Evolent Health: Revolutionizing U.S. Healthcare with Value-Based Solutions and Rapid IPO Success

Unknowingly, we have entered the second half of 2015. While China is still discussing when commercial insurance can be perfectly implemented, American companies are already considering and practicing the elimination of third-party commercial insurance, allowing medical entities, namely hospitals and doctors, to take on the role of insurers, fully control premiums, and maximize the interests of medical institutions.

If Kaiser Permanente built its insurance services exclusively for its own hospitals, another company has helped all hospitals realize this dream: Evolent Health, a U.S. industry leader. Widely rumored to be preparing for an initial public offering (IPO), the company indeed went public successfully in the first half of 2015.

I. Overview of Evolent Health, a Company with Rapid Growth

Founded in 2011 and headquartered in Arlington, Virginia, the company has established branches in San Francisco and Pittsburgh, with a presence in 25 markets across China. In September 2014, it had over 600 employees; by April 30, 2015, its professional team had grown to 836 members. The company’s annual revenue exceeded $100 million last year, up from $40 million in 2013.

The company was jointly established by UPMC (University of Pittsburgh Medical Center) and The Advisory Board Company. At the time, UPMC contributed $24 million in capital, while The Advisory Board Company was a large-scale enterprise with 2,500 employees and a valuation of $2 billion.

Evolent has three co-founders. The CEO is Frank Williams, the Chairman is Seth Blackley, and the Chief Executive Officer is Tom Peterson. CEO Williams previously also served as the Chairman of The Advisory Board Company.



The company's core business is software sales and the provision of consulting services.。Designed to help healthcare systems establish exclusive value-based healthcare delivery models., regardless of the stage at which its partners find themselves, it can help them achieve transition or transformation, driving change from the inside out.

The company deploys physicians or clinical experts to identify avenues for improving hospital health services and leverages advanced data analytics to better assess patients’ disease risks. It also assigns management consultants to partner hospitals, assisting healthcare institutions in establishing their own health insurance plans or facilitating collaborations between hospitals and commercial insurers. In essence, by aiding in the management of patient populations, it enhances service quality; by controlling disease risks, it reduces medical costs. From a cost-control perspective, the company intervenes in healthcare institutions and participates in every aspect of hospital management.

Unlike traditional consulting firms, CEO Frank Williams plans to continue leveraging consulting services over the next 10 to 20 years, forging deeper ties with healthcare institutions by following up on and participating in their health management processes. “In just a few years, the company has grown to nearly 850 employees and established a presence in 25 markets across China. I rarely see companies growing at such a rapid pace,” said Williams., “We could have grown faster, but the company deliberately slowed its pace to ensure better service.”

II. The Affordable Care Act Drives Corporate Business Growth

In fact, hospitals in the United States are also heavily criticized. Hospitals have long relied on referrals, emergency surgeries, or treatments to sustain operations, but apart from electronic health records being efficient, the entire system is still described as inefficient and extensive.

With the implementation of regulations under the Patient Protection and Affordable Care Act in October 2013, the U.S. healthcare system underwent a significant shift in its reimbursement model. Previously, medical revenue was determined by the volume of patients treated; now, the evaluation criteria focus on the quality of care and treatment outcomes.

The public can also independently compare various health insurance plans based on publicly available information and select more cost-effective coverage options. This not only encourages insurance companies to participate in market competition but also accelerates the service transformation of healthcare institutions, compelling hospitals to reduce medical costs and shift from fee-for-service to value-based payment models. (For a detailed explanation, please refer to another article by VCBeat.）


Under such industry circumstances, how should hospitals respond? The main approaches are as follows:
1. Effective Marketing
U.S. hospitals have recognized that they are healthcare providers and patients are consumers, granting patients greater decision-making authority. Therefore, it is essential to establish consumer-oriented marketing, brand promotion, and customer service.

For example, NewYork-Presbyterian operates its own YouTube channel for advertising and marketing. The hospital also features an indoor navigation system to ensure that patients and their visitors do not get lost, thereby enhancing the consumer experience. Patients can also rate the quality of physicians’ services.

2. Acquire Similar Medical Institutions
The strategy has primarily focused on merging with or acquiring outpatient clinics and ambulatory surgery centers, with the expectation that this would offset patient attrition. Ironically, this approach runs counter to the original intent of national policy, as it merely creates broader healthcare networks without fundamentally improving medical services, leaving systemic operational inefficiencies unresolved.

