Presenting Sponsors:
I’m excited to be joined by Dr. Rushika Fernandopulle, co-founder and CEO of Iora Health. If you haven’t heard of Rushika or Iora Health yet, you will. He designed a new model of primary care delivery that challenges the core assumptions of US healthcare and produces better health outcomes at a lower cost. He’s a Harvard trained physician who serves on the staff of the Massachusetts General Hospital and on the faculty of Harvard Medical School. His company, Iora Health, solves for some of the most pressing problems in our healthcare system today, including physician burnout and addressing social determinants of health. Our conversation touches on these issues and the future of our nation’s primary care.
Bill Frist: And now, please join me and our guest for A Second Opinion. Rushika, great to have you here today.
Dr. Rushika Fernandopulle: Thank you. It’s great to be here.
Bill Frist: Now listen, Iora, I don’t go to a meeting, or a convention, or a conference that the company that you founded, that was probably initially a dream, now a reality, doesn’t come up as the most significant, underscored, important example of where healthcare is moving and should be moving in the future when it comes down to primary care. Primary care being really at the heart of our healthcare sector throughout. So, let’s start right at the beginning. What about the initial dream? Where did this come from?
Dr. Rushika Fernandopulle: I’m a primary care doc, and it came from me being a physician and being in practice and really realizing that the model was broken. I think it became real to me with a colleague, who after a long day of seeing patients and being frustrated like a lot of doctors are, she put it really clearly. She said, “Every day I lose a little piece of my soul.”
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: That people come to us with such problems and we should be able to help them, but the system doesn’t allow us to do it. It’s good people, good intentions, but the system wouldn’t let it work. And that really set me upon a journey of what if we decided to build a system that actually did let us do the right thing?
Bill Frist: But you were a doctor and was there something in your background that led you to think more in a system’s approach?
Dr. Rushika Fernandopulle: Yeah, so I have always been sort of back and forth, when I was in college at Harvard, I was a government major.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: And then I spent a detour when I was in med school at the Kennedy School of Government doing a Masters in public policy and spent, of course as a business school, I had spent a year working at a place called the Advisory Board Company. I’ve spent my career to date back and forth between health system stuff.
Bill Frist: Yeah, so you came with an appreciation of it. So, tell me with the medical school, business school, Kennedy School how did it go chronologically?
Dr. Rushika Fernandopulle: The sort of nonlinear path, I guess all of us have nonlinear paths, was government major, medical school for three years, Kennedy School, which included being able to do things at the business school. Actually, the industry at the time when I was in med school, I wanted to go to the business school and get an MBA and was really told by people, “Look son, you could be one of us or one of them.”
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: Right? That was seen as the dark side.
Bill Frist: That’s exactly right.
Dr. Rushika Fernandopulle: Now, the Kennedy School they could tolerate, because this is public policy, but you could then walk across the river and take things over there.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: Then I thought I was going to be a surgeon. I did a year of general surgery at Penn and decided I didn’t want to be a surgeon that badly. Tried to figure out what to do and stumbled upon a place called the Advisory Board Company, which is a healthcare think tank in DC. Went back to finish my residency at Mass General in primary care, because I really wanted to be a doctor. Went back to the Advisory Board.
Dr. Rushika Fernandopulle: And then, actually at the time when I had these thoughts, I was practicing part time at Mass General but was… a lot of docs, I think, have these ideas, but they can’t do anything about it.
Dr. Rushika Fernandopulle: I happened to be spending a chunk of my time running an inter-faculty health policy program at Harvard. So, on Harvard’s dime, was able to sort of say, “What if?” The core inside was what we had been trying to do in primary care, maybe all of healthcare, is what I’d call the incremental change model. Take an existing practice and tweak a little bit.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: That doesn’t work. We tried it for 20 years. Maybe we need to just create the vision of where we want to go and then we can figure out how to get from here to there and how do we do that.
Dr. Rushika Fernandopulle: So, at Harvard, I was able to spend some time visiting people, talking about, coming up with ideas and a design of what if I started over, what would I do?
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: And then, I went to all the big health systems in town and tried to sell them on the idea. Like, “Look, I’ve got these idea of rebuilding primary care. I want to start from scratch and build around populations and teams. Will you let me have one practice to be able to do this?”
Bill Frist: This was how long ago?
Dr. Rushika Fernandopulle: This was 2001, 2002.
Bill Frist: Yeah. It’s interesting Boston is not the most innovative, creative place. In 1981, ’82 there was a moratorium put on heart transplants. I left Boston, I left Mass General. What is this? It’s supposed to be a creative area and I went out to Stanford because they had a five year moratorium on doing any heart transplants. You know, most creative dynamic they had-
Dr. Rushika Fernandopulle: Absolutely, yeah.
Bill Frist: I wonder, did you run up against resistance because you had these creative ideas?
