FCV Partnership, CareBridge, is the First Healthcare Company in a Decade to be Ranked #1 on Inc. 5000 List

Brad Smith and Bill Frist created CareBridge to solve not one problem but two: how to rein in costs, and how to deliver better care to Medicare and Medicaid recipients.


Former US Senator and Founder of CareBridge Bill Frist (right) and Executive Chairman Brad Smith (left). Photography by Gabriel McCurdy

Bill Frist was already three or four careers deep–surgeon, senator, venture capitalist, environmentalist–when Brad Smith showed up at his doorstep in 2008 in Princeton, New Jersey, where Frist was teaching. Smith was then a 26-year-old whose first job out of Harvard was chauffeur. Not for a limo service, but for Bob Corker, who was running for Frist’s former job, U.S. senator from Tennessee. For two years, Smith drove Corker around the state, absorbing politics at the ground level. Following his election, Corker thought Frist might be a good person for Smith to know, particularly since both were interested in education policy, which Smith had studied in grad school. “I went to see him, even slept on his couch, which saved me the hotel room,” says Smith, who got a gig researching a book out of the meeting. But the meeting’s big payoff, 15 years later, would be a place at the helm of the fastest-growing private company in America. In 2019, the two men co-founded CareBridge, a value-based health care management company whose revenue expanded a feverish 157,144 percent last year, to nearly $873 million, putting it atop the 2023 Inc. 5000. With revenue likely to surpass $2.5 billion this year, CareBridge may have a chance to defend its title. That’s because some of the country’s largest health insurance companies are hiring CareBridge to care for Medicaid patients who receive home and community-based services.

It’s a growing business. These clients often have physical, intellectual, or developmental challenges, and require a lot of resources. In the past, many would have been institutionalized. In recent decades, the emphasis has been on helping them stay within their community, either at home with a family caregiver or in group homes with a paid caregiver. But the change hasn’t necessarily improved their lives or contained costs. Medicaid spent $162 billion in 2020 on home and community-based services (shorthanded as HCBS), up from $95 billion in 2016, reflecting the shift from institutional care, but also the growth in cost per patient. With the aging of America, demand will increase, and the federal government lacks the expertise for a fine-grained response.

“The government is too big to solve this problem. It can’t individualize enough,” says Frist, a Republican who certainly tried to solve it in his two Senate terms: In 2003, he shepherded through a Medicare overhaul that added drug coverage–and substantially expanded the role of private health plans, to improve efficiency. He adds, as it happens, that the big insurers aren’t able to manage the details either, and are looking for someone who can.

The promise of CareBridge is to promote well- being in part by using technology–a two-way tablet in the hands of each caregiver or patient that monitors health signals and connects the patient with appropriate services, 24 hours a day. The goal is fewer hospitalizations or trips to the emergency department, and healthier, happier clients. That, in turn, means lower health care costs. CareBridge pockets some of that savings as income.

Smith, 40, and Frist, 71, are an unusual combination: exquisitely educated men (Harvard-Oxford for the former; Princeton-Harvard Med for the latter) who have a passion for serving vulnerable populations. “Health care is unique in where it sits in the U.S. economy,” says Smith. “The kind of things that health care does for people don’t exist in other sectors. You can build businesses that have huge impact.” More important, they’ve backed their passion with a business model that–within a hopelessly inefficient yet complex industry–they say reduces costs and produces both better outcomes for patients and profits for investors.

They are also convinced that they can do more good as entrepreneurs than they would as bureaucrats or politicians. If you’re a cynic, you can label them as insiders who have taken advantage of the revolving door that connects powerful people in government with highly regulated industries. (Why, for instance, was the Federal Aviation Administration recently run by a former airline executive when airline service is so awful?) And state Medicaid agencies have drawn criticism for awarding contracts to companies whose executives once worked for those agencies.

But health care produces data–measurable outcomes. And the initial data on CareBridge’s performance was so compelling that the owners of four of the largest managed Medicaid plans–Elevance Health (formerly Anthem), UnitedHealthcare, Centene, and Aetna CVS–took a piece of CareBridge’s $140 million Series B funding round last year, helping push CareBridge’s valuation past $2 billion. These payers, as the big health insurers are known, are also CareBridge’s biggest customers, and they are moving the company into 30 states where they have won Medicaid contracts.

