This startup is building a new model for primary and specialty care in Austin, Texas. It just secured $95.5M to fuel its growth

Harbor Health launched in 2022 to bring a new care model to the Central Texas market that integrates primary and specialty care services. The company has larger ambitions to build a vertically integrated "pay-vider" business and secured a hefty funding round to fuel its growth.

The startup, backed by General Catalyst, Alta Partners and 8VC, banked $95.5 million, bringing its total investment to date to more than $128 million. The funding round also includes returning investors Health 2047 Capital Partners, Lemhi Ventures, Martin Ventures and a series of individuals.

In the past year, Harbor Health grew its clinics from two to now eight locations in Central Texas near Austin, with more planned in 2024. It also opened an Express Care location for walk-in appointments and after-hours care and plans to open another one this month.

The company also launched two mobile health units to serve the needs of local employers by bringing health care to local campuses. Harbor Health offers both in-person and virtual care and uses data and analytics to identify the right care path for patients, which helps to reduce costs, according to executives.

Harbor Health was founded by experienced healthcare leaders including Dr. Clay Johnston, the first dean of the University of Texas Dell Medical School, Eric Scott from 8VC and health benefits entrepreneur Tony Miller.

Miller co-founded Bind Benefits, which was sold to UnitedHealth Group in 2021 and is now called Surest. He also started two other health benefits companies that were sold to UnitedHealth Group; Definity Health was sold in 2004 in a $300 million deal and consulting firm Carol Corp. was acquired by Optum, UnitedHealth’s health services arm, in 2011.

waiting room area of Harbor Health clinic
Harbor Health's La Frontera Clinic in Round Rock, Texas (Harbor Health)

Bind focused on redesigning health insurance to enable members to view treatment options and compare costs before making a decision. Miller is bringing that same consumer focus to build out Harbor Health.

The idea for the company was sparked by conversations Miller had with Johnston about building a "pay-vider" focused business in Austin, Texas.

The startup secured $30 million in funding last June. "That first set of capital was to build the clinical company first of that pay-vider so we got very busy in terms of standing up our own de novo clinic, recruiting clinicians, building our conditions system of care, contracting with other specialty care companies to round out the full clinical model," Miller said. "We expanded rapidly last year and we will have 12 clinics before the end of this year. Now we're getting ready to build a coverage company."

Harbor Health will use the cash infusion to grow its primary care services, broaden the scope of specialty care offerings, and develop plan designs that support care journeys co-created by consumers and their clinicians, executives said.

Texas employers can use these plan designs to lower their costs while incorporating an improved, coordinated care system that results in healthier employees.

"We realized in order to maximize the impact of our innovations, we needed to combine our efforts into one enterprise as a vertically integrated 'pay-vider'—both a payer and a provider," Johnston said in a statement. "We have built a geographically dense care model that is organized around integrated practice units and focused on member health conditions. This new investment and our rapid growth confirm our innovative care model is working, and we're meeting more people where they are with collaborative, team-based care."

Harbor Health's model is based on connecting patients to a dedicated health team, which includes a coach, a medical doctor and a nurse, and the health team works with patients to develop customized care pathways. Those care models have to be paired with longitudinal coverage models that make insurance subsidies align to better care journeys, executives said.

"Eventually, we see a future where current care design and benefit design models become obsolete, replaced by a health-producing and health-promoting system that follows people along their life journeys," Miller said.

In the past year, Harbor Health has served patients in the Austin area 25,000 times with in-clinic appointments, virtual appointments, mobile clinics and other modes of communication. The company employs 43 clinicians.

"In a very short period of time we went from this company that was just on paper as an idea into one of the largest organized primary care providers in Austin," Miller said. "I think that was a differentiating factor for why investors got excited about our company, just how fast and how quickly we were able to demonstrate the value we were delivering."

Harbor Health plans to use the fresh funding to widen primary care access while also getting "deeper" into specialty care, including cardiology, dermatology and gastroenterology services. The startup also will continue to invest in software and technology.