Dr. Rushika Fernandopulle: Absolutely. Again, I think Boston is a great place to talk about innovation, a lot of really smart people and lots of great papers. It’s a really hard place to do it.
Bill Frist: That’s exactly right.
Dr. Rushika Fernandopulle: Yeah, so the first thing that happened was you went to all these health systems and wanted to do this, and they sort of pat me on the head and they all said, “That’s really interesting, but you know our practices are full, we’re making money, what’s the problem you’re trying to solve?”
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: I was like, “Care sucks. Patients hate it. Doctors hate it. We ought to be innovating.” And they said, “Not our problem.”
Dr. Rushika Fernandopulle: So I decided then, in a fit of craziness, I’m a doc, I can start a practice. I started a little practice, Renaissance Health, rebirth of primary care, about 15 years ago in a little town called Arlington, just outside Boston.
Bill Frist: Yeah, sure.
Dr. Rushika Fernandopulle: We were going to try all these things. Going to try health coaches and texting and emailing patients. 15 years ago, we were letting patients see their whole medical record, unheard of. We convinced an electronic health record company in Carlton, Georgia, Greenway that we had the future of healthcare. They were going to do a special build for us to let patients see their whole record. Radical stuff.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: One of the big problems in trying to fix primary care is the business model. If all you do is bill per doctor sick visit, you can’t pay for the right things.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: Our only idea at the time was, let’s just ask our patients if they could support this. We were one of the first, what’s called direct primary care practices in the country. We sort of said, “Look, if everyone pays about $40 a month, we’ll breakeven. If you’re poor pay us less, if you’re rich pay us more.” It’s a crazy, sort of pay what you want model.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: But we still had to sign contracts with health plans so we could order specialists and things like that, right? So you had to contract through a big health system back then. You couldn’t do it as a one doctor practice.
Dr. Rushika Fernandopulle: So, we went through the Mass General. I was already credentialed, but I had a partner, a woman [inaudible 00:07:26], who had practiced at Brigham for eight years and I put her through the credentialing and she got turned down by the Mass General credentialing committee because they didn’t like our business model. And I was like, “That’s not the point of the credentialing committee.” The point of the credentialing committee is did she qualify to practice medicine at MGH. She’s doing it the Brigham for eight years, of course there’s no question.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: So we had to appeal to the chair of medicine, a guy named Denny Ausiello, who to his credit said, “You’re right, that is not their purview. I’m going to overrule the credentialing committee and let you do it.” So yeah, no, there’s a lot of that sort of stuff. A lot of bumps. I think maybe one of the few things you learned doing this is refusal to take no for an answer. Might just ask a different question.
Bill Frist: In these early years where you, as you were figuring this out, were you financing it along the way or were you able to sort of make ends meet by pulling a little bit here, a little bit there.
Dr. Rushika Fernandopulle: All of the above. At the time, you know, no one was funding things like this.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: Right? I mean now, there’s lots of funding of health technology, new models. Back then people thought we were crazy.
Bill Frist: Right.
Dr. Rushika Fernandopulle: It’s 15 years ago. Before medical, before any of this stuff.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: So I went to an old boss of mine, a guy named David Bradley.
Bill Frist: I know well.
Dr. Rushika Fernandopulle: Atlantic Monthly. He used to run the advisory board and really pitched the idea to him. “David, I got this idea. I want to create a company, Renaissance Health. We’re going to change primary care. We need some investment.” And to his credit, what’s a funny is, end up writing a business plan. Three months writing a business plan.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: Dot every I. Met him at his office in the Watergate, pushed it toward him. And not only did he not open the business plan, he didn’t touch it. “Don’t you want to see my business plan?” He said, “I’m happy you wrote one, but I don’t believe these things. They never work out that way.” He said, “But I believe in the idea and more over, I believe in you. What do you need?” And I was like, “I need $250,000 to quit the day job and get going.” And he said, “All right, well let’s, I’m going to write you a check. Consider it a personal loan. Investing it is too hard. If at the end of four years you have the money, pay me back. If not.” It was just so generous of him.
Bill Frist: Great story.
Dr. Rushika Fernandopulle: And so that’s what really helped fund. And then we would moonlight on the side and do all sorts of other things. But that’s what got us going.
Bill Frist: All right. So take me beyond that. So you got that going.
Dr. Rushika Fernandopulle: Yeah, we got that going.
Bill Frist: You had the idea.
Dr. Rushika Fernandopulle: Again, you don’t learn these things by thinking about it. You learn it by doing it, right? So we started building a practice, getting people in, learning how to build the right teams, learn how to do huddles, learned how to use these email and text message, which were these new tools, learned how to do groups of patients together to support each other. It’s a lot of stuff you have to learn. But then what happened about three years in, the powers that be in Boston started getting upset at us. We were accused of raising expectations, of making other practices look bad and do you understand that this could upset the status quo? I was like, “Yes, that’s we’re trying to do.” And so we ended up having to shut that practice down. They weren’t gonna let us grow. And I realized, you know, like anything, you had to point and pivot, right?
