Over the past few years, there’s been a notable surge in investment dollars directed towards companies specializing in value-based care. In fact, investment in companies that enable value-based care increased more than 400% between 2019 and 2021, according to a McKinsey analysis.
This investment trend has only continued in 2022 and 2023. On Sunday, a Nashville-based value-based care startup announced that it had completed one of the biggest venture funding rounds in healthcare’s recent history — Main Street Health closed a $315 million fundraising round, bringing its total funding to about $342 million. What separates the startup from other startups enabling value-based care — such as Aledade, Pearl Health and Privia Health —is that it is solely focused on bringing value-based care models to rural communities.
Many of the investors that participated in the round were health systems and health plans. This includes UnitedHealthcare, Humana, Elevance, Centene and CVS, Main Street Health CEO Brad Smith said during an interview at HLTH in Las Vegas. He founded the startup in 2021 after he left his role as director of Center for Medicare & Medicaid Innovation.
Smith pointed out that most health plans are trying to participate more in the provider space, and many of them are acquiring provider assets. But “almost all of that acquisition” is in urban or suburban areas with population density, he noted.
“What’s unique about the rural market is there’s not enough United or Humana or Blue Cross patients in any of these clinics for one of those payers to either set up their own clinic or have a doctor in that clinic. So there’s really an economy of scale that comes from being in these really small clinics. We told the payers that our model only works if we have all of them contracted — because there really aren’t enough people in the clinic if we only have half of them,” Smith explained.
Main Street Health seeks to scale value-based care in rural areas for both Medicare Advantage and original Medicare patients. When serving the former population, the startup takes on full risk. When serving the latter, the company is expanding the Medicare Shared Savings Program, Smith said. Main Street Health takes on the risk and then shares a portion of the savings back with the physicians — Smith described the payments his company gives back to physicians as “flat fee for different activities per month kind of thing.”
To carry out this model, the startup partners with existing primary care practices in small towns with populations that are usually between 3,000 and 5,000 people, Smith explained. A lot of the practices that Main Street Health partners with only have one doctor and one nurse practitioner, he said.
The startup helps these practices move into value-based arrangements by deploying “health navigators.” These navigators go into the practice and assist existing staff with the care coordination activities involved in value-based care.
“The navigator will do things like call people for a mammogram or call people to come in for a visit. We’ve also built data feeds so we know about things like if people don’t pick up their medications. That way, we can call them to come get them,” Smith said.
With its new influx of capital, Main Street Health plans to partner with more practices and place more of these navigators in clinics across the country. Along with its funding announcement, the company said it has plans to expand to 26 states.
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