The news that ZoomCare has its first outsider investor -- Endeavour Capital – signals that the neighborhood health clinic model is headed toward a major expansion and moving far beyond its rudimentary beginnings in 2006 when it only offered primary care services. Over the next 12 months, major changes are on the way.
ZoomCare’s preparing itself for one of its first steps – becoming an Oregon insurance company after submitting documents with the Oregon insurance commissioner in late 2013. Until it’s actually certified as a fully-insured company, CEO and co-founder Dave Sanders has been asked by the Insurance Division not to comment.
But with 250,000 customers last year – the majority of whom were seen in the Portland area -- ZoomCare should have fairly easy access to potential members, and has already established network relationships with hospitals in the region.
Earlier this year, ZoomCare submitted a proposal to insure state employees under the Public Employees Benefit Board, but didn’t rank high enough to qualify. And, since it’s still awaiting approval from the Insurance Division, ZoomCare cannot participate in Oregon’s health insurance exchange for 2015 enrollments.
The company’s also plugging away at legislation for the 2015 session, giving it the ability to be reimbursed by insurance companies for telemedicine visits. After introducing similar legislation this year, ZoomCare’s proposal gained the backing of Sen Laurie Monnes Anderson (D-Gresham), who set up a special task force led by Cathy Britain, a consultant and board member of the Telehealth Alliance of Oregon, to review the legislative proposal.
Not only will telemedicine reduce healthcare costs, with insurance companies negotiating for lower fees, it will also help drown out the fee-for-service payment model which relies on in-person care and needs to fall by the wayside, CEO Dave Sanders, told The Lund Report in early February. Currently, 20 states require insurers to pay for telemedicine. “We’re trying to modernize Oregon,” he added.
During that interview, Sanders also said he intended to expand the neighborhood clinic model by having 37 clinics open this year in Portland and Seattle. Currently ZoomCare operates 23 clinics. “We’ll be in all the great neighborhoods,” he said.
Sanders also inked his first contract last November with a self-insured employer – DSU Trucks with has 400 employees – and is convinced he can lower their healthcare costs by as much as 40 percent – while he’s been having conversations with CMS so he can begin accepting Medicare and Medicaid patients. In Portland, roughly 33 percent of all employees work for a self-insured company so there’s plenty of room to grow.
The private equity firm isn’t disclosing how much money it’s investing in ZoomCare, as a matter of policy, but did make a substantial investment, Sanders said, which could be worth up to $25 million. On the Portland-based firm’s website, Endeavour acknowledged that its typical investment ranges between $25 million and $100 million, ”however it does have the ability to invest substantially more.”.
Describing the investment, Stephen Babson, managing director said, “We are impressed with the innovative way ZoomCare has grown by aligning its novel healthcare system and business model. ZoomCare fits with our investment strategy of long-term equity commitments to what we view as some of the best firms in our region, so we are excited to join with them as a minority investor.”
With this investment, ZoomCare can offer a complete range of services up to the hospital level and expand specialty services, Sanders told The Lund Report. Currently, it has eight specialists on board.
“We intend to continue diversifying our services so we can be innovative and go deep,” he added. Before accepting the offer from Endeavor, Sanders was courted by investment companies around the world. But those investors were primarily interested in having ZoomCare become a national player and open what Sanders called “a thin layer of services.”
“No way were we going to take on any controlling investor,” Sanders continued. “We preferred to go with a company that shared the same vision and the same values and intend to develop a complete healthcare system in Portland and Seattle. We have a very patient long-term care minority partner with a proven track record as a local and regional company.
“ZoomCare is leading a movement to build an on-demand healthcare system with the customer at the center, and we are pleased to have Endeavour Capital on board to help accelerate our rate of innovation. Endeavour shares our vision for ‘twice half ten’: twice the health at half the cost with ten times the customer delight.”
FOR MORE INFORMATION
To read the earlier story about Dave Sanders that appeared in The Lund Report, click here.Diane can be reached at [email protected].