Dr. Rushika Fernandopulle: So, Hey, let’s get out of Boston, go somewhere else. But B, this idea that we’re doing more intensive primary care, of course it’s better relationship with the patient, better experience. It’s better outcomes. But it was clear to us that we were saving money in healthcare, working people out of the hospital, out of things they didn’t need. We went to all the health plans by the way and ask them for the data. They wouldn’t give it to us, right? So we realized we need a partner. It also bothered me that we were asking people to pay money, extra money for healthcare. They almost all had insurance already. The problem in US healthcare wasn’t that there’s too little money in the system. I’ve seen the amount of money in the system, right? We’ve taken out of the system and back into primary care, right?
Bill Frist: Yes.
Dr. Rushika Fernandopulle: So the obvious route was what if we go after the self insured employers, they care. And so through a relationship with a guy named Arnie Milstein, who I’d met with at Mercer at the time, he got us a deal with the Boeing Company. So Boeing at the time, it’s about 2007, you know, obviously they were building airplanes, but the had this huge competitors issue. Every time they put a Boeing 737 up against an 8319 they had a big cost disadvantage because Airbus, their competitor, was in France and subsidized. And they didn’t have to pay the healthcare costs. Right. So the CEO at the time said, “No, I want us to start doing things to help figure this out.” And so we worked with three big health systems in Seattle, Virginia Mason, the Everett Clinic, Valley Medical Center. Boeing funded US building these practices for Boeing employees and their families.
Dr. Rushika Fernandopulle: And now by the way, when Boeing asked for the claims data, they get it, right? When we ask for it they tell us, “No way.” When Boeing says they say, Yes, Sir.”.
Bill Frist: So you physically did have to move?
Dr. Rushika Fernandopulle: No, I commuted.
Bill Frist: In terms of the company.
Dr. Rushika Fernandopulle: Yeah.
Bill Frist: But in terms of the center of gravity.
Dr. Rushika Fernandopulle: Activity. Yes, it was. So families who live there, I was commuting back and forth to Seattle, but Seattle was a much easier place to start doing these sorts of things. You have a good idea, you could run with it. And particular having someone like Boeing behind you.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: You know a lot of doors open when that happens.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: So we ran that for about three years. Arnie published in Health Affairs a great article which showed better care. It showed a 20% drop in healthcare spending, largely driven by hospitalizations. Well actually the interesting part, the thing that Boeing liked the most was a 56% drop is absenteeism dates.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: Because whenever they promise to deliver a plane, they promised a delivery date. And every day they’re late, it was a million dollar fine.
Bill Frist: Wow.
Dr. Rushika Fernandopulle: So they said, “You can keep these guys on the line?”.
Bill Frist: Yup.
Dr. Rushika Fernandopulle: I think we often don’t think of health care is providing value.
Bill Frist: It never gets measured.
Dr. Rushika Fernandopulle: It never gets measured.
Bill Frist: From the absenteeism or the productivity or the presenteeism, it’s not in the numbers.
Dr. Rushika Fernandopulle: It’s not in the numbers. Right. And I think we miss an opportunity by doing that. Boeing got it though. Like this is actually really valuable to us.
Bill Frist: And you were able to to refine what you were doing and continually fine tune?
Dr. Rushika Fernandopulle: Exactly. So we kept providing the model and then we got an opportunity to do the similar thing with the casino workers in Atlantic city. So which was a similar idea there. We worked with a big health system, Atlanta care to build a practice. I ended up becoming the medical director there, and so I was actually seeing patients there for two years.
Bill Frist: Right.
Dr. Rushika Fernandopulle: We learned how to do health coaches from the community. We did a lot of new things. Again, big drops in hospitalizations, better outcomes. The interesting thing is the reason they hired us was said the number one reason for strikes in the US is healthcare costs. And so the management got smart. So they said, “Okay, we’re not going to negotiate healthcare costs anymore. We’re going to negotiate total compensation. Now if you want more benefits, take home less salary. If you want less salary, take on more benefits. Right? But it’s not between us, it’s between you and your union and you can’t strike against your own union.” Right? So the problem, they’d negotiate this contract seven years earlier, for seven years they couldn’t give people a raise because every penny of the entries compensation was going to health care. So if your $12.50 hour maids are not getting a raise and the cardiologists are driving bigger jaguars, right, that’s a problem.
Dr. Rushika Fernandopulle: So we did this and actually the result of this was that they were able to give a 50 cent an hour pay raise to everyone.
Bill Frist: Wow.
Dr. Rushika Fernandopulle: Because of lowering healthcare costs by doing the right thing.
Bill Frist: That was concrete demonstrable.
Dr. Rushika Fernandopulle: Exactly.
