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PeaceHealth has signed a definitive agreement to acquire on-demand healthcare startup ZOOM+Care for an undisclosed amount.
PeaceHealth President and Chief Executive Officer Liz Dunne said what was exciting about the deal was the “complementary nature of our organizations and our shared passion for being the stewards of our communities’ health and well-being.”
“The addition of Zoom to PeaceHealth’s networks accelerates our vision of ensuring greater healthcare accessibility and affordability in our communities while increasing our ability to meet the on-demand needs of today’s consumer,” Dunne said in a press release announcing the deal.
Zoom co-founder and CEO, Dave Sanders reiterated Dunne’s point on the complementary nature of the two companies’ relationship, saying: “We found in PeaceHealth a shared vision and recognition that healthcare is continually evolving with increasing preferences for on-demand care. PeaceHealth and ZOOM+Care both aim to create a magnetic consumer experience, provide superb clinical results and help make healthcare more accessible and affordable.”
PeaceHealth Executive Vice-President, Mike Dwyer explained that the deal was led to by their mutual desire to be as “as innovative as possible, and meet the market where the market is at, and look at innovation as it’s applied to creating affordable access for our community to care in ways that are meaningful to touch those communities in the ways they want to touch health care.”
The Columbian reported that PeaceHealth decided to acquire Zoom mostly because of the startup’s innovative, technologically based approach to health care, combined with the easy access available to patients through neighborhood clinics.
Healthcare Dive explained that the deal brought together Zoom’s mobile app-driven services and neighborhood clinics with PeaceHealth’s specialty and hospital services under one umbrella, giving consumers more choices of when and how to receive medical care.
Under the terms of the deal, the two companies will remain separate entities: ZOOM+Care will continue to operate under its own brand name with a separate leadership and board of directors. A new board is expected to be in place in early 2019. However, there is uncertainty on whether Sanders will continue in his position at the helm of the on-demand healthcare startup.
The startup will also keep all of its staff, estimated to be 425.
Zoom was founded by two doctors in 2006 and has expanded to 37 clinics in Oregon and Washington, where it provides a full range of healthcare services, as well as innovative telemedicine services.
Zoom operates small storefront-style clinics, where patients can schedule same-day appointments at the startup’s locations on their phone or computer and chat with doctors online. The startup provides primary and specialty care, as well as vaccinations, prescriptions and lab testing. The company’s approach is said to be popular and its business plan is one with which other organizations are experimenting
Sanders, The Columbian continued, said that Zoom’s approach has been popular with people aged between 18 and 45, but the company was working on adjusting its patient base to become more mainstream.
“We believe that all consumers, all ages, all walks of life are seeking to control their schedules, their appointments, their times, their messages through their mobile phone. I think the reason why PeaceHealth made this investment is that they saw that coming, and they saw Zoom as a vanguard of that movement,” Sanders said.
With the deal, Zoom is expected to continue expanding, as it eyes more locations in Portland and Seattle. Its existing clinics saw about 20,000 patients a month in 2017, generating about $50 million in annual revenue. “We haven’t really even touched the (other markets) in the I-5 corridor,” Sanders said when explaining the expansion strategy.
On the other hand, PeaceHealth is a Catholic non-profit that operates 10 medical centers and a multi-specialty group practice in Washington, Oregon and Alaska. In 2016, PeaceHealth generated $2.2 billion in revenue. It employs about 16,000 workers.
Recently, Zoom has faced legal troubles after allegations that it retroactively altered medical claims to void Affordable Care Act risk adjustment payments, leading to an FBI subpoena in June.
Zoom was accused of “cherry-picking patients to avoid those on Medicare and Medicaid, which reimburse at lower rates than private insurance plans. By falsifying claims, the company sought to lower its risk adjustment payments by making patients look less healthy.”
In addition, in 2017, a major investor reportedly filed a breach of contract lawsuit, saying Zoom was insolvent.
It was not said whether these legal problems in any way affected the deal.