New Marketplace
“We Have to Change Everything” (09:38)

Imagine it’s 1902, and you want to travel from Boston to London in less than a day. But the fastest boat takes a week to cross the Atlantic. Shipbuilders could try to meet the challenge, but they probably won’t solve the problem. What you need is an airplane built not by shipbuilders, but by a disruptive new entrant: the Wright brothers.

“I would argue we are at a similar moment in health care today,” says Rushika Fernandopulle, co-founder and CEO of primary care entrant Iora Health. “Our health care delivery system, despite good intentions and largely good people, is not meeting our needs.”

Attempts made by incumbent health plans and systems to address problems such as high costs and poor outcomes have not been wholly successful, argues Fernandopulle. Even new processes, rewards, technology, and culture changes meant to improve health care are still largely built for the old system. “Despite lots of rhetoric, the real effort’s almost always small and incremental,” he says. “About 12 years ago, I realized that these small, incremental changes were not going to work.”

The problem, according to Fernandopulle, is that our current health care system focuses on transactions. “Last I checked, those don’t heal anyone,” he says. “What heals people — the reason we all went into medicine — is relationships.” To form those relationships, we must remove transactions, and to do that, “we have to change everything,” says Fernandopulle. “Change the payment model, change the delivery model, change the technology platform, maybe more importantly change the culture.”

To promote relationship-based care, Fernandopulle tried to implement changes within existing health systems, but he found — despite their good intentions — that these systems “couldn’t get out of their own way.” So he decided to build a new delivery model from scratch: Iora Health.

Iora operates on value-based payment only, along with team-based care that embeds case management, care navigation, population management, and mental health. Iora also built its own IT platform.

“Our goal was to build a scalable model to show we can do this anywhere,” Fernandopulle explains. “We’ve shown off-the-charts patient satisfaction, team satisfaction, improved clinical outcomes, [and a] 15-20% drop in total health care spend relative to match controls driven mostly by a 40-50% drop in hospitalizations.”

Fernandopulle acknowledges that the journey has not been an easy one. “There are huge barriers to entry for anyone doing this. There are a lot of rules favoring incumbents and old ways of doing things,” he says. Still, a small but growing number of new entrants are trying to build airplanes, and, in turn, challenge the health care industry as a whole to raise the bar.

“If we were to create sustainable and well-functioning health systems for ourselves and our children, we need both new entrants and incumbents to work together to create and scale new ways of doing things,” says Fernandopulle. “We have oceans to cross, and only together can we learn how to fly across them.”

From the NEJM Catalyst event New Risk, New Business Models held in Boston, October 6, 2016.

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