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Up and Comers 2016: Par8o: Zeroing in on the Referral Moment

May 17, 2016
by David Raths
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Each year, to accompany our Healthcare Informatics 100 list of the largest companies in U.S. health information technology, we pick six fast-growing companies that we think could have a significant impact on the industry in the years ahead. Indeed, some of our picks have gone on to much bigger and better things. A 2013 pick, Health Catalyst, is having a major impact in the data warehouse and analytics space. Another from that year, Explorys, is now part of IBM Watson Health. One of the companies we chose in 2014, Evolent Health, is now publicly traded. This year, promising approaches include applying machine learning algorithms to clinical variation and the move to web services to address interoperability.

In 2006 Daniel Palestrant, M.D., and Adam Sharp, M.D., formed a successful company called Sermo, which is a social networking platform for physicians that also offers a targeted way for marketers and researchers to survey clinicians. But in 2012 the two left their startup to launch a new technology company called Par8o that focuses on improving the medical referral process.

Daniel Palestrant, M.D.

“Sermo’s focus was primarily market research,” says Par8o CEO Palestrant. “As an entrepreneur, I believed that the real innovation in healthcare was going to start to happen on the delivery side. To us, it was skating to where the puck was going, and ultimately an easy choice.”

“The more we looked around, the more we became intrigued by referrals. As physicians, we realize referrals are unique moments in a patient’s care needs,” he says. “They occur at a change in diagnosis or escalation in care. They create a moment where you can have alignment between the patient, payer and provider. Our original conception was to try to use the referral moment as a high-leverage way to better match the right patient to the right resource at the right time.”

Palestrant, and Sharp also realized that existing technologies did a poor job at managing referrals. “It is a particular blind spot for EHRs for two reasons: One is that effective referral management means updating lots of different lists and provisioning rights,” Palestrant says. “You have to know who is in network, who is not in network, who manages referrals, who is participating in which plan. I became more convinced that is an area EHRs struggle with. Second, EHRs tend to work best behind the firewall, when everyone is on the same platform and working on the same system.”

They created Par80 as a cloud-based solution that can integrate with EHRs from companies such as Allscripts and Epic. Here is how it works at customers such as Mount Sinai Health System in New York: At the moment of referral, Par80 looks at three basic things: the clinical indications, the resources available in the network, and the rules that the plan design dictates. “In real time it takes all that information and creates what we call a care compass, which is a rank order of choices for that user to select from when referring the patient,” Palestrant explains. “We overlay any cost, quality or performance data available that can help inform the referral decision. Once a resource is selected, we ensure the receiving party is held accountable for scheduling that next step in care, and create a ‘Fed Ex effect,’ so the patient’s referral can be effectively tracked and the information can be easily routed back to the sending provider.”

With the growing popularity of health plans that create an incentive for primary care provider and patient to work together in picking the patient’s clinical journey, Newton, Mass.-based Par8o is seeing adoption from most of the large payers in the country. “Those models tend to be the best for improving cost and quality,” Palestrant says. “The payers roll out a plan like that, and they need to have a technology to facilitate it.”

One good example, he adds, is an accountable care network called WellHealth Quality Care, a 900-physician group in Las Vegas. It is fully at risk across 55,000 members. “In their case, they use the referral moment to guide patients toward high-quality and low-cost options, and in doing so can offer the patient a reduced or eliminated co-pay,” he says. “We have about 65 percent of the primary care doctors in Las Vegas are using the technology to manage their referrals and authorizations.”

Palestrant says the 40-employee company has been fortunate to count a number of payers as strategic partners and investors. “We haven’t done any recent fundraising. We have been very focused on operationalizing and meeting our target of achieving profitability later this year.”