Why Primary Care Needs to Work Differently: Patrick Nelli on Building Aligned Marketplace
Aligned Marketplace founder and CEO Patrick Nelli recently joined Siobhan Nolan Mangini and Bob Kocher of Venrock on their podcast, Running Through Walls, for a conversation about his path to founding Aligned, what advanced primary care actually looks like in practice, and where he believes the industry is headed.
Below are some of the key questions from the conversation.
Why did you leave Health Catalyst to start Aligned?
In college, I realized that I was going to have to be working most of my waking hours. If I was going to be doing that, I wanted it to be towards something that I felt passionate about. For me, it was healthcare. I realized I wanted to try to maximize the positive health impact I could have, but it's been a journey to figure out the best way to do that.
What's the biggest difference between being a president and CFO versus a founder and CEO?
You're constantly context switching. The biggest bottleneck in the business can shift from week to week or month to month, so a huge part of the job is figuring out what that bottleneck actually is right now, and then redirecting focus onto it. That also means convincing yourself and the organization that this is the right thing to spend the day, the week, or the month on, whether that's growth, product, operations, or recruiting, and then being willing to shift again when the answer changes.
How did you land on the idea for Aligned?
It was a combination of data points. At my previous company, we served primarily large hospital systems, but also independent primary care organizations, health insurers, and life science companies. We kept seeing in the data that the best results came from keeping people out of the hospital. What we loved early on about this problem was that it was a win-win-win, where employers, clinicians, and plan members all benefit.
What actually makes advanced primary care different from a typical doctor's visit?
These clinicians have smaller patient panels, so they can spend more time with patients, and build real relationships. Members are often given the clinician's cell phone number. It's all enabled by a different payment model: instead of being paid per visit, these groups are paid to keep people healthy.
Where do the cost savings actually come from?
The savings come from a few places. The first two have to do with keeping someone out of the hospital.
The first is lower unit pricing of downstream services: lower cost imaging, lower cost labs, lower cost procedures, lower cost infusions. By steering someone to an independent advanced primary care group that has no misaligned incentives, that clinic will steer members to the highest-value downstream care. Hospitals have been consolidating and have a lot of pricing power, but the good news is there's been growth in independent options out there: independent imaging centers, ambulatory surgery centers, independent specialty infusion companies. So there's more and more opportunity to steer members toward lower unit price downstream care.
Second is reducing downstream utilization. By being more accessible and available, it reduces a member's need to go to the emergency room, because they can reach their PCP. It reduces hospitalizations, reduces specialist visits.
And then the third is actually improving someone's health. That third one doesn't typically show up in year one, the first two can, from a savings perspective. Improving an individual's health means better managing chronic conditions, changing member behavior. That takes a longitudinal relationship-building process that takes time.
Is this only for large employers?
Aligned is built for large, self-funded employers whose people are spread across many markets. If an employer is geographically concentrated, they can often sign a direct contract with one of these groups themselves. The harder problem, and the one Aligned solves, is geography — giving employers one way to offer that same standard of care everywhere their employees live.
Why make this free for members?
There is an affordability crisis in the US when it comes to healthcare. But interestingly, high-value services are oftentimes not that expensive. Primary care only accounts for about 6% of total spend in the commercial market, but can influence up to 90% through referrals, chronic condition management, and transitions of care.
We highly advise, though it's ultimately up to the employer, that they make these very strategic, high-leverage, high-value activities, such as advanced and direct primary care, available at no or low cost to a member, so that a member goes there first before going to the emergency room, urgent care, or a specialist. It's been shown many times that if you have an appropriate relationship with a PCP, use of the emergency room or a low-quality urgent care center goes down dramatically. Taking away any barrier to establishing that relationship feels like a really smart move by employers.
How is AI changing how you're building the business?
It's so fun to be living in this time. We leverage AI extensively to create a better member experience and for internal operations. A lot of the clinics on our marketplace leverage AI to create a better patient experience.
But an interesting part of any trend, in my mind, is figuring out what is going to change dramatically, and what will stay the same. Our view is that individuals forming a longitudinal relationship with a person on the other side will remain an important part of behavior change and primary care for many years to come.
So we actually believe the industry will barbell. On one side, there will be telehealth, very AI-driven solutions that will become more prevalent. That's a good thing, low cost and very efficient. The other side of the barbell will be high-touch, high-experience offerings of advanced and direct primary care. What gets gutted is the middle, fee-for-service care that takes three months to refill a prescription.
We've seen this happen in other industries, like retail, with Amazon being one side of the barbell, and local, mainstream, and luxury retail being the other side. We think AI will drive that same change within the US primary care ecosystem.
What advice would you give a founder starting a healthcare company today?
The first would be to find a problem you really care about. Changing the world is hard, and there are ups and downs, you need conviction around that mission to get through the troughs and valleys. The second would be that you need to love your customers. I would think deeply about ensuring you love your customers, because that's ultimately why a business should exist.
Listen to the full episode of Running Through Walls to hear the entire conversation.