The country’s current fee-for-service healthcare system prioritizes treating disease over preventing it, a reality that Aledade CEO and co-founder Farzad Mostashari said “leads to wasteful spending and unnecessary suffering.” That’s why his company partners with independent practices, health centers and clinics to establish accountable care organizations, which are networks of physicians and healthcare facilities that share the clinical and financial responsibility of providing coordinated care. Metrics such as preventable hospitalizations, avoidable emergency department visits and post-acute care utilization demonstrate ACOs do a better job at reducing avoidable expenses than providers who aren’t enrolled in an alternative payment model.
On Monday, Aledade raised $123 million in a Series E funding round. The round, led by OMERS Growth Equity, brings the company’s total funding to more than $400 million since its founding in 2014. The Bethesda, Maryland-based company partners with more than 1,000 independent primary care practices, including more than 140 federally-qualified health centers, across 36 states and Washington, D.C.
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Though other startups focused on innovative primary care, such as One Medical and Oak Street Health, have emerged over the past 15 years, Mostashari said Aledade’s model is uniquely scalable.
“A key differentiator for Aledade is that we partner with existing independent practices,” he said in an email forwarded by a representative. “We don’t buy practices, which takes a lot of capital, and we don’t build practices, which is resource- and time-intensive. This allows us to scale more rapidly.”
Aledade partners with practices that are already well-known in their communities so the company can maintain trusted relationships between doctors and patients, according to Mostashari. He also said the startup’s platform is “uniquely extensible,” pointing toward its ability to leverage data and technology, including remote and virtual care, to help practices improve their patients’ health and increase savings.
The company plans to put its new funding to work right away, firstly by expanding its value-based care model with health plans across the country. Specifically, Aledade is seeking to grow its partnerships with Medicare Advantage plans, given that it’s an area with much opportunity. Aledade works with a variety of payers, including Medicare, Medicaid, Medicare Advantage and commercial insurance companies.
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The company has roughly 800,000 patients enrolled in a traditional Medicare plan under global risk contracts. In those same practices, the company has about 200,000 Medicare Advantage patients. Knowing that Medicare Advantage is set to achieve parity with traditional Medicare in terms of future enrollment, the startup is working to close that gap.
The company will also use the funds to expand offerings through its new health services subsidiary, Aledade Care Solutions. ACS announced its first launch in January with Aledade’s acquisition of Iris Healthcare, a company providing virtual Comprehensive Advance Care Planning services. ACS is preparing to add more services with input from practices in the Aledade network.
The startup makes its money by taking a percentage of the shared savings earned by the ACOs it operates. Mostashari noted that the company has had positive EBITDA since 2020, positive cash flow and consistently strong revenue growth — successes he attributed to the company’s prioritization of fast scalability.
“In this tougher market, we didn’t need to raise, but the best time to raise is when you don’t need to,” he said.
Picture: Feodora Chiosea, Getty Images