3. Streamlining the Medical Service Process
If the aforementioned activities constitute a battle for medical real estate, then optimizing assets to ensure smoother operation of service systems is where true investment should be directed. Any inconvenience within any segment of healthcare services represents a potential pain point. For instance, if patients frequently feel confused during their medical visits and are uncertain about the next steps, this indicates that hospitals should streamline processes by reducing intermediate steps.

Moreover, the involvement of third-party commercial insurance appears redundant. Is it possible to establish a direct channel of communication between hospitals and patients, achieving full integration from medical services to the payment system? This approach faces the challenge of medical risk transfer: who should bear the medical risks? If commercial insurance companies cease to exist, hospitals would need to simultaneously assume both medical liability and the burden of economic cost control.

Based on the simple revenue formula, key priorities for hospitals include reducing costs, managing patients efficiently, monitoring and tracking patient health status, ensuring post-discharge well-being, and lowering readmission and disease recurrence rates.Consulting and management firms such as Evolent Health are well-positioned to provide robust support to hospitals. Kaiser Permanente, for instance, has adhered to this principle for many years, with its integrated healthcare system encompassing both hospital operations and proprietary health insurance plans.

60% of Americans have health insurance either paid for by their employers or purchased individually as commercial coverage, and employers are eager for medical prices to be stable, transparent, and predictable.Therefore, hospitals can offer bundled payment solutions to corporate employers. For instance, while employers know the fixed amount payable for a specific service package, hospitals, being aware of their profit margins, are incentivized to control costs within the transaction, thereby maximizing their overall benefits.

3. Self-built platform equipped with proprietary technology to provide integrated services

Evolent Health is the largest provider of health insurance service solutions after Kaiser Permanente. In terms of corporate structure, UPMC is responsible for the research and development of technology and services, while The Advisory Board Company provides best-practice research and technical solutions. As of March 2015, the company had more than 3,900 hospitals and healthcare institutions as members.

Since healthcare institutions have true control over the costs across the entire service delivery chain, driven by health insurance cost-containment pressures, the company can assist these institutions in completing their service transformation from data and technological perspectives. Although only 10% of U.S. healthcare spending is currently based on value-based or outcome-based payment models, this proportion is projected to exceed 50% by 2020.

To achieve the transformation of healthcare business models, a set of core capabilities is required, including aggregating and interpreting diverse clinical and financial data, standardizing and integrating technologies, and establishing a value-based framework for fiscal and health management, all seamlessly embedded into healthcare delivery workflows. Evolent Health provides an end-to-end, technology-enabled service platform with the following core components:

1 Identifi® Technology Platform
2. Integrated Technologies, Proprietary Processes, and Clinical Service Models
3. Embed deeply within the healthcare system and establish long-term partnerships
4. Integration into Healthcare Institutions and Participation in Clinical Processes
5. Payer-agnostic, healthcare delivery system-centric, accommodating diverse payment models

The Company’s Products—Blueprint Program and Identifi® Platform
From technology to tools to teams, Evolent Health provides integrated consolidation services.The company began by offering consulting services to help partner enterprises define their target markets, formulate actionable strategic roadmaps, assess existing clinical capabilities, and support the development of detailed business cases. This consulting service is known as the Blueprint Program., in addition, the product features also include:

1. Efficiently optimize the network management system, establish professional partnerships, and lay the foundation for building the network system
2. Establish scalable backend infrastructure, along with analytics and reporting teams, to support the financial and administrative operations of healthcare institutions
3. Design and manage organizational structures with physicians at the helm, transforming management models to drive “inside-out” systemic reform
4. Integration of clinical operations and data, optimization of electronic medical records, and provision of value-added application services, based on the Identifi® platform products.

Company Services — Consulting Services and On-site Research Participation
The company initially launched with its Blueprint consulting service, enabling teams to rapidly assess the overall status of healthcare institutions. Building on this foundation, it provides strategic recommendations for establishing a value-based healthcare framework, with a particular focus on future disease prevention and enhancing the efficiency of healthcare management.

