Primary care is ripe for disruption. Here are the players trying to shake up the market

A new crop of healthcare startups are trying to shake up the $260 billion primary care market.

It's an industry that's ripe for disruption, according to Canaccord Genuity healthcare analyst Richard Close.

Studies have shown the value of primary care through lower healthcare spending and improved health outcomes. But there has been an underinvestment in primary care in the U.S. compared to other developed countries and there is a shortage of primary care providers, Close wrote in an analyst report examining the primary care industry.

Regulatory and reimbursement changes are paving the way for new primary care models and alignment with payers, according to Close's analysis. And the insurance market creates a sizeable opportunity for employer-focused and elderly-focused primary care. 

Primary care practices are getting hit hard by the loss of revenue during the COVID-19 pandemic and the impact of the health crisis is forcing organizations to rethink how they operate

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COVID-19 is shining a light on the divide between business models that can thrive under the circumstances and those that cannot, Close said. "Business models such as Zoom, Amazon, Netflix, and Teladoc have been clear winners. There are also winners and losers in primary care," Close wrote.

Many of the new primary care startups focus on value-based care and payment models, which are not as reliant on volume of visits or procedures, and these companies could be in a better position to navigate the evolving COVID-19 pandemic, according to Close's analysis.

Primary care startups also use next-generation technologies such as patent portals, mobile applications, remote monitoring and telemedicine. Providers that can connect to their patients virtually have been much better equipped to maintain relationships with their patients during stay-at-home orders, Close wrote.

Given the vast size of the primary care market, it's no surprise that private equity and venture capital have rushed into the market. One Medical is the one publicly traded company in the space while private companies such as Iora Health, Oak Street, Privia Health and VillageMD have each raised capital and are leading the evolution of primary care, Close said.

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Startups Firefly Health and Galileo as well as more established telehealth players such as Doctor on Demand, MDLive, and Teladoc also have rolled out virtual-first primary care offerings to payer and employer customers. 

Digital health company Hims and Hers also has jumped into the space as it fast-tracked an expansion of its telehealth services to offer access to primary care.

Here are some of the leading players and why they are worth watching, according to the analysis:

One Medical: A membership-based, tech-integrated, and consumer-focused primary care platform, the company has been around since 2002. One Medical went public in January and raised $245 million in its initial public offering.

The company, which is backed by Google parent Alphabet, currently serves about 455,000 patients in 11 markets across the U.S. and plans to add more later in 2020.

In its first quarter as a public company, One Medical saw its sales grow 25% to $78.8 million, but the company also reported wider-than-expected quarterly losses.

Forward: Another membership-based primary care company, Forward has built various proprietary technologies including a custom electronic health record system, a body scanner, and real-time blood testing, according to Close.

The membership offering to patients covers a range of basic and preventive health services. Given the health benefits of ongoing primary care, many employers and health plans incentivize their members to utilize primary care services.

The company recently launched Forward at Home to support patients during the COVID-19 pandemic. The service combines one-on-one consultations with our doctors, interactive health data visualizations, and automated vitals monitoring.

The startup has raised more than $100 million to date, according to Pitchbook.

Aledade: Founded in 2014, takes a partnership approach and works with more than 550 primary care practices to build accountable care organizations. The startup provides practices data analytics, policy and ACO expertise. 

The company manages more than $7.3 billion in healthcare spending. Most recently, Aledade raised $64 million in a Series C round led by new investor OMERS Growth Equity. The CEO of Aledade announced that the company is growing revenue by over 60% and expects to reach profitability in 2020, according to Close's analysis.

ChenMed: A physician-led primary care company focused on providing services to moderate-to-low-income seniors with complex chronic conditions. The company operates more than 60 primary care practices in 10 states and recently announced plans to open 15 more centers in 20 weeks.

Early during the pandemic, ChenMed pivoted from 98% in-center patient appointments to 95% virtual appointments in just one week, according to the company.

Iora Health: Launched in 2010, the company primary care practices throughout the country with a focus on the Medicare population. Patients benefit from 24/7 access to care, same-day and next-day appointments in person as well as by phone and video, onsite labs, fully integrated behavioral health services, yoga classes, and health coaching.

The company also built a proprietary collaborative care platform and EHR system, called Chirp.

Iora Health operates 48 practices in 10 states. In February 2020, the company raised $126 million in a Series F funding round.

Crossover Health: Launched in 2012, the primary care provider focuses on the self-insured employer market. Through the company's on-site or near-site health centers, Crossover provides a wide range of primary care services, in addition to behavioral health services, health coaching, acupuncture, physical therapy, and optometry services.

In February 2019, the company acquired Sherpaa Health, a virtual primary care company that also had care navigation and care management services.

Some of Crossover's notable customers include Apple, Facebook, Visa, LinkedIn, Microsoft, Comcast, and Symantec. The startup is piloting a new model with Comcast where patients will be assigned a “virtualist” in addition to their physical care team.

Crossover has raised $113 million to date, according to Crunchbase.

Oak Street Health: A primary care provider focused on the Medicare population, the startup targets areas where there is a lack of quality primary care options, which tends to correlate with low-to-moderate-income geographies.

Oak Street has 54 locations across eight different states and is now expanding into new markets in the Midwest and elsewhere.

Since its inception in 2012, Oak Street centers have helped reduce its population’s hospital admission rate by 51% and emergency room visits by 46%, the company said.

The company has raised more than $105 million from a variety of private equity firms, according to Crunchbase.

VillageMD:  A fast-growing operator of primary care clinics, the company has 2,900 employed or partner primary care providers through independent practices, hospital-owned practices, and hospital-affiliated practices. VillageMD currently operates in nine markets.

In October, VillageMD landed $100 million in a Series B funding round led with $75 million from Kinnevik AB. Previous investor Oak HC/FT and new investors Town Hall Ventures and Adams Street Partners also contributed. 

The company partnered with Walgreens to open five new 2,500-square-foot primary care clinics in the Houston area, with plans to possibly expand there and in other markets.

Privia Health:  A national physician organization that partners with primary care and select specialist physician practices, health systems, payers and employers.

Privia's footprint includes 2,500-plus healthcare providers who care for more than 2.6 million patients across five markets, according to the analysis. The company is profitable and benefits from a recurring revenue model with a gross revenue run-rate that has recently surpassed $1.2 billion, Close wrote.

The company has raised $417 million to date, backed by investors including Goldman Sachs.