At Aver, CEO Bill Nordmark is focusing on the assist, guiding health systems and insurers as they evolve towards “pay-for-quality”
When asked to explain the market forces underpinning his company Aver, which recently raised a $27 million series C, CEO Bill Nordmark talks about $500 bags of peanuts.
Imagine if you bought an airplane ticket to visit some family members, says Nordmark, but you didn’t know the price of the ticket when you took off. When you landed, you started to get bills from every single person that you interacted with — $1000 for the baggage handler, $2000 for the ticket agent, $500 for the peanuts. Not to mention the mysterious $10,000 ‘airport usage’ bill.
Thankfully, this isn’t how airlines operate. The price of an airline ticket bundles together all of the services required for the whole experience of getting from point A to point B. It is, however, precisely how healthcare handles billing. Surprise bills, mysterious facility fees and fluctuating prices have become the norm. In fact, says Nordmark, healthcare seems to be just about the only industry that hasn’t figured out how to bundle payments efficiently so that customers can pay for outcomes rather than paying for a confusing list of fees and line items. With Aver, Nordmark is working to change all that.
In healthcare, this concept of focusing on outcomes and payment bundles (vs. individual services) is called value-based care, or fee-for-value, and it’s nothing particularly new. It was central to the HMO movement of the 1970s and 80s, as well as to the Affordable Care Act passed in 2010 and to today’s “managed care” population health plans run by companies like Centene.
“In healthcare we have a tendency to bring back old models and rename them,” says Nordmark.
The thinking behind value-based care goes like this: pay the medical establishment a set amount of money (AKA capitated payments) to keep a patient well, or get them through a procedure, and you’ll fundamentally change the incentives built into the system. Rather than financially incentivizing doctors to order more tests, provide more in-patient services or prescribe expensive drugs, you incentivize them to keep patients healthy, out of the hospital, and do it all as efficiently as possible.
The problem is that even if you believe in the need for value-based business models in health, the “shift to value” is a complicated morass. Healthcare is still wired to be a “fee for service” world and it’s in the awkward adolescence of the digital age. Nordmark saw the mess up close and personal through his previous startup PaySpan, which he sold in 2016. PaySpan, where Nordmark worked as Chief Growth Officer, pioneered point-of-care digital payments for patients, as well as digital payments for health insurance premiums. Up until this point, few if any of these services could be paid for with a credit card in the doctor’s office. Payspan was bringing medical billing and payments — which up to that time had been handled largely through paper checks — into the 21st century.
But streamlining payments was just the gateway. Through his work at Payspan, Nordmark was introduced to Aver along with the broader world — and challenges — of value-based care. He began to ask questions in the market. He discovered that even when a healthcare provider wanted to shift to a value-based business model, they just weren’t set up for it. “These are old systems,” says Nordmark. “They’re old mainframe, Cobalt, hundred million dollar implementations and if you touch them they break. So there’s a big complexity to even be able to process the data.”
He discovered that even when a healthcare provider wanted to shift to a value-based business model, they just weren’t set up for it.
Nordmark also dug into the medical loss ratio (MLR). Think of MLR as overall administrative efficiency. This number represents the split between how much a health plan spends on medical claims (your health) vs. how much they spend on administrative costs (everything else). You wouldn’t, for instance, want your insurer spending 50% of your premiums on executive salaries. That would be a bad MLR. The Affordable Care Act put limits on these ratios and required insurance companies to report the proportion of premium revenues spent on “clinical services and quality improvement.” According to the ACA, insurance companies need to spend at least 80% or 85% of premium dollars on medical care, or else provide a rebate to its customers.
To put it simply, for insurance companies to thrive in the post-ACA world, they need to figure out how to be more efficient, doing more within their “medical loss ratio.” A big piece of that efficiency — and a way to dramatically improve the patient experience — involves bundling payments in logical ways, and presenting them to patients (or whoever is paying) in a format that makes as much intuitive sense as searching for a plane ticket online.
And that (cue the music) is where Aver comes in. Nordmark understands the push and pull of healthcare incentives. He’s seen firsthand the incredible administrative burden of bundling payments together. Even health systems that want value-based care often just don’t have the tech infrastructure to pull it together. So, he built Aver to help them do it. Aver was designed to come alongside payers and providers — insurance companies and hospitals alike — that are shifting from fee-for-service business models to value-based care and simplify the process.
Popping the Hood
How do they do it? While there’s a lot of wizardry under the digital hood, a lot can be summed up as a big data assessment and an actionable dashboard. Aver pores over enterprise-level health data to identify opportunities — for reducing cost variance, for improving provider behavior, for designing “episodes of care.” (Think of “episodes” like that bundled airline ticket we talked about.) The data-crunching digital platform assesses where billing can be bundled and how to find other efficiencies within the system. And then Aver’s platform feeds that data — and a thousand more data points — to the right users in an actionable dashboard. Nordmark describes it as “unlocking” a provider or payor’s day-to day business to help them implement value-based programs.
On the patient side, the Aver experience is all about improving care through price transparency. Like the airline analogy from earlier, through Aver, patients know the exact cost of their prospective healthcare bundle. They also know how much they will owe — a major departure from the industry’s norm. Since providers and payers partner on managing the risk of the procedures the patient will not receive another bill or further billing through the procedure.
To put it simply, for insurance companies to thrive in the post-ACA world, they need to figure out how to be more efficient.
When asked what he’ll do with the company’s recent $27 million raise — which came from Cox Enterprises — Nordmark breaks it down into three areas. Number one, help current customers scale these value-based programs, and help them execute at an even higher level. “Where we can put resources, whether it’s in the analytics or it’s in the network or just helping them move faster, we want to do that.” Number two is scaling operations. “We’re growing, doubling year over year, and the excitement around the business is huge. So we’re building a world class operation to help our customers move faster.” Third, Aver will invest in telling their story. “We want the market to know what we’re doing behind the scenes.”
Aver is an “under-the-hood” technology. It’s also a bridge technology, helping, guiding, assisting health systems to leap forward from one business model to the next. In that way, Bill Nordmark and his team in Columbus, Ohio are classic innovators. They identified a point of friction, and they stepped in to smooth the road. They’re “changing the inner workings,” as Nordmark puts it, but they’re doing it with a guiding hand, so everyone can come along.
How big is your team?
40 and growing. We’re actually looking for talent everywhere. We want to bring in “athletes” — people who are great at a bunch of different things.
What’s unique about running Aver out of Columbus, Ohio?
You hear the war stories of Silicon Valley. Everybody’s chasing the next Google or Twitter. What we’ve found is access to great talent in Columbus.. There is also a growing healthcare focus in the market fueled by a major university in the city and large health systems.. We’re also close to a number of our customers.
Why were you excited to partner with Cox Enterprises on this $27 million Series C?
Cox Enterprises is a patient, long-term investor with ambitious growth goals. Their philosophy is ‘to build a better future for the next generation to come”, and they see an opportunity to make a positive impact in healthcare. Cox has shown a passion for our company and what we’re doing, and they are willing to make bold moves, so I’m excited by the bet they placed in us as they diversify into digital health.