Through data analytics on the company’s Identifi platform, physicians can identify patients at the highest risk and develop targeted, personalized intervention plans.Coordinate with the healthcare team to provide health care and other assistance to assigned patients, and participate in the coordinated management of patient care.

By providing consulting and implementation solutions, as well as deploying staff to conduct on-site field research, Evolent Health establishes long-term partnerships with enterprises, offering expert guidance akin to a mentor to facilitate their transformation.

Company's Series of Solutions
Clients have the autonomy to choose which design proposal to adopt:



1. Strategy, Performance, and Advisory Services
(Implemented through the BluePrint initiative)



AValue-Based Business Strategy: Accelerating Market Entry to Address the Following Issues:

Promote the growth of core value-based services;
Building a Multi-Dimensional System for Long-Term Success;
Launch your own health plan;
Optimize risk-based payment contracts for payers;
Directly serve corporate employers in the community where the hospital is located;
Leverage value investment strategies to expand fee-for-service businesses;

BUpgrade infrastructure to enhance clinical implementation capabilities, with the following functions:

Bridging the gap between optimal population health management and existing infrastructure;
Expand current business capabilities to become more powerful;
Optimize the investment sequence and prioritize business initiatives based on their urgency and importance;
Expand the network, enhance marketization, and strengthen marketing capabilities;

CCase Studies of Financial Business, with the following purposes:

Capture the value created by institutions;
How to Mitigate Risks;
Identify the most critical and sensitive areas to avoid;
Potential Impact on Business;
Impact on future profits;

2. Population Health Management Technology
(Implemented via the Identifi platform)

AData Integration Services, Integrating a Patient-Centric Data Warehouse
Ingest a wide range of clinical, financial, and administrative data, including core electronic health records (EHR) and affiliated EHRs. Additional data sources encompass lifestyle behaviors, home care, clinic visits, pharmacy records, laboratory results, biometrics, self-assessments, payment information, automated data transformations, corporate operations management or risk control, as well as numerous physiological metrics such as dental and vision health and sleep patterns. Continuously expand data sources to comprehensively monitor and manage individual health.

BClinical and Commercial Content, Driving Advanced Intelligent Decision-Making
Centralize the management of patients' clinical data, provide stratified risk prediction, selection of clinical protocols and interventions, while driving efficient clinical and business workflows. It enables non-programmers to author, test, and deploy clinical and business content.

COptimizing Electronic Medical Records to Help Physicians Focus on Core EMR Content
Gain a deeper understanding of electronic medical records and implement practical changes;
Avoid inefficient manual record-keeping or sifting through legacy documents;
Facilitate seamless collaboration between physicians and nursing staff;

DProvide specific application software to members of the medical service team
Identifi Care: Supporting Workflow Consultation
Identifi in Practice: Analytics and Workflow Tools to Help Physicians Navigate the Primary EHR
Identifi Implementation: Dashboard Suite Monitors Key Clinical, Financial, and Operational Performance Data
Identifi Health Plan: Managing Quality Documents, Predicting Risks
Identifi Analysis: Providing Customized Analysis and Reporting Tools

3. Medical Management and Implementation: Enhancing Clinical Execution Capabilities



A Improving the Health Status of Responsible Populations
The company provides proven solutions and tools to enhance clinical efficacy, including:

Clinical Protocol: The integration of evidence-based protocols and service models, combining clinical and social interventions to significantly improve patient health.
Professional Care Team: Remote and on-site care teams provide end-to-end support for the entire healthcare service system
Patient Engagement: Leveraging tools and methodologies to enhance patient relationships and facilitate more efficient interactions
Quality and Risk Interpretation: Procedures and tools can reveal risk probabilities, seamlessly integrating into physicians' workflows to form intervention tools.

