Our conviction in value-based care, in addition to our alignment with Aledade’s mission brought us to make our initial investment in April 2020, when we led the Series C raise. We have since continued our support of the company with a subsequent follow-on investment (Series D) in January 2021 and leading the most recent Series E raise in June 2022.
How did this deal originate? Can you tell us about the first steps on the road to this investment?
Across the US, primary care physicians are in need of innovative ways to deliver better care at lower cost, while simplifying the administrative burden that takes time away from their patients. At OMERS Growth Equity (OGE), we believe that healthcare needs to transition from fee-for-service to value-based care, where providers and health systems are paid based on patient outcomes. We identified Aledade as an attractive company within the space, with its market traction, physician-first approach, and an experienced and mission driven management team. We were initially introduced to CEO and co-founder Farzad Mostashari by a mutual contact, who identified the shared principles between OMERS and Aledade. After our first meetings, we knew there was mutual alignment around the mission of “doing well by doing good”. Aledade’s work in supporting physicians so they can better support patients, deeply resonates with our investment philosophy which is focused on seeking high-quality investments to meet the pension promise to the over half a million OMERS members, including first responders and frontline workers.
What sets Aledade apart from its competitors? What is it doing differently?
Aledade focuses on true partnership with independent primary care physicians, who tend to have the least resources but are best positioned to influence care and outcomes. The company has a capital-efficient business model which leverages existing infrastructure of practices in the community. Finally, Aledade has a scalable model which has consistently delivered improved patient outcomes and generated medical cost savings across various types of value-based contract arrangements. We are excited by the scale of additional impact they can enable, which provides a long runway for continued growth.
What are some key metrics that convey the company’s success or growth since the initial investment?
When we originally invested in early 2020, Aledade was partnered with around 550 independent primary care practices, covering more than 840,000 patients and $7.5 billion in total health care spending. Over the past 26 months, Aledade has grown to over 1,000 practices, and today manages 1.7 million patients (+102%) and $17 billion (+126%) in total health care spending. In addition, Aledade has expanded beyond traditional Medicare into other value-based care arrangements, including Medicare Advantage, Medicaid, and commercial contracts. Impressively, Aledade is projected to have created over $1 billion in total savings across the health care system to date!
OGE invests in companies with strong management teams. What struck you about this particular group of people?
When we were first introduced to the team, we were particularly impressed with Farzad, his vision for Aledade, and the strong team he built around him. Farzad was the former National Coordinator for Health IT at the Department of Health and Human Services, where he helped shape healthcare policy. He realized that despite setting the tone in policies, change was happening too slowly, so he set out to build Aledade. We were particularly impressed with Aledade’s partnership approach and the management team’s “fellow travelers” mentality. More recently, we saw them act with decisiveness when their partners were impacted by the COVID-19 pandemic. They are truly partners to the physicians they support and that has not wavered.
What’s next for the company?
Aledade has made incredible progress on broadening the support for its provider partners, through solutions such as Aledade Care Solutions. Aledade has also demonstrated success in building out partnerships through both Medicare Advantage plans and commercial contracts. We expect the team to continue building out the company’s data analytics, technology and services offerings to better support its provider partners as it continues to expand its value-based care model across the country.
What excites you about the future of this company?
Today, Aledade helps providers manage over 1.7 million patient lives and has consistently improved both quality of care and cost of care among its patient population over time. The work they do is so important. In a world of rising healthcare costs and increasing care inequality, we see Aledade and its fellow travelers as a great solution to help align incentives to provide better, more equitable, and sustainable healthcare, and provide the tools and analytics necessary to help its partners succeed in that mission. They are proving that value-based care can and does work at scale and the magnitude of their impact is immense and exciting.
