Can this startup help eliminate $24 billion in unnecessary medical procedures? Top Silicon Valley investors seem to think so.
Owen Tripp is sitting in my Midtown Manhattan office and patiently listening to me ramble on about how difficult—no, analog—it is to see my local dentist, which last month involved a phone call, an in-person visit, a “clipboard from hell” (as he calls it), and a snail-mail invoice received weeks later.
My gripe: It’s a digital world, baby. So why am I writing using a ballpoint pen to write my credit card number, email address, and other digital information on a piece of—gasp—paper?
Tripp, CEO of a San Francisco health technology company called Grand Rounds, is nodding. He’s clearly heard this tune before. But it doesn’t stop him from joining the chorus.
“I mean, we’ve all had this experience, right? I know I told you all this stuff the last time I was here. I know you took a photocopy of my insurance card the last time I was here. Why am I even carrying this thing around with me anymore? Grand Rounds does all of that work. It’s not the end goal; it just increases the likelihood that people will use us. The end goal is you in the office with the best doctor that will accept your insurance in your local area. And they’re the best based on what we know about them—seven billion data points associated with clinical outcomes. We are giving you the expertise and the depth to say, ‘We got your back. We’re going to vouch for this guy.'”
Tripp calls it a “quality algorithm,” and it’s the core of what makes Grand Rounds tick. The service, spearheaded by a mobile application of the same name, is targeted at corporations that want to put a clamp on escalating healthcare costs and take advantage of the landscape afforded by the 2010 Affordable Care Act. It’s also accessible to individuals not covered by corporate healthcare plans.
Grand Rounds launched in 2011 as a way for someone to get a second (or third, or fourth) opinion on serious medical situations. Co-founder Lawrence “Rusty” Hofmann, chief of interventional radiology at the Stanford University Medical Center, was driven to launch such a service after his young son survived a harrowing medical journey aided by his father’s extensive industry relationships. Today, Grand Rounds has expanded upon its mission to essentially pair any patient with the most effective and appropriate physician nearby, with the promise that doing so will result in less doctor-shopping and fewer follow-up visits and, therefore, lower related costs.
On Thursday, Grand Rounds announced that it raised a third round of funding, totaling $55 million, from “a new global mutual fund investor”—BlackRock, sources tell Fortune—alongside Venrock, Greylock, Harrison Metal, and Lyra Health CEO David Ebersman. The sum brings Grand Rounds’ total financing to $106 million.
“Today, patients go to Yelp or Angie’s List or pick a doctor based on a provider list—throw a dart against a wall,” Tripp says. “Their primary doctor might refer them. But even there that’s a pretty impoverished referral network because primary-care doctors, my father included, may know 100 or 200 doctors. That’s actually not enough to even cover the basic Western subspecialties. There are 260 subspecialties. Even if you know a ton of doctors, you’re not touching them all. So there are problems in the fragmentation in how people do this today.”
The efficiencies Tripp shares are compelling. Twenty to 25% lower complication rates. Hospital stays that last half as long as the average and 50% less time away from work. And three times as much return on investment in terms of medical costs—music to the ears of CFOs worldwide facing a more than 10% increase in corporate health care costs for the third year in a row, according to consulting firm Aon Hewitt. (Average costs of company-sponsored plans in North America are expected to rise 6.5% this year, down two percentage points from last year because of increased coverage under the ACA. Still, that’s $10,000 to $12,000 per person, five times as much as Canada or the U.K.)
And the company’s data scientists are learning interesting things about American physicians along the way—for one, that low-ranked doctors were more likely to prescribe medication in response to a problem rather than do the harder work trying to address the underlying issue.
Grand Rounds is focused primarily on picking up more customers in the more than 120 countries in which it operates to stay ahead of its competition, which includes 2nd.MD, Accolade, Best Doctors, Doctor on Demand, and Teledoc. It’s also focused on beating back the age-old notion that more healthcare is better—a strategy long employed by some of the world’s largest health companies. Tripp says Grand Rounds serves several Fortune 500 companies, though he declined to name names. The hunger is there to fight escalating costs, he says.
“Corporate America is massively undergunned in this fight,” Tripp says. “They don’t have the analytics. They don’t have the teams. They don’t have the trade groups teaching them how to do this stuff better. And worse still, they have been asked to do more with less—the boss wants a 4% trend and you’ve got to keep everyone happy. We’ve got to figure out a way to cut back on the administrative costs and things that are not producing outcomes. When people need to use a healthcare resource, they need to use it well.”
With additional reporting by Dan Primack.
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