BConsistency Transmission Network: Establishing and Centralizing Institutional Value Networks to Enhance Healthcare Value
The company participates in the design, construction, and maintenance of the value network:
High-Performance Networks: Developing Strategies to Deliver Maximum Clinical Economic Value and Optimal Service Experience for Patients
Value Compensation Mechanism: Establish incentive mechanisms to reward primary care physicians and specialists who improve clinical efficiency
Integrated Partnerships: Strengthening Collaborative Relationships Among Service Personnel, Staff, Specialists, and Primary Care Physicians

CFinancial and Administrative Management: A Scalable, Value-Based Management Framework
The company provides teams and tools to manage all operations at the operational level:
Leadership and Management: Experienced, passionate executives can lead and manage business operations.
Health Plan: An end-to-end health plan that tailors solutions based on the local advantages and influence of medical institutions, enabling hospitals to become trusted community health plan and insurance service providers in their regions.
Payer Risk: A mature value-based contracting strategy, providing teams of negotiators and actuaries, supported by technology-enabled infrastructure
Pharmacy Benefit Management: Integrating Pharmaceutical Care Services to Achieve Higher Clinical Value at Lower Cost
Reporting and Analysis: The analysis team provides reports and insights to identify areas for improvement in clinical, financial, and network domains.

DSystem Transformation: Driving Organizational Change Management from the Inside Out
Help physicians optimize their workflows by:
Organizational Design: Management structures can help build trust among stakeholders, including achieving a balance between key physicians and strategic decision-making.
Physician-Led Practice Transformation: Optimizing Workflows, Leadership Training, and Strengthening Performance Management to Enhance Physician-Community Communication
Change Management: Helping guide stakeholders within healthcare institutions with proven communication strategies, channels, and tactics

4 Market-Oriented Strategy



AEmployer Interest Advantage: Directly Serving Local Employers
Design a compelling network that encompasses employers within the local community;
Implement Protocols Aligned with Clinical Practice
Implementing Health Benefit Plans and Promoting the Formation of Health Consciousness

BTaxpayer Alliance: Building Sustainable Partnerships with Payers
Payers and physician groups collaborate to establish sustainable population health partnerships.
Establish a dedicated negotiation team to coordinate the relationship between payers and healthcare providers.

CValue Boundaries of Health Plans
Innovative Health Plan Products from Healthcare Institutions to Attract Members and Enhance Health Management Standards

IV. Flat and Agile Corporate Management and High-Intensity Work Pace



Unlike the top-down hierarchical structure of traditional enterprises,Evolent Health Advocates Flat Management. The company respects individuals with ideas, courage, and conviction, and values those who can translate ideas into action to genuinely solve problems. It advocates continuous self-reflection and transcendence, emphasizing the power of team striving. The company celebrates every victory, respects the value of labor, and fulfills its commitments.Furthermore, with healthcare institutions at the core, providing patients with optimal services is our highest motivation, as well as the company’s greatest honor and mission.

The company provides every employee with a Fitbit wristband. This device monitors daily physical activity and sleep patterns, demonstrating that the company has established a comprehensive health management system for its own employees first, in addition to providing population health management services to other medical institutions. Employees’ desks are paired with treadmills, and healthy snacks are also available.


Employees remarked that everyone here is intelligent. The dynamic, fast-paced work environment ensures continuous learning. Issues are resolved promptly, as colleagues are always willing to offer assistance. The workplace fosters an open culture where employees are empowered to change practices they find unsatisfactory or incorrect. Senior leadership is highly competent, dedicated, and knowledgeable.

However, precisely because the company is a rapidly growing and fast-evolving organization, employees are required to possess the ability to adapt flexibly.. Individuals who prefer a structured routine and repetitive tasks may find it difficult to adapt. Additionally, the company’s high-intensity work environment fails to ensure a healthy work-life balance.

V. Evolent Makes a Strong Market Debut, Buoyed by Robust Profitability Performance

On June 5, 2015, Evolent Health Holdings, Inc., an emerging company just four years old, went public on the New York Stock Exchange, raising $195 million and achieving a market valuation of $1 billion. Evolent Health Holdings, Inc. operates through its subsidiary, Evolent Health LLC.

The initial public offering (IPO) price of the Class A common stock was $17 per share, under the ticker symbol “EVH,” with a total of 11,500,000 shares sold. The holding company’s primary asset is its ownership of Class A common shares in Evolent Health, LLC. Following the offering, it holds 69.4% of the voting power, while other shareholders hold Class B common shares with 30.6% of the voting power. Additionally, the company granted the underwriters an over-allotment option to purchase an additional 1,725,000 shares of Class A common stock.

Furthermore, pursuant to the U.S. Jumpstart Our Business Startups (JOBS) Act, Evolent Health was designated as an “emerging growth company” in 2012, thereby streamlining the IPO process, reducing issuance costs, and alleviating information disclosure obligations.

