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Qliance Medical Management raises another $6M

Qliance Medical Management Inc. has raised another $6 million in venture funding as it prepares to expand into California.

Seattle-based Qliance’s inexpensive “direct-care” model, which shuns health insurance, has survived recent passage of the federal health insurance law. The firm, in 2007, began selling its services to individuals, but small businesses — and now large ones — have been showing increasing interest.

“That’s the fastest growing segment for us now,” said Qliance CEO Norm Wu.

In the past year, Qliance has signed up some 50 small businesses, which have reported “savings of up to 50 percent over traditional insurance plans,” according to the company. Now large businesses and unions are negotiating with Qliance.

“We are in discussions with large health-care purchasers,” Wu said. “We’re seeing a lot of interest from them.”

This makes Qliance all the more attractive to venture investors, who see the Qliance model as a way to improve health care and make it more affordable while at the same time reducing costs. Under this model, consumers pay a set monthly fee for all primary care, with all the trimmings, and buy high-deductible health insurance to protect them from the cost of severe illnesses or accidents. Qliance charges a flat monthly price ranging from $44 to $84, depending on age.

“There’s a lot of people who want to give us a lot more money than we have room for,” Wu said.

Investors in this round were led by Bezos Expeditions and MSD Capital LP Other participants included comedian and Seattle Sounders co-owner Drew Carey and previous venture-fund investors Second Avenue Partners, New Atlantic Ventures and Clear Fir Partners.

“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 see Qliance in health care,” said Melinda Lewison, a Bezos Expeditions principal, in a statement.

Partner Nick Hanauer of Second Avenue Partners said, “Qliance is a game-changer that transforms the access, the quality experience of patients while also fundamentally improving the economics of health care.”

So far, Qliance has raised a total of $13.4 million in venture funding and has used it to open two more clinics, in Mercer Island and Kent. Much more expansion lies on the horizon, beginning next year with California.

“The number of clinics (Qliance opens) depends on how many commitments we get,” Wu said.

“Our philosophy is, we will build it if they will come.”

Qliance, founded in 2006, has embraced the “direct care” model of delivering primary medical services, which excludes insurance companies as intermediaries between patients and doctors. Qliance refuses all forms of health insurance. Instead, for a monthly fee, patients can easily access Qliance doctors and nurse practitioners (13 in all) for such services as checkups, vaccinations, pneumonia, minor fractures, and ongoing care for chronic illnesses such as diabetes and hypertension. Patients can make same-day or next-day appointments for 30- to 60-minute office visits seven days a week.
Meanwhile, health care costs continue their upward surge nationally. In Wu’s view, the Qliance model “is a solution that potentially can get to the root causes of cost issues” by stressing basic medical care, through which patients are kept healthy or treated quickly when sick, thereby eliminating unnecessary specialty care, hospitalizations and emergency-room trips.

Several local businesses, including Total Living Concepts, Tri-tec Manufacturing and Becker Trucking, attest to cost savings by including Qliance in their health plans.

“It’s a good deal not only financially for us, but people love Qliance,” said Lyle Romer, executive director of Kent-based Total Living Concepts, a nonprofit organization providing services for adults with developmental disabilities.

In 2008, Total Living, with 63 employees, funded traditional health insurance, with no deductibles and with monthly premiums of $656, for a total cost of $495,936.

Last year, the organization began buying insurance with a $4,000 deductible, with monthly premiums of $202.

But it added Qliance services for its employees, at a monthly cost of $54 each, and promised to fund the $4,000 deductible for employees felled by serious illness or accident through a health reimbursement arrangement (HRA), which ended up costing Total Living a monthly average of only $22 per employee, for a total annual cost of $210,168 and total savings of 58 percent.