Bill Frist: Tangible.
Dr. Rushika Fernandopulle: I think what we need to do in general is can we take money out of healthcare back in people’s pockets.
Bill Frist: Right.
Dr. Rushika Fernandopulle: I think they can spend it better than we can. So then what happened, the real inflection point is Atul Gawande, a great writer in the New Yorker, ended up writing an article about us in a thing called the Hot Spotters.
Bill Frist: Right.
Dr. Rushika Fernandopulle: And it got a lot of attention and he was one of the first people to really point out that if we did healthcare right, particularly for the sake of a group of people, we can make these huge impacts. And we were one of two examples he used. I think two or 3 million people read his article and he’s a great writer obviously. And so then the phone was ringing off the hook by other health systems who wanted to do this.
Dr. Rushika Fernandopulle: And I think I had, while this worked, there were real limitations of trying to do it within a health system. We’d use their it platform, which was this sort of EHR, not built for the purpose. Every time we tried to, you know, for instance, one of our pieces of our model was to hire health coaches who are from the community without any necessary qualifications, and imagine the hospital HR department went ballistic.
Bill Frist: Well, it’s not in the book. Not in the book.
Dr. Rushika Fernandopulle: I remember little things. We would have to teach yoga classes to our patients. And One day our yoga teacher said, “Hey, it’s a beautiful day. Can we have the yoga class at the beach?” Which was like two blocks away.
Dr. Rushika Fernandopulle: Absolutely. Sounds like a great idea. And so we put a sign up, you know, “We’re meeting at the beach, walk over there.” And someone at the hospital, the lawyer got ballistic, “Well you can’t do that.” Like, “Why?” “A liability. What if they get hit crossing the road?” These are adults, they cross the road every time. Like you’ve got to be kidding me, right? I just got frustrated with all this mishegoss and I said what I need to do is do this ourself. We need to own and operate these practices and we need to build our own it platform, right? Not have to use these existing tools and really have the independence to do that. And I need to figure how to do it at scale, right? It’s one thing to build these single pilots, but what if we can build a model that we can do everywhere.
Dr. Rushika Fernandopulle: Could that really change health care? So that’s what I partnered with a gentleman named Chris McCowen, who’s a head of a successful business called Health Dialogue. And so he teamed up with me and we raised some venture capital money and said, let’s build Iora. So eight years ago we built Iora to say let’s actually do this and do it at scale.
Bill Frist: Do it, and you define it no legacy system.
Dr. Rushika Fernandopulle: Exactly. Start from scratch.
Bill Frist: Through that period of time, just thinking in terms of leadership and growth, did you have a mentor, of course very different, I did sort of classic medical school training and I majored in government.
Dr. Rushika Fernandopulle: You did too? Wow.
Bill Frist: I ended up going into the political world and I’ve never had a mentor per se. In fact, when I was going through the medical training area, people should, don’t get involved in business, don’t get involved in the community, you need to focus just on becoming the best surgeon and don’t look outside. And that was it.
Dr. Rushika Fernandopulle: Yeah.
Bill Frist: You were discouraged. Did you have a mentor? You’ve had a series of them. I know Chris is one in a way, but was there one person who helped walk you through this?
Dr. Rushika Fernandopulle: Good news is there’s now a lot of people like me who are docs, who are trying to rebuild the system. When I was doing this, this was unheard of. It’s completely unheard of. So I think sometimes you have to be one of the first. You know, I had an a number of mentors, people like David Blumenthal at Harvard, Arnie Milstein, I mentioned, I mentioned Chris McCowen.
Bill Frist: The great.
Dr. Rushika Fernandopulle: David Bradley, who at various phases of my life had been hugely helpful in how to do the next thing.
Bill Frist: That highest integrity, focused, compassionate, empathetic.
Dr. Rushika Fernandopulle: Yeah.
Bill Frist: A lot of people don’t know David, but that’s the sort of person who is sitting up.
Dr. Rushika Fernandopulle: Absolutely. And you’re trying to help people get to where they’re going to go, but I think that the path itself I’ve had to sort of figure out.
Bill Frist: Yeah. All right, so then, so Iora was born, the true Iora was born.