For Frist, a renowned transplant surgeon before he entered politics, being an entrepreneur is an extension of what he did as a physician, but on a broader canvas, which is what makes it attractive to him. “I took an oath as a surgeon to take one person at a time and fix their heart, fix their lungs,” he says. “What I have been lucky with, and blessed with, is the opportunity to see how to take things to scale. I keep the same values.” After leaving the Senate, he partnered with the Chicago private equity legend Bryan Cressey in what is now called Frist Cressey Ventures, which invests in early-stage health care companies, such as Monogram Health, which offers in-home care for people with complex chronic conditions.

He and Smith first collaborated in 2009 on a Nashville education nonprofit called Score, which Frist funded and Smith ran. In Smith, Frist sees someone who shares his mission and can also execute. He describes Smith as a data nerd with a deeply analytical mind, able to convert numbers into insights and insights into action–and also as an entrepreneur who can attract talent. “Those are the things that make him special at getting to scale fast,” says Frist. “He builds great teams.”

Throughout his life, Smith has been someone who flings the door open when opportunity knocks. When he was a senior at Webb School in Knoxville, Tennessee, where he grew up, he began applying to SEC schools such as Tennessee and Georgia. But a school board member suggested he also apply to Harvard. That board member was Bill Haslam, a future Tennessee governor whose billionaire family founded the Pilot Flying J truck-stop company. At Harvard, Smith interned at consultancies and considered a career in the field.

When he returned home after graduation, Haslam told him about a job opening. “He said, ‘Hey, my brother’s former college roommate needs a driver,’ ” Smith recalls. The brother, Jimmy, is the current co-owner of the Cleveland Browns; Jimmy’s roommate was Bob Corker.

After Corker won the election in 2006, he helped Smith get the position of executive assistant to the White House political director, where he spent six months before heading to Oxford. When he returned, he had lunch with Bill Hagerty, a former member of the White House Fellows selection committee (and now a U.S. senator from Tennessee), hoping to get tips on how to apply. Hagerty had other ideas. Young fellow, he said to Smith, I just got a job running Tennessee’s economic development agency. Do you want to be chief of staff? Smith was 28.

With CareBridge gathering momentum in 2020, Smith did something unusual, crazy even: He left the company to take a job in Washington with the Trump administration. Founders almost never leave their babies unless they’re forced to. But Smith saw a singular opportunity in becoming director of the Center for Medicare & Medicaid Innovation (CMMI), the department within the Centers for Medicare & Medicaid Services (CMS) that tests alternative payment models. Besides, he already had an actual baby girl at home. (Two sisters would eventually join her.)

When Adam Boehler, then the director of CMMI, called Smith about succeeding him, Smith’s initial reaction was “intrigued, but on the no side.” But he talked to people who had senior roles in CMS or Health and Human Services, and they offered similar advice: “They said, to a person, ‘These are the calls you don’t get too often,’ ” he recalls. Once again, he answered it. He had to sell his interest in and cut his ties with CareBridge, but for a health care entrepreneur, this was on the order of starting a private space company and then running a directorate at NASA.

For decades, CMS has been trying to figure out how to migrate Medicare and Medicaid from a hugely expensive, fee-for-service model–which cost $1,634.8 trillion in 2021–to one based on value and outcomes. As in, can we get healthier patients yet spend less? What Smith found during his 19-month tenure–which also saw him serve on the Operation Warp Speed Covid-19 response team–is that value-based care is really hard. CMMI has funded 54 so-called innovation models–for example, linking what Medicare pays hospitals for hip replacements to how well the patients do–to the tune of some $8 billion, and almost all of them failed to move the needle. “Only five of the models saved money,” says Smith, who returned to CareBridge as executive chairman in 2022, “and very few of them showed quality improvements.” That lesson informed the company.

