This is part 2 of a weeklong series on Zappos CEO Tony Hsieh’s Downtown Project.

Entrepreneurs tackling education and health are increasingly proposing that we throw out the current system rather than merely reform it.

But few have been bold enough — or have adequate resources — to create a new system from scratch. Until now.

Zappos CEO Tony Hsieh’s project to revamp a city — The Downtown Project — is the exception to the rule and will make for a hell of a case-study someday. In 2009, Hsieh revealed plans to redevelop the long-overlooked city north of Las Vegas’ glamorous, casino-filled Strip.

Leveraging Las Vegas

Our three-day series examines Zappos CEO Tony Hsieh’s ambitious, $350-million plan to reinvent downtown Vegas.

Part 1: Creating an ‘entrepreneur’s Disneyland’

Part 2 (today): Health and education in Vegas

Part 3: Nurturing a startup ecosystem

He’s set aside $350 million for the Downtown Project. $200 million is targeted for real estate acquisitions, $50 million for startups, $50 million for local small businesses.

The final $50 million has been earmarked for health and education in the area.

Hsieh is under pressure to bolster these services in downtown Las Vegas, given that the Zappos office will move to the area by the end of the year. At present, the area lacks good schools and good medical care, and that’s a big potential stumbling block for making downtown an attractive destination for employees and their families.

Rethinking health care: The Iora model

Health care in the state is notoriously sub-par. According to the United Health Foundation, Nevada ranks near the bottom of the 50 states for immunization coverage, prenatal care, and the availability of primary care physicians. The proportion of people who lack health insurance is also high, relative to other states.

For most doctors, Las Vegas is among the least attractive cities to practice medicine. But for Dr. Zubin Damania, it’s an opportunity to dream up innovative ideas and “fix health care.”


Above: Zubin Damania, as pictured on his web site, ZDoggMD.

Hsieh hired Damania (left, and above), a Stanford-educated internal medicine physician, to lead the health care practice.

Damania’s side hustle is his medical rap videos, which he produces and stars in. Under his pseudonym, ZDoggMD, he uses puns, parodies, and poop jokes to skewer the health industry. The wildly funny series propelled him to Internet stardom.

Zappos’ chief became aware of the videos through Damania’s wife, a former classmate of Hsieh’s from Harvard.

“Tony would occasionally watch my videos and tell me they were interesting and weird,” jokes Damania in an interview. “But when he did this Downtown Project, he decided I might be just crazy enough to set up shop.”

After doing some soul-searching, Damania made the decision to relocate his family to Vegas to work with Hsieh. Investigating a new model for primary care would be far more exciting than “being a cog in the machine of a broken system,” he said. “I get paid a flat salary to do anything health care-related.”

In April of this year, Damania and Hsieh announced that they would introduce a new Iora Health clinic to downtown Vegas. These clinics have already sprung up in Atlantic City, Brooklyn, and other cities.

Damania selected Iora, a startup that operates medical clinics, because he was impressed by its model, which he believes is turning primary care on its head with its focus on streamlining administrative costs and delivering holistic care. Iora is not dissimilar to One Medical, the concierge medical practice best-known on the West Coast that also claims to be entrepreneurial, collaborative, and patient-friendly.

Hsieh was also impressed by Iora, and recently participated in the company’s second $14 million funding round alongside Fidelity BiosciencesPolaris Partners, and .406 Ventures, his most notable health investment.

Iora manages clinics that cater to specific groups — employees of a large university or company, for instance — instead of patient populations selected by insurance companies. It’s ideal for Vegas with its diverse community of small business owners, freelancers, artists, and non-unionized workers.

The clinics use technology to engage patients between doctor visits. It’s a preventive care model that is designed to save money in the long run. Vegas residents (Zappos employees and locals) can expect to pay a flat membership fee of about $60 or $70 a month. In return, they’ll receive same-day appointments, 24/7 Skype access with a doctor, and zero transactions at the point of care.

