ALAMOSA, CO – Friday Health Plans on Main Street Alamosa currently has 200 employees and is growing. It will add another 400 employees over the next three to five years for a total of 600, and will occupy 70,000 -square -feet of downtown office space.
CEO Sal Gentile spoke to The Citizen about Friday Health’s expansion plans; its recent acquisition of Tim’s Auto at San Juan Avenue and Sixth Street to go along with its purchase of the former Wall, Smith, Bateman, Inc., building on Main and San Juan; its plans to add another downtown parcel for employee parking; and the business plan behind Friday Health that is fueling the growth.
“Our entire business model is about servicing the Affordable Care Act customer under the assumption that the direction of U.S. healthcare is a lot like Medicare, which went to a subsidized population of individuals with a choice, and now well-tested and well-established,” said Gentile. “We think the same is going to happen to consumer healthcare, that ultimately groups will become groups of individuals subsidized by their employer as opposed to their employer making decisions for them.
“Their employers will be a funding source much like the federal and state governments are for Medicare and Medicaid, and otherwise people will make their own decisions … As long as there are enough choices in the marketplace, a well-subsidized population can make good decisions to buy health insurance on their own.”
Friday Health’s business plan is attracting institutional capital, which is fueling its Alamosa expansion: Gentile said the company raised $50 million in 2019 and another $160 million in April. “All of that capital will largely go to fund expansion.”
Eventually, he said, Friday Health will outgrow its Alamosa operation and will then look to find another small town, one with a university and a regional hospital, to set up another operation to complement its Alamosa office.
Friday Health came to Alamosa when it purchased Colorado Choice Health plans in 2017.
“When we acquired Colorado Choice we had just over 20,000 members in the plan, and today we sit at just over 84,000 members, so we’ve grown by four times,” said Gentile. “We’ll be expanding; my hope is to at least double that number by January of next year and hopefully double again in 2023. So our goal in the near term is to get to in the neighborhood of 300,000 members spread out over 12 states.”
Friday Health currently offers healthcare plans in four states – Colorado, New Mexico, Nevada and Texas – and through the growth strategy will offer plans in Oklahoma, Georgia and North Carolina in 2022 and then five additional states in 2023.
JOBS AT FRIDAY HEALTH:
“Our primary avenues here are, we do all of our call center work, so 100 percent of our customer service – which includes support of brokers and providers as well as members – is a primary function. We do all of our clinical operations here, so we have a number of doctors, nurses, nurse coordinators, referral coordinators that do the work a health plan needs to do when members or doctors call about services.
“We do most of our claim processing here, and we do a mix of provider operations where we maintain the information about the doctors in our network, and we also do some pharmaceutical support work in extension of our provider network. So those are our primary functions.”
Gentile and his business partner, David Pinkert, started Friday Health Plans in 2015 following the passage of the Affordable Care Act. Both are health technology industry veterans, with Gentile originally from New York.
Paying attention to trends in the healthcare industry, and being on the tech side, helped Gentile see the coming shift of more and more individuals purchasing healthcare on their own rather than receiving health insurance through an employer plan.
You have to go back to the 1990s to understand the progression. It was then that Health Reimbursement Arrangements (HRA) became popular as a way to reimburse employees for non-critical medical expenses. The Affordable Care Act, when it passed Congress in 2010, prevented HRAs from reimbursing employees for any healthcare premium expense but at the end of the Obama administration a rule was passed that established Qualified Small Employer Health Reimbursement Arrangements (QSEHRA). This allowed small businesses that didn’t offer health insurance to help employees pay for expenses, including premium costs. Then in 2019 the Trump Administration adopted another rule that established Individual Coverage Health Reimbursement Arrangements (ICHRA) to the Affordable Care Act, which allows employers to reimburse their employees tax-free for their individual health insurance.
Friday Health is banking on a flood of individuals coming into the health exchanges to purchase insurance. “What we’re seeing right now is a fairly modest pick-up, but I think it will get bigger especially with what’s going on in our economy,” said Gentile.
The gig economy, the growth in small businesses, the spirit of entrepreneurs to strike out on their own all play into Friday Health’s strategy.
“Moving forward, people can expect more companies to shift away from offering healthcare plans to their employees, and instead having an ICHRA to subsidize an individual healthcare plan. It enables an employer to fund the HRA and let the individual go buy insurance and get premium support. We see that as the future of healthcare. It’s been happening in a trickle and it’s soon to happen in a flood.”
For Alamosa it means a growing company anchoring Main Street and its downtown.