The challenge, especially within Medicaid, is the fiendish complexity of restructuring a basic human service as vast as health care. It requires expertise along regulatory, medical, technological, financial, political, and socio-economic vectors, and you have to get all of them right. “These are the most needy, most vulnerable populations in America,” says Annie Lamont, co-founder of Oak HC/FT, an early investor in CareBridge, “and there was very little innovation.” Perhaps the best-positioned people to solve the value-based care conundrum are entrepreneurs with experience in both government bureaucracies and tech-driven health care startups.

People like Smith and Frist.

CareBridge’s headquarters are in a non­descript, low-rise office building in a precinct of Nashville on the other side of the Cumberland River from the sites the tourists visit. But headquarters don’t mean as much in business these days, even less in health care. The company’s 430 employees–more than double the figure from just a year ago–are split about 50-50 between the home office and clinical outposts around the country.

What makes CareBridge interesting as a medtech company is that it doesn’t have a magical app to cure diabetes or kidney disease, nor is it positioned to earn the kinds of profit margins of a SaaS business, say. Instead, CareBridge is addressing one segment of an enormous industry and is more than willing to accept single-digit profit margins to do so. That’s somewhat antithetical to what tech startups do, but the dollars in health care are so massive that the math makes sense. The U.S. spends about $4.5 trillion annually on health care, more than any other country–about 18 percent of GDP–and for that gets worse outcomes than almost every other developed nation. By some estimates, 30 percent of that spending is waste.

Smith and Frist both knew that across the HCBS populace, even incremental improvements could boost the health of millions, reel in spiraling costs, and reward the entrepreneurs who could scale these responses. According to Smith, the addressable market is about $120 billion in annual spending on home and community-based patients. CareBridge’s investors and customers–risk-based managed care organizations (MCOs) run by insurers–control about half of that segment. “So our market size is $60 billion,” says Smith. “And we’re only two or three billion into it.” If the company netted, say, 8 percent on $3 billion, the profit would be $240 million. CareBridge is now profitable.

CareBridge isn’t so much a startup created on a single insight as it is a company assembled from parts. Smith and Frist lined up the technology, the IP, and the big customers before forging ahead. For technology, they bought Healthstar, a company they found in Smith’s hometown of Knoxville, whose service geolocates caregivers to make sure they show up; and Sinq Technologies, a data aggregation and payment company.

Most important, each of those companies had a dowry of sorts: big insurance clients, including Elevance and UnitedHealthcare. That provided CareBridge with the opportunity to “land and expand” and upsell its HCBS services. Smith worked those connections. For instance, at an industry conference in Israel, he ran into the CEO of UnitedHealthcare Tennessee, who introduced him to the company’s VC arm, Optum Ventures. The health care giant became a client as well as an investor, and is giving CareBridge a significant portion of its HCBS patients. (CareBridge won’t disclose the value of the contract, but in 2023, its $2.5 billion in revenue will come from five clients.)

Frist and Smith also knew they could gain an advantage by mastering state Medicaid regulations. Unlike Medicare, which is a national, federally administered program, Medicaid is run by individual states that apply for waivers to use federal funds. Each state has different, often confounding standards for who qualifies for each benefit. There are 124 patient assessments that states use to qualify and pay for coverage. “We can go into 30 states and be experts on those assessments,” says Frist. Part of that expertise came from hiring a few of the very people who were running those state programs.

CareBridge is in part an extension of the pair’s second collaboration, Aspire Health, founded in 2012, and their belief that private enterprise is better than nonprofits in addressing some sets of patients. Aspire provided community-based palliative care, a field that had been dominated by nonprofits, which were struggling. “The care the nonprofits were giving was through-the-roof good,” says Smith, but unsustainable because they were losing money providing it. As a physician, Frist had long recognized the demand. Smith says he was moved by watching his grandmother struggle in her final days, confined to a hospital bed. “Nobody could figure out the business model around it,” says Frist. “There was a huge need among the population that had severe chronic disease. Most were going to die within a year, but not soon enough for a hospice. We went in and figured it out.”

What they devised was to assign each patient a care team–nurse practitioner, RN, MD, and social worker–to proactively coordinate coverage so they had an option other than an institution. The outcome was better lives–better deaths–and lower costs, given that, to be blunt, we spend disproportionate amounts of health care dollars on the last six months of life.

