Zoom+ remade urgent care for the on-demand generation. Now the startup is setting its sights on new applications, including retail insurance and specialty care. The catch? Medicaid and Medicare patients need not apply.
Steve McCallion is a little embarrassed. It’s the Zoom+ weekly all-hands meeting, and team leaders are reporting on key performance indicators. Zoom+’s co-founder, Dave Sanders, 51, dressed in “medical casual” (a scrubs-inspired T-shirt and jeans) takes the stage. He speaks energetically and enthusiastically, deploying inspirational anecdotes, statistics and nonstop jargon to rally the room around the company’s successes and challenges.
Sanders’ unflagging enthusiasm is not what’s making McCallion fidget. To the contrary: Hired 18 months ago as chief member officer and creative director, McCallion is extraordinarily excited by Zoom+’s reinvention of urgent care. In a decade the company has turned a necessary nuisance, an unexpected trip to a health clinic, into a painless, customer-facing retail experience. He’s gung ho about Zoom+’s bold plans to expand the model beyond urgent care and bring a shopper’s approach to every aspect of the health care system.
No, what’s bothering McCallion is the meeting’s location, plain vanilla offices in ho-hum Hillsboro.
“They’re pretty rough,” apologizes Ziba Design’s former creative director, and you can almost hear him mentally counting the days until January 1, 2017, when Zoom+ flees to its new headquarters in the Pearl. That move, as well as recent top-level hires from retail powerhouses Target and Nike, signal Zoom+’s intent. The company has already successfully orchestrated an urgent care do-over, delivering it faster, cheaper and more beautifully to an increasing number of tech-savvy customers. It’s grown from a single clinic in Bridgeport Village to 32 distributed around Portland, Salem and Seattle.
Their success has caught the eye — and ire — of local hospitals that have answered back with their own brands of web-enabled, customer-facing, retail-style urgentcare clinics.
But Zoom+’s goals are bigger and bolder. They want to reshape it all — primary care, pediatrics, specialty medicine, emergency, imaging and insurance, the entire health care stack — with a customer-centric, tech-heavy retail approach.
Amazon, Uber, Netflix and countless others have walked this road before, reinventing their industries for the smartphone, streaming and ubiquitous app generation. But the stakes here feel higher than a shopping trip or a taxi ride or a hotel room. Health care is serious, as serious as a heart attack.
What’s more: Zoom+ sidesteps one of the big challenges facing our uber-challenged (pun intended) medical delivery system — how do you pay for everyone, the sick, the elderly and the infirm? Zoom+ takes themselves out of that discussion by focusing on the demographic of the moment: young, healthy millennials.
Fast-talking, confident and mission obsessed, Sanders, a physician who started his medical career in Multnomah County’s urgent-care clinics, is the perfect foil to Zoom+’s co-founder and chief medical officer, the quiet, nebbishy, Albert DiPiero. The dichotomy works. Zoom+ is their third business endeavor since meeting as freshmen at the University of Michigan in 1984. The other two: Salu, a online communication hub for primary care doctors, and MyHealthBank, an early leader in creating Health Savings Accounts, which were launched and eventually sold.
Zoom+ was bootstrapped for the first eight years and has operated profitably for the most part. A cash infusion from minority investor Endeavour Capital in 2014 coincided with the company’s exponential growth. In the last 18 months, Zoom+ has gone from 125 employees to 350. Half work in the clinics; the rest, including 50 computer engineers, are at the Hillsboro (for now) headquarters. While they won’t reveal revenues, the company has experienced annual growth of up to 100%, Sanders says.
“We can’t be incrementalists,” he opines. “We have to be 100% better every year or there’s no reason for us to exist.”
While 100% growth in Portland is hard to imagine year after year, Zoom+’s recent management hires — like former Nike vice president David Kohel, retail expert Bill Frerichs, formerly of Target, and the aforementioned McCallion — point to a system ready to scale up and replicate in other markets, perhaps even nationwide.
“We believe that Zoom+ is the right model for health care in America and throughout the world,” says Sanders in typically grand fashion.
That growth has been a pain point as Zoom+ integrates what could be three different companies: clinical care, retail delivery and technology development under one roof.
“Nearly everyone coming in tells us the pace is too fast,” says Sanders, leaning back in a chair in the Hillsboro office. As a result, there has been employee churn at all levels. Four highlevel executives — Ellie Godfrey, Denise Honzel, Kathy Prosser and Britt White all exited in April.
Despite the setbacks, the Zoom+ team is barreling forward, convinced of the righteousness of their cause. Health care today is a hassle by design, a traditional model that focuses on the system and places provider and hospital needs over those of the patient. This translates into long waits for everything from appointments to test results, and uncertainty about the final cost.
“If we had it to do again, no one would build what we have today,” says Ben Umansky, managing director of research and insights at the Advisory Board Company, a global analytics, research and consulting firm that specializes in health care. He points to spiking insurance deductibles coupled with consumers’ expectations of transparency and access across all sectors as driving the change.
“Every other industry expects consumers to search online, compare prices and read reviews,” Umansky says. “Health care is just getting around to that.”
