News Column

New medical model

May 18, 2014

By Ilene Aleshire, The Register-Guard, Eugene, Ore.

May 18--Oliver Alexander and Orion Falvey are on a roll.

In the past 31/2 months they've won the $1,000 grand prize in the Civil War Shark Tank business competition and $4,000 at the Willamette Angel Conference.

They cleared a little over $6,000 on the crowd-funding site and secured $70,000 in grant and loan money from Lane County, on top of an earlier loan of $11,000 approved by Oakridge, to be paid back over three years at 1 percent interest.

And, a little over a week ago, Alexander and Falvey said, three local investors decided to put $100,000 into the pair's startup venture -- a pilot project aimed at providing better health care to rural areas.

What this all means is they can move ahead with their plans to open a health care clinic in Oakridge, hopefully as soon as July, they said.

What started out as a school project -- Falvey is a recent University of Oregon business school graduate and Alexander will graduate this year -- is now turning into what they, and others, are hoping will be a pilot project for rural health care that can be replicated across the state and beyond.

The plan is simple: Members of Orchid Health will pay a flat monthly fee -- starting at $39 for birth to age 35 -- for unlimited visits, with the focus on preventative and primary care. Discounts are offered to families and people who pay in advance. Small businesses get a special flat rate deal. Plans also are offered for Medicare and Medicaid recipients, who do not have to pay a membership fee.

The idea grew out of a 2012 student competition organized by the Oregon University System to design a social business plan.

Alexander, who grew up in Medford, and Falvey, who is from Alaska, settled on the field of health care, both because it was a challenge and because of the impact on people's lives.

Based on data from state health officials about where the greatest needs lie, they came up with a plan for a mobile medical van that would serve Oakridge, Klamath and Lake counties.

"I wanted a project with tangible results, that would serve people's needs and make life tangibly better for them," Falvey said,

Their second-place finish, and $3,000 in prize money, was the seed for what became Orchid Health, a project that has consumed much of their waking hours for the past two years.

The original plan morphed into a single, fixed clinic to serve Oakridge, and its approximately 3,300 residents, who are on the state's list of communities with unmet health needs. Alexander and Falvey then began looking for funding sources.

Partnering with the county

One break came when they attended a conference on sexually transmitted diseases and were introduced to Jason Davis, and the Lane County Health and Human Services office he works for.

Davis was there as part of a mission to get the word out about the rapid increase in STDs in the county, Alexander and Falvey were there in search of any useful health care data.

They talked to Davis about potential funding avenues and he suggested they talk to Glenda Poling, the county's economic development manager.

The county knew there were unmet health care needs in Oakridge, which was down to one physician, Davis said. It became apparent that Falvey and Alexander could set up and operate an additional clinic there at less cost than the county and with less risk to the county, Davis said.

And Orchid Health had the potential to make a major impact on the health of these communities, Davis said. "If they get 20 people in Oakridge to stop smoking, if they get 15 people to stop drinking sugary beverages, that has a significant impact on that community."

Beyond that, he said, "The hope is that they'll carry this (model) into other (rural) communities."

Potential impact

Alexander and Falvey share Davis' hope that their model will be successful and can be replicated. They have already identified up to 20 Oregon communities where, based on state health care data, "60 to 100 percent of their health care needs are not being met," Falvey said.

At the end of January, the county commissioners approved use of $70,000 of lottery funds, half as a grant, half as loan. Half of the loan will be forgiven if the clinic opens its doors by the end of this year.

Alexander and Falvey said there are several reasons Oakridge residents have unmet health care needs. Two of three doctors who practiced there had left, they said, leaving a shortage of providers. The physician who is left, Falvey said, "has been doing a great job of carrying the load We want to work with him."

The distance between Oakridge and Eugene-Springfield is also a factor in health care, he said, making it hard for many people to get there for care and discouraging some from getting needed medical help until a problem has worsened.