As they scaled Aspire, staffers kept coming across patients who already had a caregiver–a potential source of labor they weren’t tapping. “We’d thought about how to leverage the caregiver, but we never actually did anything about it at Aspire,” says Smith. They sold the business to Anthem for $440 million in 2018.

Smith initially stayed with Anthem after the sale, but he had negotiated the right to explore new startups, and he began researching the home and community care market. In looking at data from both CMS and private players, Smith discovered that these patients were among the costliest to care for: They represented 3 percent of Medicaid patients but 17 percent of total spending. “We could really build a different model,” he says.

In the CareBridge model, the two-way tablet received by each patient or caregiver is a health care switchboard, providing immediate access to care. Day to day, the tablet manages patient well- being, logging blood pressure and insulin levels in people with COPD or diabetes, or transmitting advice on healthier diets. Each patient has an initial evaluation to assess the level of services they might need and to map out a plan that will enhance well-being–as opposed to responding only when they become sick. And, similar to Aspire, CareBridge assigns them to a disciplinary care team that includes occupational and physical therapists, nurses, physicians, behavioral health specialists, and social workers.

When there’s an issue, the caregiver presses a red button on the tablet to summon help. That might start with a call from a nurse practitioner or social worker but can escalate to a video visit by a physician’s assistant or a doctor. This kind of scaled delivery is producing positive results. Hospitalizations for CareBridge’s patients are down 23 percent and nursing home days by 16 percent compared with the prior providers.

The company augments medical care with social care to promote independence and encourage patients to do more for themselves, like installing a grab bar and a shower seat in the bathroom with instruction on how to bathe safely so they can shower on their own. This would mean that a health aide isn’t required for the job. The com­pany will also provide differently abled people with job training if they’re interested in working rather than spending all of their time at home.

It works for the payers, too, because essentially CareBridge is taking patient risk, which is considerable, off their hands. It costs MCOs an average of $40,000 to $50,000 annually to care for each HCBS patient. They pay CareBridge a monthly fee per member (not disclosed publicly) that the company books as revenue. As part of the contract, CareBridge also agrees to meet certain standardized quality measures, such as controlling blood pressure, completing advanced care planning, and ensuring patients are taking their meds. At year end, CareBridge splits any savings over the baseline cost of these patients, as agreed in the contract. Keeping people out of the hospital or the emergency department by anticipating their health needs turns out to be a winning strategy. The company says it is meeting quality measures more than 90 percent of the time.

Still, this is an experiment in transferring care from local, if scattered, groups of providers to a national one. “It’s an intriguing idea that holds a lot of potential, but I hope it will be vigorously evaluated,” says Alice Burns, associate director for the Kaiser Family Foundation’s Program on Medicaid and the Uninsured. Health care companies, she argues, are confronting severe labor shortages of long-term care workers, and the situation is only going to get worse. To attract more staff, CMS has proposed a rule requiring that 80 percent of HCBS funds go to workers, as opposed to profit, administration, and overhead. “How does value-based care play out with 80 percent pass through?” asks Burns.

And how far can they take this model into other health care sectors? As CareBridge was rapidly scaling, Smith, via his own venture firm, Russell Street Ventures, was launching another company called Main Street that takes similar teams and metrics to primary care in rural medicine. That’s another market that is desperately underserved, especially in states that have refused to expand Medicaid.

As health care spending heads toward $7 trillion by 2030, so will the demand for companies that can deliver value. That’s why firms such as Transcarent, Somatus, and Clarify Health have reached unicorn status. For its part, says Oak HC/FT’s Lamont, CareBridge is “a win, win, win. This is improving people’s lives, lowering costs, and making money. It’s the trifecta.”

Granted, Lamont speaks from the perspective of a winning investor. As companies like CareBridge expand, the onus will be on them to prove that private companies are better at public health care delivery than governments–even if some of the same actors move from one sector to the other as management or investors. Because if we don’t cure our ailing health care system, we will run out of money long before we run out of patients.

Source: INC