Table.Evolent Health Income Statement

Fig.Evolent Health Revenue and Profit

Fig.Evolent Health Stock Performance (in USD)

VI. Business Cooperation Models and Competitive Advantage Analysis

In 2014, U.S. healthcare spending was projected to exceed $3 trillion, with an estimated $1 trillion considered unnecessary. Therefore, a fundamental shift toward value-based healthcare could save $1 trillion in expenditures. From 2013 to 2020, total spending increased from $2.1 trillion to approximately $3.2 trillion, during which the revenue share of healthcare service providers rose from 10% to 50%. Meanwhile, the market share of health insurance operations supported by medical institutions is expected to reach 15%.

The company projects that its future revenue will reach $10 billion. To this end, it has developed a unique partnership development model, ranging from providing Blueprint consulting services to partner companies and offering subsequent improvement plans, to establishing long-term partnerships. Specifically,Healthcare institutions will adhere to one of the following three cooperation models:

1Directly serving corporate employers: Evolent can assist in managing self-funded employers that establish healthcare security systems for their employees;

2Facing Insurance Payers: Providing comprehensive bundled payment medical risk solutions for third-party payers, primarily commercial insurance companies and the government.

3Self-Managed Health Plans: Launch health plans operated directly by healthcare institutions to control all medical insurance costs. Surplus revenues are retained by the healthcare institutions, which can also collaborate with multi-channel insurance systems, including commercial insurance and medical insurance.

In 2014, the company’s four largest partners—India Medical University, WakeMed Health & Hospitals, Piedmont WellStar Health Plan, and Premier Health Partners—generated significant revenue for the company, with transaction volumes accounting for 25%, 21%, 16%, and 14% of total revenue, respectively, collectively representing 76% of total revenue.

In March 2015, a total of 10 long-term partners were developed. The top five partners—WakeMed Health & Hospitals, Indiana University School of Medicine, Piedmont WellStar Health Plan, Premier Health Partners, and MedStar Health—accounted for 21%, 18%, 17%, 12%, and 10% of total revenue, respectively, collectively representing 78% of the total revenue in March 2015.

The company's competitive advantages can be summarized in the following six points:

1 The company is an industry-leading early innovator.

2 Possesses a self-built comprehensive technology platform, Identifi

3 Brand awareness centered on healthcare service providers is a key differentiator among industry competitors:
Evolent Health truly provides mature solutions to healthcare institutions, regardless of payers or non-clinical operations.
Therefore, it enables data sharing among multiple payers and healthcare providers. This is something that payer-led solutions cannot achieve.

4A collaboration-driven business model to establish long-term partnerships
Although business development expenditures accounted for 10% of the company’s total revenue as of the end of March 2015, this investment secured contractual partnerships with collaborating enterprises, with an average duration of six years.

5 Channel Development
The company’s business model begins with its role as a consulting firm, launching the Blueprint initiative to expand channel development. This approach not only enables healthcare institutions to clearly map out their development prospects but also facilitates the transformation of their economic structures. Furthermore, it helps foster strong relationships between the company and senior leadership at healthcare institutions. Consequently, a portion of the company’s revenue is derived from follow-on services generated by the Blueprint program.

6Outstanding Leadership Team
To build an industry-leading management team, the company has assembled a senior leadership team of 10 executives, with an average of 15 years of experience in the healthcare industry.

VII. Frank Williams has a profound understanding of the insurance role undertaken by medical institutions

Prior to joining Evolent Health, Frank served as CEO and Chairman of The Advisory Board Company, a global research, technology, and information services firm that supports 4,100 leading healthcare organizations and academic medical centers. During his tenure, the company completed its initial public offering (IPO) and achieved annual revenues of $450 million. It now employs more than 2,500 people and has a market capitalization exceeding $2 billion.



Frank previously served as Chairman of MedAmerica OnCall and Chairman of Vivra Orthopedics. A former consultant at Bain & Company, Frank grew up in California. He earned a Bachelor’s degree from the College of Letters and Science at the University of California, Berkeley, and an MBA from Harvard Business School.

