San Francisco-based Grand Rounds, which helps patients find the best doctors for their specific ailments, announced today it has raised $55 million in a Series C financing. The money comes from existing investors including Venrock and Greylock, along with an undisclosed new investor described as a “global mutual fund.”
Grand Rounds was founded in 2011 to address a conundrum. The United States has one of the best health care systems in the world, yet patients have no easy way to identify the practitioner most adept at treating the condition they face, says the company’s CEO and co-founder Owen Tripp.
“I think a lot of patients are missing an opportunity to go to a top quality physician who is in their area and is on their insurance network,” Tripp (pictured above) says.
Instead, patients choose doctors based on unreliable factors—skimpy patient satisfaction surveys on consumer websites, the names of the medical schools where available doctors trained, or even whether a physician’s office building has a parking lot, Tripp says.
Grand Rounds brought a big data approach to the problem, devising a system of ranking doctors based on factors that actually predict superior performance in a particular specialty, Tripp says. Those factors include the residencies and fellowship programs they completed, and even the reputation of those hospital programs during the years when the doctors took part, Tripp says. Hospital departments can rise and fall in the rankings over the years as outstanding leaders arrive or depart, he says.
Grand Rounds also looks at a number of other factors, including doctors’ practice patterns—such as how often they prescribe addictive painkillers or outdated treatments.
The company drills down from general specialties, such as neurology, to specific maladies, such as multiple sclerosis and Parkinson’s disease. “When you’re a patient suffering from MS, it doesn’t do you much good to go to an expert on Parkinson’s disease,” Tripp says. Grand Rounds says it has evaluated 96 percent of active U.S. physicians.
Grand Rounds is part of a burgeoning health IT industry that is attracting significant support from venture capital firms. Companies such as Newton, MA-based startup Par8o (pronounced “par-eight-oh”), Boston, MA-based Kyruus, and Chicago, IL-based Allscripts (NASDAQ: MDRX) are focusing on helping hospitals and physician practices to streamline their operations and improve the quality of care. This often includes matching patients with the best doctors.
Eden Prairie, MN-based Optum Labs provides data-driven services not only to health care providers and insurance plans, but also to employers who are trying to manage their health care benefit programs. Their workers can consult Optum’s Nurse Line to find primary care doctors and specialists available through their insurance plan networks.
Grand Rounds’ services are tailored primarily for employers. They subscribe to the service because quicker diagnoses and faster, better-chosen treatments are often less expensive than the results when workers go to the wrong doctor first, Tripp says.
“The only way bad health care is cheaper is when the patient dies,” Tripp says. “But that’s not the stated strategy of any employer or insurance company I know of.”
Grand Rounds signed up its first employer in 2013, and now serves 50 companies in the United States and other countries. The cost to an employer is “a few dollars per employee per month,” Tripp says.
Grand Rounds’ new capital infusion brings its total fundraising to $106 million. The company plans to use the money to expand its analytics platform and its staff to meet demand.
Individual patients can use the service even if their employers aren’t Grand Rounds customers. But those patients pay out of pocket for the consultations, which can range from few hundred dollars to several thousands in complex cases.
Patients covered under their employer’s contract use Grand Rounds in two different ways. If there’s no uncertainty about their diagnoses, they tap into the service to find the best doctors, and make their own appointments. Their insurance plans foot the bill for their care, as usual.
If a patient hasn’t been able to find out what’s wrong, or needs a second opinion, Grand Rounds takes a more hands-on approach. Its ‘undiagnosed cases clinic” submits the patient’s test results and other information to review by an array of different experts headed by a doctor paid by Grand Rounds. Those cases account for about 10 percent of all requests the company handles. The procedure for second opinions is similar. Grand Rounds can tap into the expertise of top experts even if they’re not near the patient’s community, by sending the doctors test results, scans, and other information. The cost of these more intensive consultations is included in the employer’s flat fee.
Grand Rounds follows up with patients to check whether the outcome of their care matched the company’s predictions. That data is fed back into its recommendation engine.
Employers can save money when the best care turns out to be the least expensive care, Tripp says. For example, patients often undergo unnecessary surgery for lower back pain, because physicians have a financial incentive to choose that expensive option, he says. Tripp estimates that of the $44 billion spent per year on that one surgery in the United States, the health care system could be saving $24 billion.
In most of Grand Rounds’ contracts with employers, workers have the choice either to consult the system or not when they choose a doctor, Tripp says. But some employers, motivated by potential cost savings or the desire to keep staffers healthy and on the job, are moving toward making it compulsory, he says.
“A number of employers are deciding to heavily incentivize or require it,” Tripp says. “If it is compulsory, we want to make sure we can deliver on our promise to lead them to the highest quality outcome.”