Dr. Rushika Fernandopulle: Born about eight years ago. And so again, the idea was, because I often talk about our theory of change for healthcare is the southwest airlines theory of change, right? So imagine US Airlines, 1980, high fares, poor service, right? What changed? It wasn’t American and Delta waking up one day to decide to be better, it wasn’t the government, wasn’t consultants. It was actually a new entrant coming in, changing the rules, right? Pilots can clean the plane, we can only fly in one plane. We can have great service and have fun and wear shorts and we can do fairs 1/10th of what they’re doing. And they would not only provide a better experience and cheaper fare flying for the people who flew Southwest, but it sort of kicked American and Delta and US in the behind and said, “We better do that or we’ll lose our customers.”.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: But that was my idea is. Can we do this and actually become sort of a moving force in healthcare. So, we had to do it at scale. So the first two practices we did simultaneously were in Hanover, New Hampshire, and in Las Vegas, Nevada. And you can say, well, you can’t get to more different places than that.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: But that’s exactly the point, right? The problem with healthcare is it’s local, right? So it’s not as simple as stamping out Starbucks where it’s the same thing everywhere. It could be fine, but it’s also not chaos where you just do whatever. You have to figure out what has to be the same because it has to be the same. It’s the right thing. But what has to be different because healthcare is local. And the only way you learn that is to do it in two very different places simultaneously. So those were our first two practices and again the business model was similar. We worked with employers, start with college employees, Casino Workers Union in Vegas. They would pay us a fixed amount for primary care instead of the patient and then we’d get on with it, health coaches.
Dr. Rushika Fernandopulle: So the model, you know, really has changed the payment. We have health coaches, integrated behavioral health. We text and email our patients, we take them the grocery store, we teach them to walk, we do all the things that we need to do. We’d be able to run it platform, power this and really build a new culture. Actually, one of our earliest investors with Tony Shea, the CEO of Zappos.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: Very interesting guy, but he really taught us, you know, how you build great culture in a company. People I healthcare forget that the right chain is you have to have teams that are really happy and engaged. That will create customers who are happy and engaged. You will then be able to improve their health and that will lower health care costs. You will capture some of that value. That whole chain is important. You can’t skip it. A lot of health care institutions treat their employees like crap and then they’re surprised when they treat customers poorly.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: No, you treat your employees like crap.
Bill Frist: Start with that.
Dr. Rushika Fernandopulle: Yeah, absolutely. You’ve got to start with that.
Bill Frist: Everything will flow from that.
Dr. Rushika Fernandopulle: Everything flows from that. Exactly right.
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Bill Frist: Tell me, on the outside capital, and you suggested it earlier, 15 years ago, people with good ideas, they couldn’t get to the execution or to scale because they didn’t have access to capital.
Dr. Rushika Fernandopulle: Yes.
Bill Frist: And to build something to go to scale, which is the ultimate objective.
Dr. Rushika Fernandopulle: Yes.
Bill Frist: As you said, so you can affect more people in a bigger, more powerful way and affect real quality and cost and access. How important was the private capital coming into you?
Dr. Rushika Fernandopulle: So we could not have done this without it. Right. So, I spent eight years with Renaissance with a little bit of a loan from David Bradley, we took out a second mortgage on the house, but you can’t scale it. We had never built more than one practice at a time because you just can’t.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: Can’t hire people. You can’t build systems. You can’t tolerate a bad year. All of those. So what Chris and I started at Iora was exactly the point of let’s actually raise real capital. Now the key to this is getting the right investors, right? So this interesting mix, I think there’s often this, you know, we think of this charity and then there’s sort of a mediating sort of venture capital to ultimately maximize profit.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: I think my vision is those two things don’t have to be different. Like there are plenty of ideas and places where I think you can create huge human value and, if you’re smart enough, create a way to create a lot of profit from it. Right? So the making profit for us is a side effect, if we can do the right thing in health, we know for a fact that 30% of what we’re doing in US healthcare is waste. And by the way, be clear, this is things not that just people don’t need but are potentially harmful to them. If we can reduce that, improve people’s health, improve their life, right, that create huge human value. But by the way, if we can get the right payment models, we get to generate a huge amount of return on that.
Bill Frist: Right.
Dr. Rushika Fernandopulle: Right. These are not incompatible.
Bill Frist: You start with 30% of is waste or really doesn’t affect the system directly. There’s a lot of room to be able to-
Dr. Rushika Fernandopulle: A lot of room to move. Chris often says, “This is the biggest business opportunity in the world.”
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: The gap between three and a half trillion dollars of US healthcare and whatever we could be doing. That’s $1 trillion a year.
Bill Frist: $1 trillion, you’re right.
Dr. Rushika Fernandopulle: A staggering amount of money. Right? And we’re all better off for it. Right? But the problem, A, you need find investors who marry that we want to improve human value and make a profit but have long enough time horizon. Right? So this is not snap your fingers.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: And people change, right? So we’re eight years in at Iora, right? You need investors who are willing to ride this for the long term. And so we were lucky to have found an initial set of investors, started with some Boston based investors who we knew personally who were willing to invest. And then I told som high net worth folks investors. And then, you know, we got a direct investment from the Rice University endowment, which was an interesting longterm time horizon. Our last round was led by the [inaudible] from Singapore, Tamasic, which again has 50 year time horizons. And so we’ve been able to, I think, get the right sort of investors who are aligned with what we’re doing.
Bill Frist: And the model itself is not unique, but you really made it happen and you’ve defined it in ways other people haven’t defined it. What is a health coach and how important are they to the model of delivering better care, more affordable care and a higher quality of care to individuals?
