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.

More From New Marketplace
New Risk, New Business Models

Changing How We Pay for Primary Care

Primary care accounts for more than half of the United States’ office visits, but direct spending on primary care is only a tiny portion of our nation’s total health cost.

New Risk, New Business Models

Getting Real about Health Care Costs — A Broader Approach to Cost Stewardship in Medical Education

In the next era of cost-stewardship education, future and current physicians will have to be taught to reduce spending across the care continuum.

New Risk, New Business Models

Discord Between Ballad Health and the FTC

How a proposed merger of two large rural health systems has created opposition from federal regulators and economists, but supporters among local business groups.

New Risk, New Business Models

How Multi-Specialty Hubs Fill a Major Gap in the Care Continuum

Kaiser Permanente, Mid-Atlantic States identified a niche for patients seeking immediate care and found a way to reduce emergency department visits while improving patient satisfaction and quality.

New Risk, New Business Models

Medicare Payment for Behavioral Health Integration

Four new codes that went into effect at the start of 2017, to pay clinicians for BHI services they provide to Medicare beneficiaries, are a major step forward.

New Risk, New Business Models

Going Dutch: Using Social Capital in Health Care

There is no reason that the opportunities created by social capital cannot be realized in other countries.

New Risk, New Business Models

Should Medicare Value-Based Purchasing Take Social Risk into Account?

Strategies for monitoring quality of care for socially at-risk patients and reducing disparities.

New Risk, New Business Models

A View from the Front Line — Physicians’ Perspectives on ACA Repeal

A new survey finds that primary care physicians strongly endorse key elements of the Affordable Care Act that enable individuals to obtain insurance coverage and that very few support repealing the law.

New Risk, New Business Models

Survey Snapshot: Can Start-ups Rescue Health Care?

NEJM Catalyst Insights Council members view start-up firms as the most likely source of disruptive innovation in health care — but offer caveats.

New Risk, New Business Models

Moving Past the EHR Interoperability Blame Game

Why can't EHRs talk to one another? We never created the right incentives, but we pretend that we did.


A weekly email newsletter featuring the latest actionable ideas and practical innovations from NEJM Catalyst.

Learn More »


Discord Between Ballad Health and the…

How a proposed merger of two large rural health systems has created opposition from federal…

Getting Real about Health Care Costs…

In the next era of cost-stewardship education, future and current physicians will have to be…

Bundled Payments

30 Articles

An Image of Medical Complexity

It’s no wonder the general public can’t decode the complexity of health care finance when…

Insights Council

Have a voice. Join other health care leaders effecting change, shaping tomorrow.

Apply Now