With all that in mind, Alexander and Falvey planned a clinic that would provide ongoing preventative primary care and also serve as an urgent care.

They leased 2,000 square feet of space at 47815 Highway 58 that will include five examination rooms, a reception area and have space and equipment to do X-rays and basic lab work. More complicated lab work will be sent daily by courier to PeaceHealth.

A physician -- Dr. Mike Henderson of Bend -- has committed to be at the clinic part-time, they are still working out his schedule.

One of their selling points in recruiting health care providers, Falvey and Alexander said, was the promise of far less paperwork compared to dealing with insurance companies, freeing up more time to spend with patients.

They've in the process of hiring a clinic administrator and already have a commitment from a nurse practioner, Falvey said.

They also are in the process of hiring a mental health worker -- "our top choice," he said -- and have worked out an arrangement for teleconferencing with county behavioral health specialists. Falvey and Alexander will staff the front desk of the clinic themselves initially to see how things are going.

People with major emergencies will be sent to McKenzie-Willamette Medical Center. And Falvey said he and Alexander already have formed relationships with medical specialists in the valley where they can refer patients.

They hope that eventually one-third of the Orchid members will be private patients, one third Medicare and one third Oregon Health Plan, Oregon's version of Medicaid, although they are limiting the number of OHP patients they will initially accept.

Medicare and Medicaid patients will not have to pay Orchid's monthly membership fee, but Medicare patients will be responsible for the 20 percent co-pay Medicare requires.

Confident of interest

Falvey and Alexander said they are confident they will have enough patients to make a go of the clinic. Surveys they sent out with the city's utility bills found more than enough interest -- even with a conservative estimate of how many of these people actually sign up -- to reassure them that the clinic is workable, they said.

They have built their budget with the expectation that they will operate at a loss for the first few months. This is partly because they are limiting the number of patients they sign up initially to avoid overwhelming the new system and partly because they are planning for initial visits that will take longer than follow-up visits, reducing the number of patients that can be seen at the clinic in a day.

Orchid isn't set up to deal with catastrophic illness or injury, its founders said.

What they are suggesting is that people buy a high-deductible insurance policy that would cover catastrophic needs and then join Orchid Health for routine and preventative care. This would still be a cheaper alternative for many people than other options available, they said.

Falvey said he and Alexander are already getting encouragement from both insurance companies and local hospitals, who see the Orchid Health model as keeping health care costs down by providing "direct, high-quality primary care upstream." This would reduce the amount of expensive visits to the emergency room and also the need for more expensive care later on for medical problems that have gone untreated, they calculate.

Investor support

Falvey said that he and Alexander closed their current round of funding a little over a week ago receiving commitments from the three local investors.

At that point, he said, "We became fully funded," he said.

If all goes as planned, Falvey said, they are hoping to open two more rural health care clinics in year two of their startup.

Both he and Alexander said they are grateful for all the support they have received in their attempts to get Orchid off the ground, from UO faculty and business advisers to state and county officials to the people of Oakridge -- "They have been so kind and so generous," Falvey said.

Oakridge city administrator Louis Gomez, in turn, said he is happy that Alexander and Falvey were interested in opening a clinic in Oakridge.

Gomez said he has watched UO's business school, particularly its entrepreneurship program, and been impressed with what he has seen.

"The kids that come out of there do very well, they take calculated risks that pay off," he said.

"They've got a very strong curriculum and one on one (support)," Gomez added.

Orchid Health has the potential to not only help meet Oakridge's health care needs, in an affordable way, Gomez said, but also to help its economic development.

When people are looking at moving to a town, or opening a business there, there are usually two things they really look at, he said. "They look at schools and they look at health care."

Orchid Health

Co-founders: Oliver Alexander and Orion Falvey

Location: 47815 Highway 58, Oakridge

Projected opening date: mid-summer


"I wanted a project with tangible results that would serve people's needs."

-- Orion Falvey, Co-owner of Orchid Health, on the company that grew out of a University of Oregon class project


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