Investing in Patina

Primary care, a critical component of our healthcare system, got slammed over the last 20 months. Even before the pandemic, it was on its heels in the face of a fee-for-service reimbursement system biased towards technically complex specialty care and increasing financial pressure from new competition like urgent care and telemedicine clinics. COVID-19 further exacerbated the pain by nearly wiping out visit volumes for routine, non-emergency services, and creating major access issues for the most vulnerable patient populations.

As the healthcare system reemerges from the storm and sees visit volumes recover, we observe a few things: 

  1. Primary care groups that had higher exposure to recurring per member per month (PMPM) payment models in value-based contracts were more likely to fare better than those who were purely dependent on fee-for-service revenue streams.
  2. Consumer preference for receiving services in the comfort of one’s own home increased.
  3. There was no population in which these signals were stronger than amongst seniors over 65 covered by Medicare and Medicare Advantage health plans.

At the intersection of these trends, a first wave of advanced primary care companies has shown over the last decade that high-quality care can be delivered at lower cost to populations of medically complex seniors, and that those models can be scaled nationwide. These companies take one of three forms: a primary care provider with a traditional brick-and-mortar presence; an “MSO” (management services organization) that helps existing providers manage risk contracts; or an insurance company that may have vertically integrated clinical assets. Telehealth and home health services were layered on top of these models in response to the pandemic, but even so, these approaches were predicated on the ability to serve patients within a given catchment area of a physical clinic location. Many of these clinics also serve a range of patients, from pediatric to adult to geriatric, and take a mix of fee-for-service and capitated payments.

With this backdrop, in the same way that digital-native businesses like Airbnb exhibit fundamentally different first-principles thinking about their operating models relative to their traditional, brick-and-mortar-based peers, Patina saw the need for a new, purpose-built approach, with a singular focus on older adults (65+). They’re building a virtual-first care model absent the constraints of physical assets, with a value-based business model that rewards investment in patient engagement, tech to scale integrated care teams, navigation to ensure optimal utilization of benefits, and whole person health for all of its patients. Patina is launching its virtual and home-based primary care platform through partnerships with leading Medicare Advantage plans in geographies where, despite the existence of primary care clinics, the vast majority of patient populations are not being served where they prefer to be served – in their homes and local communities.

Building a full-stack care delivery business requires deep domain expertise, operating experience, and the ability to forge long-term, strategic relationships with the complex landscape of stakeholders across payor, provider, and consumer markets. In this vein, Patina’s CEO and founder Jack Stoddard has been building transformative businesses in the value-based care world for over two decades, at iconic companies like The Advisory Board Company, Optum, and Accolade. I first met him nearly ten years ago in the context of my previous startup, and ever since then, he’s been on my short list of people with whom I’ve wanted to build something together. I couldn’t be more thrilled to have led and co-led the Seed and Series A rounds for Patina, serve on its board, and support the journey that Jack and his exceptional founding team are taking to serve the large and rapidly growing population of seniors covered by Medicare Advantage who prefer to “age in place”.

 

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The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation.

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