DiPiero agrees. He faced a lot of blank stares when talking about on-demand clinics a decade ago. “Providers believed that people wanted a relationship with their primary care physician and a medical home,” he recalls.
The system continues to bank on that relationship for their bottom line. Most U.S. hospitals view primary care as loss leaders, expecting to drop $200,000 per primary care doctor per year. Where they make their money, Sanders says, is everywhere else. Oncology, cardiology, imaging, surgery and emergency services are all profi t centers fed by the lossleading primary care system.
Sanders and DiPiero turned that system upside down to make it profitable. Instead of being hospital based, Zoom+ is phone and retail based, “a different overhead structure,” Sanders says.
In their model, the patient, or “Sarah” in Zoom+’s parlance, is a customer. Sarah schedules care on-demand, most commonly with an app that offers a clear menu of services and prices. She is greeted, treated and discharged in about 15 minutes with medication in hand. Today Zoom+ sees over a quarter of a million Sarahs* annually, which means more than 250,000 fewer primary care visits. “I started nibbling on the feeders,” says Sanders.
* First: change the language. Working at Zoom+ means mastering the jargon. The company’s values — Food, Movement and Relationship — are emblazoned everywhere. “Sarah7” is a millennial descriptor, while the “Mot5” refers to the interaction between Sarah and Zoom+. Employees are “Emmas.” The most commonly heard Zoom+ slogan? “Twice/Half/Ten”: twice the health, half the cost and ten times the delight.
Sanders may have pioneered this approach, but other hospitals are taking note. Coincidentally, as I was writing this article, everyone in my family — my daughter and husband and, yes, even me — had urgent-care needs, offering an opportunity for comparison. Both Legacy and Providence now advertise their walk-in clinics and pepper Facebook feeds with their messages. The come-ons about web-enabled scheduling, transparent pricing and short wait times sound just like Zoom+.
Following an urgent text from my daughter at school and a quick description of symptoms, I decided she required quick attention and, most probably, antibiotics. So I logged on to Legacy GoHealth’s website and scheduled the next available appointment at a clinic less than a mile away. Without this option, my choices were a take-what-you-could-get pediatric appointment or, if it were after business hours, a trip to Providence St. Vincent’s emergency department.
My daughter was greeted, tested, diagnosed and discharged in 45 minutes. Her script was sent to the pharmacy for pickup. To be sure: Zoom+ promises to get me in and out of the clinic faster, but a trip to the pediatrician would have taken hours. I took points away for having to spend another hour at the pharmacy. At Zoom+ you leave with medications in hand.
GoHealth has been operating in the local market for years as Northwest Urgent Care. They partnered with Legacy in January 2015, changed their name, rebranded everything from signage to clinic design and are expanding rapidly. The partnership works for both sides. GoHealth gets to offer a continuum of care and access to a trusted hospital-based system. Legacy increases their reach faster than they ever imagined with a planned 22 retail clinics in place by June 2017.
“GoHealth understands retail* and how to scale up fast,” says Legacy’s director of business and facility development, Jeff Gibson. “We challenged them to push us.”
*Until recently, retail health care referred to walk-in clinics at big chain drugstores—Target, CVS and Walgreens—which offer consumers a diagnosis and prescription by experienced nurse practitioners. Alongside retail startups, these chains are now expanding and rebranding as full-scale health care providers. RiteAid, for example, recently partnered with HealthSpot, an Ohio-based telehealth startup that aims to bring board-certified providers into retail clinics.
That push includes a more customer-oriented approach throughout the organization, which translates into easier access on mobile devices, virtual visits and anything else that will make Legacy’s more customer friendly, more retail minded, more like Zoom+.
As Legacy pursues an incremental approach, Zoom+ blazes forward. At 10:00 a.m. on a recent weekday, Zoom+ Super, located in the central eastside, is blissfully empty. The facility has the same branding and feel as the urgent clinics — poured concrete floors, spare stylish counters in warm wood, and pops with their signature color: a light, bright blue. Likewise: the urgent clinic in my Southwest Portland neighborhood, sandwiched between a Starbucks and an AT&T store, looks right at home, its branded “+” potentially as iconic as Target’s bulls-eye or Nike’s swoosh.
The company’s answer to hospital emergency departments, Zoom+ Super is open 20 hours a day, offering appointments with the same web-enabled app for a single clear price. The operation is designed, once again, around the platonic patient: Sarah. She’ll be seen, tested and diagnosed in 45 minutes for an orthopedic complaint, 90 for abdominal or chest pain.
Zoom+ Super doesn’t take ambulances, active heart attacks or severe traumas. Instead they handle the nonlife- threatening problems that clog up emergency departments.
“Doctors are amazed when I explain that it only takes 15 minutes to get labs back,” says Mark Zeitzer, Zoom+ Super’s practice leader. “The joke is at a hospital you have to draw blood, lose it, find it, get it to the lab, lose it again and an hour and a half later, you have results.”
