Deal To Watch: Middleman-less Healthcare


At time of publication, December 26th, 2018, Healora had raised $11,500 of the $750,000 Bridge to Series A funding.

The Healora team has been selected as a “Deal to Watch” by KingsCrowd. This distinction is reserved for deals selected into the top 10-20% of our deal diligence funnel. If you have questions regarding our deal diligence and selection methodology please reach out to


Health care is expensive. In a recent study by the University of Chicago, “40% of Americans report skipping a recommended medical test or treatment and 44% say they didn’t go to a doctor when they were sick or injured in the last year because of cost.” In the past four decades health insurance has increased over 30 fold from $355 per person annually in 1970 to $10,739 in 2017, according to the Kaiser Family Foundation.

 Americans used to pay a nominal premium and see the doctor when necessary. Typically, there would be a manageable deductible and the insurance company would pay the balance. Now, deductibles and copays are so high people can not afford to use their insurance thus for most people health insurance is catastrophic coverage.

 The average primary care visit is 7.5 minutes, which is not the way doctors prefer to practice. Incentives are misaligned. Insurance pays doctors, fee-for-service, rather than outcomes.


Direct Pay Care or DPC is a rapidly growing model, subscription based primary care service. Client/patient pays a monthly fee, around $100 per month for unlimited access.

 Since the doctor is incented to keep patients healthy, appointments average 30 minutes focusing on educating the patient on health and nutrition. How many American’s have high deductible health insurance? A lot! According to the CDC’s National Center for Health Statistics, 39.3% of adults, up from 26.3% in 2011.

 What happens when a person on a high deductible plan, utilizing DPC needs something like a hip replacement? It is expensive. For example, if the high deductible health insurance is Blue Cross Blue Shield, the patient can get the hip replacement by board certified, reputable, Dr. Jonathon Botts in Sherman Oaks, California for $28,573. Ouch!

 According to the Federal Reserve, 40% of Americans can’t cover an $400 emergency expense, so it is fairly safe to assume the patient can not find the $28k in the couch cushions. Most likely the patient has discussed the situation with their DPC provider. Assuming the patient is in the Sherman Oaks, California area, they are in luck because the patient can sign up for free to the direct pay specialist network, Healora, and hire the exact same, Dr. Jonathon Botts in Sherman Oaks, California to perform the exact same procedure for $15,464.34.

 Healora is a free network serving the layer of services between primary care and catastrophic care. The majority of the 286 procedures, and counting, are the same procedures 40% of people are skipping due to cost such as hip replacement, bladder suspension, breast reconstruction, etc. Healora offers services like Dr. Botts’s at between 50% to 70% off. How? Healora is removing the middleman. A recent New York Times investigative report cites 30% of the US health care budget is attributed to administrative costs.


Healora’s customers are patients with high deductible health insurance and utilize DPC practices. When a DPC provider’s patient needs a hip replacement, the DPC recommends a trusted orthopedist. Healora enables the patient to continue the direct pay strategy.


Healora’s closest competitor is Kumba Health, also located in the Los Angeles area. Kumba Health is a direct to customer direct pay marketplace. Unlike Healora, Kumba is B2C strategy and the public website frequently returned error messages. There are a few other companies teasing around the edges of the space, none are noteworthy.


Healora’s co-founder and CEO Thomas Farmer, has two decades of experience in operations and distribution. Ever since Mr. Farmer received his MBA, twenty years ago, he has started and run his own organizations, though none in the medical industry.

Mr. Farmer’s partner and only other investor is Dr. Julian Henley. Dr. Henley is a double-board certified surgeon served on Yale Clinical staff. Studied engineering at MIT and physics and applied mathematics at Harvard. Dr. Henley still practices medicine in Fort Collins, Colorado and holds 32 medical technology patients.