Dr. Rushika Fernandopulle: I think it’s key. The typical business model in US healthcare is fee for service, in primary care. You get paid per doctor sick visits. So you walk in the door in the morning and you had 35 patients booked and you had whatever, 12 minutes, and you do the best you can and you come up, you prescribed something, you hand the prescription to the patient, you turn your brain off, you get paid for telling them what to do. But that’s it. The hard part about chronic disease is not telling people what to do, it’s getting them to do it.
Dr. Rushika Fernandopulle: So my old practice, I’d see you and I’d say, “You should eat less. You should exercise more. You should take your medicine. Good luck sucker. I’ll see you in three months.” You come back in three months, you bad, bad patient, you’re a noncompliant patient. I Doesn’t work. If it were that easy we wouldn’t be talking about this, right?
Dr. Rushika Fernandopulle: So our model is we are on the hook for the cost of the population. So we actually need them not just to prescribed thing, but the patients got to do it or do the right thing. So we realize that what we as doctors are trained to do is that first part is diagnose and tell you what to do, what you need as a human being to help you actually do it. What are the barriers, teach you about the disease, teach you about the treatment, to answer your questions, hold your hand when that’s the right thing to do. Kick you in the behind when that’s the right thing to do. Right? And we realized most people don’t need to be doctors or nurses even, they just need to have empathy, being able to connect to another human being. And they’re better off being closer to the patient than to you.
Dr. Rushika Fernandopulle: So there is social distance, but how nice I am, we’re doctors, you and I are, we’re doctors, right? We wear white coats, we live in a fancier house, we drive fancier car. We can’t speak to the life of a lot of the people we serve.
Bill Frist: A real connection.
Dr. Rushika Fernandopulle: A real connection. But you get someone from their community who’s respected, etc. Who’s empathetic and you can train, that makes a bigger difference. So we have three of these health coaches per doctor. They get to know their patients really well. We also hear the patients come for the doctor, they stay for the health coach. They build these incredibly powerful relationships and that really is what helps change. I think a lot of data that particular chronic diseases, the thing that moved the needle the most is what’s called self efficacy. Right? If you look at a group of people with diabetes and you ask who are the people getting into trouble, it’s not the people with the worst biological disease, the people have trouble dealing with the disease. If you can teach people that, give them self efficacy, and health coaches are much better at it than we are.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: By the way, these are great jobs, right? So we’re creating a ton of jobs.
Bill Frist: If you want to go be a health coach, what do you do?
Dr. Rushika Fernandopulle: So health coaches are people who again, the three things are empathy, from the community and willing to learn. That’s it. High school education.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: We have some health coaches who came from healthcare who were medical assistants and nurses. We have many who are not. Some of our best health coaches worked at Dunkin Donuts, at Sears, at Target.
Bill Frist: Sure.
Dr. Rushika Fernandopulle: At a variety of places. It doesn’t matter where they go. When we open I new towns, we put calls out, we get thousands of people who are interested. We sort of meet a lot of people, we learned from Tony and Zappos, about doing as speed dating, we call it.
Bill Frist: Right. Yeah.
Dr. Rushika Fernandopulle: Yeah. Meet a lot of people. Teach me anything you know. You can tell, empathetic people can meet and tell other empathetic people. And then we train them over time. So these are really good, like I said, they’re good jobs for the community and they really help improve our outcomes.
Bill Frist: If you had to say the secret sauce of Iora or the three things that really sort of push it in a unique direction, what would they be?
Dr. Rushika Fernandopulle: So the biggest one I think is that we are aligned, right? I think what happens is so much of health care, even if you want to do the right thing and help improve the population, whatever, the payment models are not aligned or the IT system is not aligned or the way the space is set up is not aligned. Right? Cause it’s all built for the old system, which is throughput. So one is I think we just aligned everything. But number two is I think we have this incredible focus on the patient, right? And everyone says this, but it means, serious, do you really design your system around the needs of the customer? So a simple answer is we never make people wait because designing a system that makes people wait in the waiting room means you value the time of your doctors, you don’t value the time with your own customers.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: But if you value the time of the customer, you actually completely change it so you don’t ever do that.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: It means your doc might be waiting around sometimes, but that’s okay because you need to value the time. So I think two is that you really design around the voice of the customer. I think third is that we really aggressively say the way we are going to pay for that, you know, so what happens is that model’s more expensive obviously. To not make people wait, get them a health coach, take them to the grocery store, go on walks, we send a Lyft or an Uber to go pick them up if we need to. Right? This is an incredibly customer centric thing. I think it’s the right thing to do by the way. You have to pay for it. So we have this pure play value based payment model.
Bill Frist: Right.
Dr. Rushika Fernandopulle: Where we say that we’re going to get paid a different way, we’re going to pay keep people healthy, not to keep people sick and that will help fund what we do. And I think aligning all those things is what’s allowed us to be successful.
