- One Medical is now valued at close to $2 billion.
- The company is signing on hospitals as partners, expanding geographically and adding services for mental health.
- One investor says it can be "the Starbucks of primary care."
Two years after leaving the traditional health-care world to lead primary care upstart One Medical, Amir Dan Rubin now faces a clear challenge. With competition heating up, he needs to rapidly expand the business into new areas without sacrificing the luxe service that patients have come to expect.
Founded in 2007 by physician-turned-entrepreneur Tom X Lee, One Medical has become popular in and around its hometown of San Francisco by providing on-demand care and easy mobile booking and by selling its services to big companies who offer access as a perk to employees. Google and SpaceX are among those employers, according to a person familiar with the matter who asked not to be named because the relationships are confidential.
One Medical is taking on a chunk of the $3.5 trillion health-care industry, which is riddled with inefficiencies, impersonal care and old technologies that don't talk to each other and leave patients struggling to find and track their medical records. The company is trying to modernize the whole process, and asks patients to pay a $199 annual membership fee.
"The vision and the focus is to delight millions," said Rubin, in a recent interview at One Medical's San Francisco headquarters. "In health care, almost every stakeholder group is frustrated and so we looked to solve a lot of these needs simultaneously by starting from scratch and putting the member at the center of the experience."
One Medical has 72 clinics in seven states, and Rubin said he's focused on pushing into new areas. The company is opening locations in Portland, Oregon, as well as Orange County, California, and Atlanta. It's also partnering with health systems Providence St. Joseph (in Portland and Orange County) and Advocate Aurora (in Chicago), which should lead to more referrals from doctors at those hospitals. Three more Southern California locations are slated to open in the coming months in close collaboration with the University of California San Diego.
To fuel its growth, One Medical raised $220million last year in a funding round led by private equity firm Carlyle Group, bringing total capital raised to more than $400 million, which includes early money from Google Ventures (now GV) and venture firm Benchmark. The latest financing valued the company at about $1.5 billion, according to two people familiar with the matter. That valuation has subsequently edged up to closer to $2 billion based on secondary market transactions, said one of the people, who asked not to be named because the terms are private.
Overall, One Medical says it has 4,000 employers now offering the service as a benefit. But there's a growing number of emerging competitors bidding for these contracts. They include Premise Health, Paladina, Iora Health, and Crossover Health.
One key piece to One Medical's strategy is to make it an appealing place for doctors to work. It's not uncommon for physicians in the U.S. to see 30 or more patients a day and keep visits to less than 10 minutes. One Medical limits doctors to 16 a day. The company also built its own medical records technology from the ground up to help doctors manage patient relationships, a big change from the existing systems that medical professionals say aren't user friendly.
Providing a service that's attractive to tech companies gives One Medical a big leg up in going after businesses.
"Historically, you've seen a lot of health-care services providers lag behind other consumer-facing industries, and that's held them back with employers," said Brian Marcotte, president and CEO of the National Business Group on Health, which represents employers. "They've done a better job at One Medical. You can feel it's different when you walk in the door."
One Medical is also adding mental health and pediatric services. Its providers are training to treat patients with anxiety and depression, and its clinics have started offering group counseling sessions. Kimber Lockhart, One Medical's chief technology officer, said these group experiences have proven very popular in tests at various clinics.
Lockhart's tech team, with occasional advisory help from the doctors on staff, developed an app — Treat Me Now — for patients to get advice on whether to see a doctor or stay at home. It also has an online appointment scheduling system, and a video tool for patients to consult with physicians.
Even with One Medical's efforts to apply elements of Silicon Valley into its business, the reality is that it runs a health-care operation, which is expensive to manage and comes with high administrative and overhead costs and loads of regulation. So investors have been told to remain patient about a potential IPO.
Steve Wise, a One Medical backer from Carlyle, addressed the road to profitability in a recent interview, when he explained the long-term vision.
"You wouldn't think a firm like us would invest in a venture-style company that still loses money," he said. "But it's a space we know well and we believe in. We want to be the Starbucks of primary care."