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A Start-Up Suggests a Fix to the Health Care Morass

Doug Chayka

WINFIELD, Kan. — If you watched the drama in Washington last month, you may have come away with the impression that the American health care system is a hopeless mess.

In Congress, a doomed plan to repeal the Affordable Care Act, President Obama’s health care law, has turned into a precarious effort to rescue it. Meanwhile, President Trump is still threatening to mortally wound the law — which he insists, falsely, is collapsing anyway — while his administration is undermining its being carried out.

So it is surprising that across the continent from Washington, investors and technology entrepreneurs in Silicon Valley see the American health care system as the next great market for reform.

Some of their interest is because of advances in technology like smartphones, wearable health devices (like smart watches), artificial intelligence, and genetic testing and sequencing. There is a regulatory angle: The Affordable Care Act added tens of millions of people to the health care market, and the law created several incentives for start-ups to change how health care is provided. The most prominent of these is Oscar, a start-up co-founded by Joshua Kushner (the younger brother of Mr. Trump’s son-in-law, Jared Kushner), which has found ways to mine health care data to create a better health insurance service.

But perhaps the most interesting and potentially groundbreaking company fostered by the Affordable Care Act is Aledade, a start-up founded in 2014 by Farzad Mostashari, a doctor and technologist who was the national coordinator for health information technology at the Department of Health and Human Services in the Obama administration.

Dr. Farzad Mostashari, the founder of Aledade, a start-up that seeks to reduce the cost of health care while improving patient treatment.

Aledade, which has raised about $75 million from investors, has an agenda so ambitious it sounds all but impossible: Dr. Mostashari wants to reduce the cost of health care while improving how patients are treated. He also wants to save the independent primary care doctor, whose practices have been battered by the perverse incentives of the American health care system.

And here is the most interesting part: His plan is working.

A few weeks ago, I visited two primary care practices in southeast Kansas that have worked with Aledade for more than a year. Their operations had been thoroughly remade by the company. Thanks to Aledade, the practices’ finances had improved and their patients were healthier. On every significant measure of health care costs, the Aledade method appeared to have reduced wasteful spending.

“The whole idea is to align incentives between society and doctors and patients,” Dr. Mostashari said, adding that Aledade has helped reduce hospital readmissions and decrease visits to specialists in many of its markets. “We’re reducing unnecessary and harmful utilization and improving quality of care.”

Of course, such promises are not new at the intersection of health and technology. Many companies have made big bets and blown up — among them Theranos, the lab testing start-up, which turned out to have been more puffery than product. Aledade faces its own share of hurdles, including whether its investors can ride out a long and costly expansion before it starts to realize any big paydays.

Still, its plan — which mainly involves using software to achieve its goals — looks promising.

The American health care system is a fragmented archipelago, with patients moving through doctors’ offices and hospitals that are often disconnected from one another. As a result, many primary care physicians — who often…

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