Bill Frist: Culture. How would you define your culture? How important is it?
Dr. Rushika Fernandopulle: I think is the most important thing, right? I think a lot of people will talk about, and even I do, the business model and the IT system and the process, but all of it’s undergirded by a fundamentally different culture. A lot of other people in healthcare try to change culture. Try to go into a practice and change it, right? So I used to do this, when we did an earlier iteration, we would go do our practice, 10 doctors and convince them here’s what you want to do and get them health coaches and payment. And what you do is get, you’d get a range, two or three of the docs that, “Oh my God, this is great. Where have you been all my life?” Hug you in the hallway. Two or three, “Whatever you tell me, I’m going windsurfing after work.” But two or three would hit it. “What? I don’t like nurses. I don’t like data. I don’t like patients. I don’t like you.” And so you fight, right? You fight them.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: So what we decided to do is let’s not do that. Let’s actually take, this is our culture. We’re gonna find the people who like it and come over here. You don’t like what we’re doing, that’s great. You keep doing what you’re doing. Again, remember the Southwest Airline thing, we mumble under our breath, “Someday we’ll take your patients away,” right? So we will change health care by moving customers.
Dr. Rushika Fernandopulle: Now what happens? We take the first three, they come to work for us. The fourth guy or the fourth gal, you know, six months later, said, “You know, that was pretty intriguing. Can I come visit your practice and see what you’re doing?” But he wasn’t an early adopter, right? He was not ready to move. But now he sees his friends doing it. He said, “Oh my gosh, this is not only not scary, this is better. Can I come over?” And the fourth guy comes over and the fifth one, right? So that’s how we will change healthcare is by building this culture and then attracting people to it.
Bill Frist: And when you go to a new community, have you had a challenge getting those first three or the health coaches? We talked about scale and the importance of going into scale. How challenging has it been to get that core to prove and after you prove it, have the people will come onboard to a local community?
Dr. Rushika Fernandopulle: Yeah, that’s a great questions. So the first thing is, I think the real question is how do you scale these sorts of things, right? So we’re now in 12 different communities, we are going to be at 50 practice by the end of the year. I think people make a mistake when they think about scaling these things is they think of it like a machine, like an industrial thing. You want to build a new factory. This is not, this is biology.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: These things are living, breathing things. There’s a collection of people. Of course it is. How does biology scale? They don’t poof a new cell out there. They take a cell and it divides, mitosis and then they both grow. So we grow through mitosis.
Bill Frist: I love it.
Dr. Rushika Fernandopulle: So we will not open a new market without existing Iora docs people moving to that market and being the culture.
Bill Frist: So you physically have them move.
Dr. Rushika Fernandopulle: Physically move them. Absolutely.
Bill Frist: To at least get it started.
Dr. Rushika Fernandopulle: That’s right. Now we also obviously need to get people from the local market in, right? So what we’ve learned is this takes a while. So we’re opening in Houston and North Carolina, about a year before we’re going to open doors there, we start going and getting to know people.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: Right?
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: Start relationships with the residency programs, relationships with the medical community. We have a dinner we invite people to, to learn about the model and see if you’re interested. Let’s make some friends. We find the people who are jumping up and down and raising their hands.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: What we’ve now done where eight years in is we also have a program where we get medical students and residents to come rotate through our practices and sometimes we even get them in an apartment and it’s great. So they come and then they go back to their place. We Opened in North Carolina. There happened to be a woman who came to this dinner who had rotated six years earlier in her Las Vegas practice.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: And she’s like, “Oh my God, like you’re coming to North Carolina.” She jumped up so fast.
Bill Frist: Yeah. That early exposure. Then they go back to their senators and say, I can’t, this is not right and this is not the way I can live. Yeah.
Dr. Rushika Fernandopulle: That’s exactly right.
Bill Frist: That is tremendous. Let me just ask one final thing. Your background is as a physician, as I talk to people around the country, there seems to be this trend of physician leadership that didn’t exist five years ago or 10 years ago or 15. And in part is because my generation, as I described earlier, wasn’t really trained or were you encouraged to get involved in the community.
Dr. Rushika Fernandopulle: Right.
Bill Frist: Or to be a leader outside of, you know, you’re organic chemistry better, firstly. And empithology better and then being the best surgeon. How important was being a doctor to the evolution of Iora and then also you staying in a leadership role as you take it to scale?
Dr. Rushika Fernandopulle: So if you look at the people, not just me, who I think are doing the most interesting things in primary care, the other, almost every one of them is led by a physician. And I think part of it is we may be uniquely, can figure out the challenges and try these things out.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: I continue, by the way, to see patients, you know, which is hard to do as you know, it’s very hard to do. It’s easier as a primary care doc than a surgeon because I think it’s really important for me to keep the perspective.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: I think it’s very easy when you stop, the thing that happens at first when he stop practicing is you think it’s easy. I think a lot of people looking outside think it’s easy cause they read Harrison’s and they say, “Oh well, oh everyone with appendicitis shows up with a, you know, right lower quadrant pain that moves and white counts 12.” Yes, that’s what the textbook says.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: You and I both know. You’re lucky to get someone who actually fits all those things.
