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Jeff Bezos, Michael Dell and Drew Carey back health care startup

Amazon.com founder Jeff Bezos, Dell Computer founder Michael Dell and comedian Drew Carey are among the new investors in Qliance Medical Management, a Seattle startup that’s trying to shake up the health care industry by delivering high-quality and affordable primary care to patients by eliminating insurance companies from the process. Qliance today is announcing $6 million in fresh capital, bringing total funding in the 3-year-old health care provider to $13.5 million. The cash will fuel an expansion at Qliance, which is looking to open new clinics in Washington state this year and expand to a second state next year.

Bezos, Dell and Carey represent one of the more interesting investment syndicates we’ve seen in some time. But their involvement starts to make sense when you realize that Qliance was initially bankrolled by Nick Hanauer, the Seattle venture capitalist who was one of the earliest backers of Amazon.com. Hanauer remains close to Bezos, and turned his friend on to the concept of doctors providing health care to patients without insurance companies acting as intermediaries.

“It’s not often you come across a business model that is truly transformational and disruptive in a sector ripe for reform, but that’s how we view Qliance in health care,” said Melinda Lewison of Bezos Expeditions, the investment firm of Jeff Bezos. “We see significant long-term opportunity in Qliance as it’s easily scalable to other communities and health care reform has added wind to its back with the ability to compete in the insurance exchanges.”

Meanwhile, Billionaire Michael Dell — who invested through his venture firm MSD Capital — got involved in the startup through connections with Qliance CEO Norm Wu. Wu has known the high-tech executive since the late 80s when he did consulting work for Dell’s fast-growing computer company. In fact, Wu said that a young Michael Dell inspired him to become an entrepreneur.

And what about Drew Carey? The charismatic host of The Price is Right was introduced to the company through Hanauer’s younger brother, Adrian. Both are co-owners of the Seattle Sounders soccer team.

The involvement of Bezos, Dell and Carey certainly raises the profile of Qliance, a 60-person company with more than 3,600 patients in Washington state. But Wu, an accomplished entrepreneur, doesn’t think having two billionaires and a comedian as investors will serve as a distraction. In fact, he’s looking forward to tapping their vast experience in business and marketing to grow Qliance into a new force in health care.

“People who have transformed businesses in the past are quick to recognize the same types of opportunities, even when they are in different industry sectors,” said Wu, referring to Bezos and Dell.

Qliance certainly has big ambitions, even though the company is being cautious as it rolls out its flat rate health care model.

“We’ve had inquiries from 30 odd states about building clinics there,” said Wu. “But we are not a very big organization, so we want to try to be focused.”

The company’s approach is simplistic, a word not often associated with health care. It works like this: Patients pay a monthly fee — ranging from $44 for kids to $84 for seniors. As part of that fee, members of Qliance receive unlimited primary care visits (including weekends) for check ups, x-rays, vaccinations, women’s health exams and other services.

No insurance. No co-pays. No messy health care statements.

“We’ve decoupled what we do, which is primary care, from insurance,” explains Wu. “And that for the patients makes a huge difference because we can take what is currently being spent on insurance, claims processing, and throw that all into the care itself.”

Wu adds that it is a little bit like “concierge care — but for the broad marketplace.”

Patients still must carry insurance for catastrophic conditions, such as cancer or other serious ailments. But even so, Wu said that Qliance can save individuals and employers money in the long run. He said that about 40 percent of primary care costs at traditional providers are associated with insurance claims processing. Furthermore, Wu said the lack of insurance paperwork frees up the staff’s 13 doctors and nurse practitioners to spend more time with patients. “The problem in today’s insurance infrastructure is that the doctors are trying to see so many patients every day to cover their overhead that they simply don’t have time to do all of the things that they are actually capable of doing, so you end up shifting the care downstream where it is much, much costlier,” he said.

About 70 employers in Washington state — representing about 30 percent of the company’s membership base — have signed on since rules were changed last summer allowing the company to accept payment directly from businesses and self insured plans. And the corporate market represents the fastest growing portion of the company’s business, Wu said. Those corporate customers achieve savings of 20 to 50 percent when they combine Qliance’s service with a catastrophic insurance coverage for employers.

Seattle area companies using the service include Tri-Tec Manufacturing, Total Living Concepts and Becker Trucking.

The current round of financing was “oversubscribed,” meaning that Wu and his growing executive team (CFO Bob Nakahara, a veteran of Premara/Blue Cross, started this week) could have raised more cash if they wanted to.

But Wu said he’s trying to keep focused, and he didn’t want to grow too fast.

“I was very, very pleasantly surprised at how strong the interest has been,” said Wu, adding that the health care industry is “really hot right now” because of the recent reforms enacted by Congress.

But Wu said that many believe the reforms didn’t go far enough to address the cost issues associated with health care. “There’s a big focus on coverage expansion, but there’s a lot of concern about how much that is going to cost us as a country,” he said. “By doing things right at the primary care level, you can actually significantly impact those downstream costs. So, people have been excited about this part of our model and the impact it can have system wide.”

The company’s downtown Seattle clinic is already operating at a profit, and now Wu plans to replicate that success at other clinics.

Existing investors in the company include Second Avenue Partners, New Atlantic Ventures, Clear Fir Partners and Zillow.com CEO Rich Barton.
The company currently operates three clinics in Western Washington in Kent, Mercer Island and downtown Seattle.