Discover more from Pear Healthcare Playbook
Lessons from Frank Cheung, CEO and Founder of Accorded, on sustainable value-based contracting and payment models
Frank Cheung, CEO and Co-Founder of Accorded, an actuarial intelligence company for value-based contracting
Welcome back to the Pear Healthcare Playbook! Every week, we’ll be getting to know trailblazing healthcare leaders and dive into building a digital health business from 0 to 1.
This week, we’re super excited to get to know Frank Cheung, CEO and Founder of Accorded, an actuarial intelligence company for value-based contracting.
Frank is a health actuary with over 18 years of experience. Prior to starting Accorded, Frank led the Analytics function at Collective Health. Prior to Collective Health, he was at Deloitte Consulting working with institutional payers and providers on value-based care and alternative payment models. And prior to Deloitte, Frank was also at Blue Shield of California. Frank is a Fellow of the Society of Actuaries and a Member of the American Academy of Actuaries.
Founded in 2019, Accorded is an actuarial intelligence company with a mission to build a frictionless, sustainable value-based contracting ecosystem. To date, value-based care contracting incurs large operational costs in the form of actuarial resources, consultants, and time. The Accorded Platform simplifies and scales value-based contracting with tools to empower companies at any stage of their value-based care journey to forecast, contract around, and validate the financial value of care.
In this episode, Frank discusses the incentives in value-based care, how to pitch to investors unfamiliar with the healthcare world, and his pathway to fixing the frustrations he experienced in 15 years of his career in healthcare.
Frank’s journey to founding Accorded:
Frank shares that the idea for Accorded started while he was a consultant working for hospital systems and provider groups. He remembers running models on contract proposals on behalf of the provider during the contract negotiation period, and that process felt much more labor intensive than it needed to be. All in all, a simple fee for service contract would take 3-6 months to negotiate with a payer. The process would take 3-5 times longer than that with value contracts or risk contracts.
“That's when I realized that there should be a technology solution for all this, especially if healthcare was going to continue to move away from fee for service to risk. In order for value-based care to really meet its full potential, there had to be a more effective way for payers and providers to align and to operationalize these contracts.”
Instead of a sudden realization that he wanted to be a founder, Frank describes his decision to start a company as a continuous frustration that built up over 15 years in the healthcare space.
Every step of his career was important:
Working at a health insurance company for the first 5 years allowed him to appreciate the operational intricacies and the financial considerations of running a health plan
Consulting gave Frank exposure to the business considerations of providers, especially as providers were being asked to take on more financial risk
Consulting for providers specifically helped him understand the complexities and frustrations of value based care contracts.
Finally, working at a healthcare startup helped Frank get close to product development/engineering teams that helped validate his belief that there could be a technology solution to these problems.
Frank’s co-founder is Thomas Bedington, a software engineer with a healthcare background but also experience as an actuarial analyst. They met while both working at Collective Health, and Frank knew the pieces had come together to tackle this problem head on. The two shared so many “industry war stories” around data, interoperability, actuarial functions, etc. that showed they had the same perspective on what technology solution could improve the analytics and contracting workflow.
While continuing to work at Collective Health, Frank and Thomas talked to companies they knew needed actuarial services. They did a few pro bono pilot projects on the side and realized they were actually adding a lot of value. Frank shares that this is what gave them the confidence to quit their jobs, raise a friends and family round, and go on to raise their seed round after about a year of work.
“The idea of Accorded, or the realization that there should be a solution came about four years before I actually founded the company. It really took going to a tech company, learning more about tech, confirming that there could potentially be a tech solution, and finding the right co-founder for me to make the jump. Short of those conditions, I’m not sure I would have.”
Accorded is an actuarial intelligence company for value-based contracting. Their core product is their proprietary data and modeling platform.
Accorded marries actuarial expertise and technology, designing data models natively with actuarial models in mind.
Frank shares that Accorded delivers certain services to their customers through actuaries and solution consultants using their platform. They also deliver software services built on top of that platform over time, either directly to customers or helping them transition to software as they scale their business.
This allows their actuarial team to deliver analytics, modeling, and insights that are fundamental to designing and implementing value-based payment contracts. Over time, they open up that back-end platform for customers looking to embed these capabilities in-house as they scale their risk contract portfolio.
Accorded’s customers include digital health specialty providers that are looking to move into risk or looking to jump right into risk contracts with payers and carriers. They also serve value-based care players across all levels of maturity, from providers that are still in fee-for-service contractors considering the move to risk-based entities that need a solution to better manage their contracts.
Frank describes the payer-provider contracting landscape as an asymmetric power dynamic: payers oftentimes have the data/the actuaries, meaning they have a lot of the leverage when it comes to setting the terms of the contract. Accorded wants to level the playing field, giving providers the data and analytical capabilities necessary to push back, making the terms more equal and balanced. Customer examples include:
Ensuring payments were commensurate with value. Frank shares that their analysis discovered that some of the contract terms and benchmarks had been set lower by a factor of 30%, which directly impacted how that customer would have been reimbursed.
They ran analysis to show where some of the opportunity areas of suboptimal spend were for specific clinical groups that their customers were looking to target, helping them deliver more targeted clinical outcomes.
Accorded also helps reduce the time to contract. Getting into a value-based contract can take anywhere between 9 months to 2 years, assuming the deal doesn’t die in the process. An Accorded customer was able to run analytical models that would have taken 3 months in 2 weeks on Accorded’s platform.
Frank believes actuaries will always have a role to play. The evolution won’t be to remove these actuaries, but it will be making the process way more efficient.