The clinic will employ three physicians and 11 “health coaches” who will offer nutritional advice and counseling. The goal is to avoid insurance and bypass the reimbursement model, which Damania doesn’t believe is in patients’ best interests.

Damania recently delivered a talk at the 2013 TEDMED conference in Washington called “Are Zombie Doctors Taking Over America?” He offered a frank opinion on the physician lifestyle right now: hours on the phone with insurance companies, endless paperwork, and despite their best efforts, plenty of mistakes made somewhere along the way.

But Iora doctors, he promises, will offer patients a more holistic experience. Rather than rewarding care providers based on productivity and procedures, the emphasis will be on the results — getting patients healthy in the long-term. For now, the $60 or so a month covers primary care, but Damania is fleshing out plans to connect patients with “non-Zombie” medical specialists, like cardiologists and neurosurgeons.

“Vegas has some of the worst health care in the country, so you can’t iterate on the current system,” he said. “You can’t polish or fix it — you have to reinvent it entirely.”

Rethinking education: hiring innovators

The Downtown Project education team.

Above: The Downtown Project education team: Ovik Banerjee, Etola Berry, Connie Yeh and Dr. Meg Murray (L-R)

Health care is just one component of building an attractive, employee-friendly urban infrastructure. For anyone with a family, the quality of the local schools is an incredibly important criterion in deciding whether or not to relocate to a city.

Unfortunately for Las Vegas, the local school district, Clark County, has a reputation for some of the most crowded classrooms in the nation, with the average class size pushing 35 students. And its high school graduation rate of 59.3 percent ranks lowest in the state.

Needless to say, there is plenty of work to do.

“For our city to thrive, families must not only aspire to live here but also to educate their children here,” the Downtown Project’s website reads.

Entrepreneur Richard Demato was recently brought in by the Downtown Project to help design a new model K-12 school, dubbed 9th Bridge, at the site of the former First Baptist Church. The historic church is currently being renovated for the inaugural class. The website says 9th Bridge will accept children ages six weeks old to kindergarten in its first year (so initially it will function more like daycare than a school — the team calls it “an early childhood center“), but it will expand the program “as our students grow.”

Creating a new school is no easy task, so Hsieh also hired Meg Murray, who has a Ph.D. in education, Etola Berry, a child care quality assessment specialist, and his cousin Connie Yeh, a former vice president at Citigroup. The pair have spent much of the past year attending education conferences to scope out the latest high-achieving school models.

Parents will also have a say in how the school is run. Hsieh invited Zappos employees to his home for a brainstorm last year. One of the ideas that repeatedly came up is the “blended learning model,” meaning an online delivery of content alongside physical classroom instruction.

The team behind the 9th Bridge school began interviewing potential teachers in March. “[They] also need to be innovators and dreamers who think creatively about the process of learning,” Yeh wrote in a blog post recently.

To lure these educators to the region, Hsieh has partnered with Teach for America, a 20-year-old volunteer corps placing recent college graduates in public schools. Hsieh hopes to attract 1,000 corps members to live and teach downtown by providing subsidized, low-cost housing. Downtown Vegas has its own Teach for America liaison, Ovik Banerjee, to help recruit teachers straight out of college.

In addition, Zappos employees are encouraged to volunteer at the local schools to build closer bonds with the community. Zappos recently donated $300,000 to sponsor three existing schools: Sunrise Acres Elementary School, J.D. Smith Middle School, and Roy Martin Middle School. School superintendent Keith Davis said the money will be used for an internal grant competition for the schools within the district.

It will take a generation or two to improve the quality of schools in the region. But the 1,600 Zappos employees and other executives relocating to the area will insist on a top-notch education for their children. Providing a new model school and shoring up the existing schools will help kick that into gear, the organizers hope.

In an interview with education publication EdSurge, Murray explained, “Las Vegas has been known to be pretty transient, but this is an opportunity for the local community to claim its town, and get people to move here and raise their children.”

Don’t miss the next installment in the series! Tomorrow, we’ll be delving into downtown Vegas’ flourishing tech startup scene. 

Top image via MedCrunch.net // education team via 9th Bridge website 

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