Liam Donahue), Fidelity Biosciences (represented by Stephen Knight) and Polaris Venture Partners (represented by Terrance McGuire).
The company was co-founded by Fernandopulle and Christopher McKown, who serves as executive chairman and who formerly co-founded Health Dialog, which was acquired by BUPA for $775 million in 2007.
Iora Health employs nearly 50 overall, with 18 in Cambridge, and expects to grow to about 65 in total by the end of the year, Fernandopulle said.