Right now there is only one Zoom+ Super, but there are plans for more. And that’s just to start. Sanders and DiPiero have more than urgent and emergency care in their sights. A recent collaboration with OHSU, where DiPiero practiced for 20 years, gives them access to a whole world of specialty and sub-specialty medicine. Zoom+ will not disclose if that partnership includes splitting costs. They are also offering primary care services, pediatrics and dental.
They’ve even entered the world of insurance. An embattled industry struggling to accommodate new patients via the Affordable Care Act, insurance has become even more expensive, complicated and downright unpleasant. Zoom+ Performance Health Insurance hopes to disrupt that model the same way they did urgent care — using a retail approach with web-enabled products, transparent pricing and a commitment to customer service.
Their pool of current insurance clients is small but growing, no doubt due to Zoom+’s small group rates for 2017 decreasing by an average of almost 4%, “while other insurers are looking for double-digit increases,” observes Sanders. Clients include tech company Response Capture, local grocer New Seasons and Hannah the Pet Society*, a vet business that recently renewed their policy.
*Pricing was one reason Hannah the Pet Society selected Zoom+ as its insurance provider, according to Fiona Ferguson, Hannah’s director of team resources. Another was a feeling of camaraderie between the two firms. “We’re both developing, Portland-based companies, and their model fits our employees’ younger, millennial demographic,” Ferguson says. She points to Zoom+’s dedication to customer service. “I’m a one-person HR department, and they have a beautiful on-line portal for me, along with a personal contact.”
Sanders admits that taking on insurance is going to be challenging, yet he sees membership as the pinnacle of care. “By offering insurance, there’s nowhere to hide,” he says. “We have to own our members’ care.” That includes both the cost and the delivery system.
Zoom+ is launching a bold experiment by building an entire system from the other direction. But there is a model they can draw from. Sanders acknowledges that Zoom’s insurance/healthcare hybrid shares similarities with another erstwhile disruptor: Kaiser. But he calls this a modern, millennial Kaiser that also accepts other insurance.
About those uber parallels: As Zoom+ discovered, it’s not so easy to march into an existing system — a complicated, heavily regulated one at that — and try to do it your way. The company initially accepted between 6,000 and 7,000 Medicare patients who had no problem paying the $99 out-of-pocket fee for urgent care. That is until the government called it fraud and sent a cease and desist letter. The playbook is familiar: A new company operates illegally until regulators call a halt — or until the rules change.
So Zoom+ moved away from the elderly on Medicare and the financially vulnerable on Medicaid to focus on the middle. Not only does it keep the company from running into trouble with regulators, it’s fertile ground for change. Health care spending is approaching 20% of the GDP, and the Affordable Care Act has been, in Sanders’ words “degraded by Congress and is not operating right.” This leaves a large chunk of the population ready for something new.
But where does that leave traditional health care? “Hospitals still have to reckon with the fact that 75% of their business comes from Medicare and Medicaid,” says Umansky.
While he applauds any attempt to better deliver health care, he cautions hospitals not to lose sight of their core mission and be distracted by the “shiny object* of this new model.” On July 11 a coalition of labor groups in Seattle and Portland protested Zoom+ for not cherry picking the young and the healthy and not taking poor and aging patients.
*Moving to the Pearl will give Zoom+ more space and a prestigious address aimed at attracting top flight design and tech staff. Zoom+Basecamp—as the new headquarters is called—will include a hub for providing virtual care, an innovation lab for digital and physical prototyping, and a kitchen co-working space for impromptu work sessions and all-hands meetings.
He also recognizes the danger of hospitals doing nothing. “I hear it all the time,” he says. “Hospitals know this new model is coming but say things like ‘Wake me when it happens.’ Now is the time to set the rules and terms of how this will occur.”
Zoom+ is already there. Sanders has helped rewrite Oregon policy on four different occasions, including two that allow physician assistants and nurse practitioners to dispense prescription medicines. In 18 months, he and DiPiero have woven retail, design and tech with medicine to create a distributed health care campus throughout the city. If it’s a success in Portland, Salem and Seattle, then maybe it will scale. Zoom+’s consumer retail model would fit in any urban location with lots of Sarahs and lots of smartphones.
While Zoom+ will not disclose any funding information, this effort, coupled with its 100% growth ambitions, will not come cheaply. The drift block alone, a concrete slab that stabilizes the CT scanner, cost $80,000, reveals Tony Westover, manager for Zoom+ Super Imaging. (In June, the company launched a proprietary digital platform that enables patients to receive X-ray results on their phone within 24 hours, as well as schedule and pay for the services from their smartphone.)
It all seems so neat and easy for something as vital as health care. The clean, simple design of Zoom+’s clinics is a welcome change, and no one can balk at receiving speedy care when they are feeling bad.
But is retail the way to access the entire system? Would you choose a neurologist or oncologist with an app? And if this is the right path, shouldn’t Medicaid and Medicare patients (the latter a huge and burgeoning segment of the population) come along too?
But these are questions for the future. Back at the Hillsboro headquarters, McCallion ticks off the present-day challenges: combining a clinical organization, a retail organization and a startup development team in a highly regulated environment. “I asked Dave if there was anything more difficult we could try,” he says with a laugh.