Why We Like it

1. Dr. Henley’s Experience: Dr. Henley was granted patent 7,657,479 on 02/02/10 entitled, “Method And System For Provision And Acquisition Of Medical Services And Products.” Dr. Henley’s patent was the basis for his previous foray into the direct pay medical market as a founder of

2. merged with HealthInReach in 2012, with HealthInReach’s CEO running the merged company. Neither company has an active website. Through The Library of Congress’s website, I learned, “ is a company that operates a commercial website that helps consumers obtain discounted prices and reduced fees for healthcare procedures.”

It sounds like was Dr. Henley’s first attempt at Healora, when as stated above a little more than 25% of adults had a high deductible insurance plan. may have been ahead of its time.
3. Market Timing: In the past twenty years, the internet has dramatically disrupted businesses and reduced costs to end users by reducing the middle man. It is no secret that health care as an industry is sorely lagging in eliminating the middleman, Healora is one of the first to execute a business model to accomplish this. In a little over five years the number of adults with high deductible insurance has increased by 50% at the same time the market for DPC has skyrocketed as well.

3. Product: It works! Duh, I know, the most basic question in assessing a startup is, does it work? Mr. Farmer has a bold vision and excitement about Healora’s direction, and a solid end-user product. Healora’s closest competitor, Kumba’s tool returns an error message if a patient requests a service Kumba does not offer. If you request a service or location Healora does not offer, the site returns a message apologizing for not providing it and offering to approach a doctor to join the network.

4. Channel strategy: Despite being enamored with Healora, Mr. Farmer shows his experience via his channel strategy. Mr. Farmer recognizes a B2C strategy with billboards, online advertising, and print ads is expensive and low yield. Healora’s focus on the gap between DPC’s and a catastrophic medical issue, a B2B strategy makes sense, tapping into the DPC network supplying a solution to providers and capturing customers who already believe in Direct Pay.


Healora is worth considering. Mr. Farmer is a seasoned, charismatic executive who understands the market. Mr. Farmer’s partner and Healora’s CMO, Dr. Henley has already started and sold a similar business.

Healora is only available in the Los Angeles and Bakersfield area. Healora plans geographic expansion to Denver, Colorado, close to Dr. Henley’s home. Colorado is a hotspot for DPC’s, so it is a good fit. Mr. Farmer reports, unlike health insurance, direct pay has no issue crossing state boundaries.

Mr. Farmer reported, Healora is partnering with a medical financing company. Considering cost is the primary problem Healora is solving, offering patients financing is likely to be popular and another revenue stream. I was unclear how Mr. Farmer was structuring the B2B strategy of targeting DPC providers other than to hire sales staff.

One of the strategies Healora is pursuing is partnering with surgical centers to fill their idle capacity. While this is certainly a reasonable gap in the market to pursue, it might be a bit too tangential to Healora’s core strategy.

Health care is big business. Healora’s strategy is to cut the middle man, insurance companies. Mr. Farmer claims insurance companies like Healora because it saves them money not paying for services. While this may be true, if Healora gets too big, and too many people push to high deductible plans, the giant, politically connected health insurance industry may not like Healora as much.

At this moment there is little to no competition for Healora. It’s first to market advantage might be enough to build a strong network to ward of competitors, much like eBay. Healora makes money by charging doctors a 15% referral fee on services bought through Healora. This is great because there is no risk for doctor or patient until service is bought. Since this model is geographically based, it can be copied in another market with little to no consequence to the copycat.

The explosive cost of healthcare is an issue to most Americans, thus popular in politics. Healora reduces the cost but does not solve the problem. The last time Dr. Henley tried this business model, he exited within two years. According to Healora’s self-reported fees, the company revenue for 2018 is $69,000. This translates to an average cost per p rocedure of $460, thus translates to revenue per procedure to Healora of $69. Healora’s crude two-year forecast assumes the same average cost per procedure, but Healora is likely to focus on more lucrative strategies.

There is plenty of reasons to bet on Healora. It’s founders are seasoned executives. The product is solid, running and has revenue. There is little to no direct competition. There is a clear market gap and the customer acquisition strategy appears viable. Personally, I am cheering for anything which will ignite a disruptive force to the skyrocketing health care costs.

About: Diallo Hudgins

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