Entrepreneur Thompson Aderinkomi cofounded a promising health care business called RetraceHealth, and after he raised millions of dollars of venture capital to fund it, the new investors kicked him out.
A little while later, in spring 2017, the controlling owners said there was no real plan for a viable business and shut the company down.
Yet RetraceHealth had paying customers. They were now unhappy and said so — to Aderinkomi. So he and two colleagues from RetraceHealth, Genevieve Swenson and Allison Santos, relaunched the same business in a new company. They called it Nice Healthcare.
Asked what’s different this time, Aderinkomi couldn’t come up with much. As for how it’s going in the second open enrollment season for new customers, Aderinkomi simply said “incredible.”
Thriving businesses don’t usually rise from the ashes of failed ones without at least some tweak to the model or products, but what’s most puzzling with the shutdown of RetraceHealth is that it had the hard part figured out. It had happy, paying customers. And yet the owners thought there was no business.
In the startup community in and around the Twin Cities what you usually hear when a company quietly disappears is that the founders had come up with a solution to a problem no one turned out to actually have. Nice Healthcare goes after real problems that only seem to get bigger.
The insight behind the business came from Aderinkomi’s poor experience in December 2012 with his very young son ill with pneumonia.
His complaint wasn’t really about the care but the experience, of going back repeatedly to a Twin Cities clinic that meant seeing strangers in a facility with lots of bright lights, hard edges and bustle. When you are not feeling well, who wouldn’t rather be at home?
The out-of-pocket cost came to $664.28, a precise figure Aderinkomi repeated just like people do when providing a phone number, it’s been so committed to memory.
What Aderinkomi discovered was that primary health care, the first and often last stop for treatment of everyday medical conditions, seemed to cost far too much for the quality of experience it delivered. What if it moved from the clinic to the patient’s house or apartment? That’s both better and cheaper.
Minneapolis-based Nice Healthcare offers a membership plan to do that, primarily through employers. For a flat fee, members get care for a lot of conditions right in their home, delivered by nurse practitioners who communicate by video chat or travel to patients with pharmaceuticals, diagnostic equipment and other stuff they need.
It is not a health insurance plan like Medica might offer; instead, it commonly works together with an insurance plan. It eases the financial pain of costs commonly paid by households as part of the annual deductible.
Consumers didn’t turn out to be the right customers for Aderinkomi to go after. Consumers might be crabby about paying too much for health care, but they weren’t as crabby as employers paying to cover employees, including self-insured employers paying most of the bills themselves.
Employers look for ways to keep the cost increases manageable, and not just by sticking their employees with a bigger chunk of the bill, said Patrick Tollefsrud, a senior vice president with Associated Benefits and Risk Consulting, a firm known as ABRC that advises employers on health care, insurance and other benefits.
As Tollefsrud explained it, the move to higher-deductible insurance plans meant that too many employees scrimped on primary care they had to pay for out-of-pocket. They held off on routine checks or going to the clinic for what seemed like minor conditions.
When they did that, they were more likely to later end up with expensive prescriptions and treatments that could even include a trip to the hospital. Not only did that chew up the deductible, of course paid by employees, lots of those costs eventually got paid by the employer.
With fixed-fee care provided for simpler conditions in people’s houses, both the employees and their employers ended up far better off.
Tollefsrud signed clients up with RetraceHealth. Then, he said, he learned that the investors controlling RetraceHealth were “going in a different direction,” that is, right into the ground. A problem for clients that Tollefsrud thought he had found one solution for just went unsolved again. So, he said, he reached Aderinkomi to see about restarting the company.
“I was working on Relate [a new startup], just minding my own business,” Aderinkomi said. “I mean, we still talked about it at family get-togethers, and with my wife. We poured four years of blood, sweat and tears, a quarter of a million dollars into personal debt, to get the company off the ground. But for the most part I put it behind me.”
“And they came at me quick, too,” he added. “But I said no. I was too burned out. But they kept coming, some of the old clients reached out to me. It was, somebody has to do this, because it was actually working. It was working incredibly well.”
A lot of Nice Healthcare’s business comes in chunks, through the open-enrollment period employers have this time of year. When the business restarted a year ago, a lot of customers came back. All Aderinkomi would allow, in terms of disclosing revenue, is that the company passed $1 million in the first 12 months, and he’s not sure yet how much the company will grow in 2019, other than by multiples of this year’s revenue.
With so much the same in version 2.0, it’s hard to point to any hard lesson learned in RetraceHealth that’s being applied here — although maybe the name, Nice Healthcare, suggests one.
As Aderinkomi described it, he and co-founders Swenson and Santos started the company with the idea that they would only work with nice people, and that they would always be nice to other people.
They have worked out a clear definition, too: “A nice person loves others the way they want to be loved and always assumes the best.”