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Health care is a scary business for many entrepreneurs. It’s a wildly inefficient industry that’s ripe for disruption. It’s a complicated business with a tall learning curve. And it’s a highly regulated sector. All of these things can give both startups and their investors the willies.

Aledade dives into the fray to help independent doctors reduce costs — and keep more of the money they’re paid to take care of a given population of people.

The company was founded by Dr. Farzad Mostashari — the former National Coordinator for Health IT — with the intention of helping independent, primary care physicians form Accountable Care Organizations (ACO) in which they’re paid by Medicare to deliver the best care, not the most care.

The government now has programs where doctors are paid the full price upfront to care for Medicare patients. Then the physician or physician group pays for whatever specialist, hospital, and lab services are needed to restore patients to health.

Aledade founder and CEO Farzad Mostashari

Above: Aledade founder and CEO Farzad Mostashari

Image Credit: Aledade

When all is said and done, Mostashari tells me, the medical group often ends up keeping only about 5 cents of every dollar it originally takes in to care for patients.

Aledade is all about helping the medical practice keep much more of that dollar — to reduce costs associated with unnecessary tests, overpriced medical hardware and drugs, and expensive hospital admissions and specialist referrals.

And, Mostashari says, there are plenty of ways to remove gross inefficiencies from the system without sacrificing quality of care in the least. He calls these things “low-hanging fruit.”

When Aledade signs a practice on as a client, it downloads the available clinical information from the electronic health records (EHR) system as well as the practice’s claims data, and pulls it into the Aledade platform.

From this they can see which patients are most at risk of getting sick (and costing time, money, and resources). The system then runs some predictive analytics on the data to derive a list of patients who are most likely to get sick and need care. This “worry list” is presented to the doctor everyday alongside the list of patients who have appointments.

“The doctor then up-regulates or down-regulates the patients based on his own clinical intuition,” Mostashari says.

The doctor might choose to have a nurse or physician’s assistant contact the at-risk patients to head off problems. Part of what Aledade does is delegate necessary outreach tasks that don’t require the physician’s expertise to other caregivers like nurses or physician assistants.

There are also times when it pays to use telemedicine to reach out to patients who might not normally schedule an appointment, and who instead stay home getting sicker and sicker.

Some of digital health’s best thinkers will be at VentureBeat’s HealthBeat October 27 & 28 to discuss how data analytics can remove costs from the delivery system. Register now. 

Aledade can also crunch the data to take a hard look at the real costs of the procedures, drugs, and therapies being prescribed by physicians, then grade them on their efficiency. There are cases where the most expensive drug therapy or specialist referral doesn’t create any better outcomes than cheaper ones. When physicians understand this, they may make different choices in the exam room. More low-hanging fruit.

Mostashari says that many of the analytics techniques being used today simply weren’t possible during the 1990s, when capitated care was last in vogue. Aledade, for instance, doesn’t use a legacy relational database to store and analyze patient data.

“The technology has improved enough to overhaul health care,” he says. “Facebook and others have reinvented the way databases are structured. The social graph model is better suited to health care. We need a ‘health graph,'” Mostashari says.

Aledade does not charge an upfront fee to physicians, but rather takes a cut from the money that it saves physicians.

I asked Mostashari how it came to be that health care services are so expensive, and how one procedure can have wildly different price tags from one hospital to the next.

He replied: “There are lots of people making money treating patients like they are ATM machines. They are not going to provide access to the full data; they are not going to talk about the costs of everything being done to the patient.”

Bethesda, Maryland-based Aledade took a $4.5 million seed funding round from venture capital firm Venrock in June.

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