Frank puts it this way: juxtapose the 9-24 months it takes to get a risk contract in place with how easy it is for a provider to get into a fee-for-service contract— you go online, accept the rates, accept the terms & conditions… done. If you’re a payer, dozens, if not hundreds of fee-for-service providers come into your network during the time you get one value-based contract across the finish line. Accorded wants to accelerate the movement of value so that we can really shift our care model away from fee-for-service.
When it comes to choosing where to start your pilot, sometimes it naturally follows the path of least resistance.
“We went from like the path of least resistance in that we were filling a space where there was a demand, but not enough supply of solution.”
Frank shares that you need a certain level of capital and scale in order to work with traditional consulting companies, and most of those models were very cost prohibitive to smaller organizations just starting off. These organizations don’t know how to position themselves or what data they actually need, and Accorded was able to offer that early on.
Frank shares that working with smaller players initially gave them time to build out the platform to maturity so that Accorded could serve those more established players down the line.
The easiest path to an MVP is to fill the gaps that the market isn’t filling.
Frank shares that Accorded’s initial MVP was quite simple. They had a very specific target group of potential customers that had a very distinct need and were priced out of the current solution. They were able to fill the gap immediately for early-stage digital health companies, specialty provider groups, and more.
They built the initial MVP off the idea that the actuaries on staff could deliver those capabilities. The product team would then work in concert with the actuarial team to start building out the requirements, enabling the actuaries to use what they were building on the backend.
“It's been a really great product litmus test for a product team because we're building for actuaries. If our actuaries are going to be using the platform that we're building, then we know that there's going to be a market for external users to also use our platform.
If we're building a solution in which our actuaries are going to look at it and say, ‘We can't use this’, then that's a very clear signal that, from a product build perspective, it's probably not going to land.”
Raising and scaling
There’s an old adage: when it comes to pitching, if you’re explaining, you’re probably losing. That might not apply in the complex vertical of healthcare, especially if you’re building something unprecedented.
Explaining to investors might be challenging, but it’s worth it— the right ones will stick around.
Accorded’s first institutional raise took place during COVID. Frank’s biggest insight from raising in this space was helping to uncover the complexities of healthcare contracting to investors.
A lot of the pitch was educating investors around the process of getting to a value-based contract, as well as how critical actuaries were to that process / how resource intensive and labor intensive the whole endeavor was. It also took investors extra work to gain conviction around the idea.
“It did take a very specific set of investors that were willing to say, ‘Okay, this is interesting. How do I confirm what you’re telling me about the problem space?”
As your company grows, focus is important.
Frank shares that Accorded is fortunate to be able to build for their internal customers — their customer success and actuarial teams. Their challenge as they’ve grown has been focus. There’s so many different business lines in the healthcare space— digital health specialty providers, institutional providers, provider entities, etc.
Going after any one of these have implications on what Accorded builds and what they sell.
“It's tempting to want to go after everyone, but it does come at a cost.”
It’s challenging to understand which market to go after. Frank shares that they put in the right kind of gatekeeping measures to ensure that they’re ready to move onto the next opportunity once they’ve tackled one.
Understand the incentives of the buyers you’re pursuing
Frank shares that especially in healthcare, it’s important for early-stage and growth-stage companies to understand the buyer in the market you’re pursuing. Each buyer and each market has a different set of incentives. You can’t assume one set of value propositions is going to resonate with a player in the Medicare Advantage space vs. Medicaid MCOs space. Aligning your GTM offering towards those incentives is going to be key.
Incentives in value-based care:
Frank shares that if you’re a next-generation care delivery or clinical model, there are things that you’re doing that don’t have a clear reimbursement structure: care coordination, plan management, follow up, medication adherence, etc. The only viable path to capturing the value that you’re delivering is through a risk model or a value-based care model. That’s the main incentive when it comes to next-generation care delivery: things that drive great outcomes and reduce costs but don’t have a clear path of reimbursement.
Frank believes the market is making providers think about value-based care more. CMS has already pushed for value-based care, and CMS typically sets the trend when it comes to reimbursement. He thinks that institutional payers and national carriers are going to start moving their models over time, and fee-for-service will move away.
Frank’s perspective on the future of healthcare
Specialty care value-based contracts. Most contracts around primary care have a form of capitation models for services or global cap based on total cost of care incentives. For organizations that manage primary care contracts or groups that are taking on more risk, they’ll be thinking about how to subcontract out those specialty patient cohorts that are high cost and can be managed better with organizations willing to take on that risk.
Just for fun— what Frank would change about the healthcare system if he had a magic wand:
Frank would make it easier for people to become medical practitioners and doctors. If more people who want to become doctors could do it, that would solve a lot of supply challenges in the healthcare system.
Healthcare moves at a different pace. Set your expectations right.
Frank has seen a lot of founders who don’t come from healthcare enter the space and be surprised. It’s like the pathway to becoming a doctor— arduous and long, but worth it for those who are passionate. Setting your expectations properly will keep you from going crazy.
The future of Accorded:
To date, Accorded has helped companies curious about value-based care implement those contracts. Next quarter, Accorded will launch their solution to help organizations with existing contracts run analytics to understand how they’re performing. This will hopefully allow them to improve on those contracts as they think about their next phase of contracting with new payers or existing payers.
Thanks for reading Pear Healthcare Playbook! Subscribe for free to receive new posts and support my work.
A note from our sponsor: PacWest
Looking for guidance, connections, resources, opportunity? Pacific Western Bank’s banking products and services are built to support your evolving needs as you navigate the challenges of growing a successful business. As you continue to scale, our team will be with you every step of the way. Ready to take your business to the next level? Learn more: pacwest.com