After the IPO, Rock Health interviewed Williams and found that few people have as profound an understanding of healthcare service transformation as he does. Regarding the company’s successful public listing, Williams held the following view:“We have a deep understanding of our clients, having previously worked at The Advisory Board and engaged extensively with healthcare system administrators. This experience allows us to grasp their intentions,”“By exploring multiple solutions, they ultimately selected one that met their satisfaction and reached a consensus.”

Additionally,Evolent Health views talent as a strategic function rather than a managerial one, so the company invested early in expanding its senior team, bolstering its corporate think tank, and enhancing its business development capabilities.This is what will attract more talent to join in the future.

Williams considers it important to achieve early benefits; through long-term observation, he has drawn the following conclusion:If the company can generate early revenue, it will build confidence and greatly facilitate the fulfillment of its future commitments.

If companies truly wish to drive innovation in healthcare management and effectively manage patients with chronic conditions, they must reform physician incentive mechanisms, integrate their medical teams, and provide them with better tools. Only then can physicians become adept problem-solvers and devote two to three times more time to high-risk patients.

“As we move forward, we have also found that not every system requires its own health plan or healthcare insurance system.”It is not necessary to see provider-sponsored health insurance plans in every market.“If payers are unwilling to share risk with healthcare providers, then providers should launch their own health insurance plans to better collaborate with payers.”

VIII. Overview of Evolent Health Milestones

In December 2012, the Next-Generation Healthcare Initiative was proposed, recommending that hospitals and health systems contract directly with employers and allowing employers to establish ACO-like organizations within their communities; it also predicted that by 2018, one-fifth of healthcare systems would become insurance payers.

On August 14, 2013, it was named one of the Top 100 Best Places to Work in Healthcare for 2013 by Modern Healthcare;

On September 30, 2014, Evolent secured $100 million in investment from UPMC, TPG Health Plan Company, and The Advisory Board Company;

On January 13, 2014, Rock Health named CEO Williams to its Top 50 Internet Healthcare Entrepreneurs list;

On January 22, 2014, it was named by Forbes as one of America’s Most Promising Companies;

On December 10, 2014, it was ranked third among the Best Places to Work in China for 2015 by the Glassdoor Employees’ Choice Award.



Implications for Chinese Entrepreneurs

Reflecting on China’s economic development, the abrupt transition from a planned economy to a market economy, though rapid, has clearly yielded more benefits than drawbacks in the long run, significantly accelerating the development process. In this light, can China’s commercial health insurance continue to draw lessons from Western models by bypassing the currently immature commercial medical insurance sector and directly endowing healthcare institutions with insurance functionalities? This raises numerous issues, including how to shift healthcare expenditure from the state to social enterprises, as well as how hospitals can enhance their informatization levels to improve service efficiency and quality while reducing medical costs.

For domestic startups, the Evolent Health case offers the following insights:
1. By identifying entrepreneurial opportunities in line with shifts in national policies and guidelines, ventures that align with the broader trajectory of national development are poised to achieve more rapid and sustainable success. For instance, Evolent Health’s success stemmed from its alignment with U.S. strategic development goals and its adherence to the Affordable Care Act’s requirements and expectations for healthcare organizations.

2. By gaining deep insights into and understanding of the industry, innovative thinking is proposed. For instance, Evolent believes that hospitals and physicians are the primary providers of healthcare services; only when they achieve maximum profit value will they be motivated to improve the quality of care. Therefore, a new model integrating healthcare delivery with health insurance has been established.

3. Flat management in emerging companies enhances operational efficiency, unleashes the initiative of all employees, and maximizes their contributions to the enterprise;

4. For platform-based service companies, maintaining relationships with existing clients and establishing long-term, stable development are essential to ensuring a continuous stream of profits. Evolent Health serves as a typical example, where nearly 80% of total revenue is generated from existing clients, with some partnerships lasting up to six years. The CEO himself acknowledges that prioritizing the maintenance of these relationships takes precedence over acquiring new customers.

5. In the early stages, companies must be willing to make substantial investments to establish a high-level think tank; expanding the talent pool is critical during this initial phase.

6. Achieve profitability early to boost company-wide confidence, strengthen team cohesion, and enable the team to focus wholeheartedly on achieving corporate goals.

7 Evolent Health has been named a Best Company for several consecutive years. In addition to competitive salaries, its favorable work environment, corporate atmosphere, and positive culture empower employees to continuously improve themselves and grow alongside the company.