Bill Frist: That’s right.
Dr. Rushika Fernandopulle: It’s always vague, the gray is huge. And I think you need to keep remembering that, that this is gray and this is hard.
And so I do feel in work and our practices and I think gives me a ton of credibility with the people. The dog gets the a dog food, right? No one can hide. Right? If I have to use the IT system, it better be working or else the phone gets called. I think the docs like it, the teams like it. So I think it’s really important. You know, we are a physician led company. I think when you’re innovating the care model, you get it.
Dr. Rushika Fernandopulle: Also though, the set of values we have as a physician, which I think, this is not a dichotomy of, you know, maximize profit and maximize clinical care. But I think we’re in a better position to say how do you reconcile these two things and what are you willing to do. I think it’s very tempting and may be hard for someone who doesn’t have that to maybe cross the line because in the short run it seems like the thing to do.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: I’m very encouraged that they’re the growing cadre of physicians who are now doing that. Again, when I did this, and when you did this, was crazy, but when I did this 30 years ago, we have our 30th college reunion, so I started med school 30 years ago, it was very rare and I like the fact there are more people doing it.
Bill Frist: Yeah. And I think the things that you’ve mentioned an important Iora, the empathy, now communication is really taught more formally in medical school and residency programs, where before it was just sort of pushed to the side. So communications and the empathy and how to really educate, all of these seem to be coming together in a way that heretofore they’ve just been absent, which leaves me fairly encouraged.
Bill Frist: So finally, are you encouraged or optimistic about where the health sector is moving, has a potential to move or there’s just so many insurmountable problems out there that you just shake your head and say it’s gonna be a long time?
Dr. Rushika Fernandopulle: So, you know, the problems are big and getting bigger, right? The system’s going to bankrupt the country. Anyone who’s had their loved one go through the medical system, even at the doctor, it’s so hard to navigate the system and do it. So in some way it is just awful. And ten I think one can get discouraged by, if you read articles from, I just read an article by the guy who started Kaiser from like 80 years ago and most of the problems still exist, right, about the way we practice. And so I think we made shockingly little progress. That said, I actually, I feel like there’s an inflection moment coming and we can feel it.
Bill Frist: Yeah.
Dr. Rushika Fernandopulle: Right. And I think it’s that maybe the problems have gotten so big that we can’t ignore them, maybe is that there are more and more people trying to actually solve them. Maybe it’s the access to capital. I think the other thing that they are now a lot of other behemoths, Amazon, Google, Apple, you know, Walmart, Walgreens, who are now sort of saying, you know, wait a second. I mean Apple is a great example. They frame it as, “Wait, this is three and a half trillion dollars. It’s done in a very non-Apple way.”.
Bill Frist: Yeah, yeah.
Dr. Rushika Fernandopulle: And maybe we have something to add here. And again, going to take me a long time to figure it out. But I am encouraged that there’s now a lot more energy in trying some of these new things. You know, I think by the way, I would never have thought to say this 10 years ago, but the government’s pushing hard. It’s the MMI and the government’s actually driving a lot of innovation. I think some of the big employers, the Boeing’s of the world who we work with, then, you know, Walmart are driving some innovation. So I think there are a lot of forces pushing toward maybe us finally making bigger steps.
Bill Frist: Yeah, that’s certainly my feeling as well. And I think that you have built a company that really pulls it all together with a focus on primary care. A Little bit like it used to be practiced before this exposure and information and all the challenges of empathetic individuals treating other individuals in a way that touches them intimately, but at the end of the day have totality, wellbeing. So congratulations on really building a great company, A. But B, more importantly, I think being a model and an inspiration for so many other people who listen to your story.
Dr. Rushika Fernandopulle: Great.
Bill Frist: So thank you for being with us. Appreciate it.
Dr. Rushika Fernandopulle: Thank you.
Bill Frist: Thank you.
Bill Frist: This episode of A Second Opinion was produced by Todd Schlosser, the Medhost Creative Group team and Snapshot Interactive. You can subscribe to A Second Opinion on Apple Podcast or wherever you are listening right now. And be sure to rate and review A Second Opinion so we can continue to bring you great content. You can get more information about this show, its guests and sponsors at secondopinionpodcast.com.
Bill Frist: Thank you again to our sponsor Medhost and thank you for listening. Be sure to join us for our next episode with Darren Gordon, the nation’s longest serving director of a state Medicaid agency. Thank you for joining us for A Second Opinion, engaging at the intersection of policy, medicine, and innovation.