"The third use of proceeds is to actually stand up the coverage company, building all the benefits and services, the enrollment services, the different coverage models and so all of the consumer services that we'll need to service large employers and small employers for offering benefits to their employees," Miller said.

The company launched an ACO (accountable care organization) REACH product in conjunction with the Centers for Medicare and Medicaid Services. And, Harbor Health has secured risk contracts with BCBS of Texas across multiple product lines as well as other risk contracts with multiple payers and employers. According to its website, the company works with Aetna, UnitedHealthcare, Cigna, Humana, Medicare, and Medicaid and accepts cash payments.

Harbor Health is working with payers on risk-based contracts and also building out a clinical practice focused on value-based care. "When you build a care model focused on how do I make the conditions journey most effective for the consumers and not worry about trying to maximize RVU or any of the other things you do in a fee-for-service world, we knew that that care model would support a really good coverage company," Miller said.

For the health system to change, coverage designs need to map to consumer health conditions to make it simple for consumers to understand what's covered and how much it will cost to get services, he noted. This needs to work in partnership with Austin employers, he added.

"Harbor is making meaningful change in transforming the current health system to a health production system. We are aligning a new care model to a payment model that rewards providers for reducing healthcare risk in populations and lowering the total cost of care to service that population. Consumers are demanding health care to be designed around their conditions and problems and to show them how they can improve behaviors and choose wisely about the costs of treatments. Harbor aims to do all of this in a vertically integrated solution," Miller said.

The company is working to stand up benefits plans for self-funded employers and plans to offer fully insured products by 2026, according to Miller.

"There's a strong appetite for a fresh approach to healthcare delivery among employers that prioritizes outcomes, enhances consumer engagement, and is proactive by design," says Chris Bischoff, managing director at General Catalyst, said in a statement. "We believe Harbor Health is providing ease of access to the largest covered population in the U.S. and bringing much-needed change as the company seeks to transform value-based care for the commercial sector."

Harbor Health's approach is different from other insurtech startups that have faltered in the market, Miller noted.

"Many of those startups were spawned out of the ACA and a lot of them went and built across many markets, in many cities and that was a very capital-intensive approach. You saw a lot of them eventually divest or exit certain states that weren't performing very well. Expansion didn't lead to the kind of results they were hoping in terms of growth," he said. "We have a very different thesis that's about having geographic density of clinical care in one MSA (metropolitan statistical areas) and have that clinical are not just be primary care but have it be multi-specialty organized and then building it into a coverage model that really does take some of the innovations that happened at Bind and accelerate them into a better version of how you do condition coverage."

Austin is one of the fastest-growing cities in the U.S. and is now the 10th largest city while Texas is experiencing rapid population growth across the state.

Harbor Health plans to expand to another market in Texas, likely Houston, Dallas or San Antonio, by 2026 and then eventually move into smaller cities like Waco and El Paso, Miller noted.

"We do plan on growing eventually all across Texas," he said.

Harbor Health's investment in building a new care model comes as primary care is rapidly evolving.

"I think there's going to be a very big transition [in primary care] in the next 20 years. I do think you're going to see more consolidation. And, in that consolidation, you're going to see changes in the clinical model itself so that clinical model is going to be a combination of all the virtual access points with bricks and mortar access points. It's going to have wraparound omnichannel communication and capability associated with what's happening. It's going to be linked and integrated into specialty care services," Miller said.

Harbor Health's focus on care models designed around health conditions is getting ahead of the curve as the lines between primary care and specialty care will continue to blur, Miller said.

"I do think there's going to be this more system of care built around conditions that primary care is clearly going to be an important part of it, but it's also this integrated version of how specialty care is organized to it. I think that kind of system is going to require more scale and probably less independent, individual onesy-twosy doctors and instead building those clinical groups that are organized in a way to deliver the right kind of health condition pathway for consumers," he said.