Accolade, Inc., Private equity origins, Comcast as first client, Hiring of chief technology officer: 2013, An inflection point

Accolade, Inc., based in Plymouth Meeting, Pennsylvania, is a provider of personalized health and benefit plans, with a mission to improve patient outcomes while lowering costs of health care for employers and health plans and their members. Accolade's integrated digital health solutions combines human qualities with technology, providing patients with individual caseworkers (Accolade Health Assistants) and nurses and access to clinical experts and telemedicine options, as well as to apps for claims, provider searches, and other functions. Supporting the program is the Maya (My Accolade) Intelligence Engine, which uses data to help guide individuals in their health care decision-making, including whether to seek a second opinion about a possible surgical procedure. The Accolade Online portal serves as members' point of entry to the system, supported further by Accolade Mobile, which provides live secure messaging with Accolade personnel and access to Accolade apps. The company also provides clients with real-time reports on member engagement and usage of benefits. Accolade generates income by sharing in the cost savings of its clients. Accolade maintains a dual headquarters in Seattle, as well as offices in Scottsdale, Arizona, and Prague, Czech Republic.

PRIVATE EQUITY ORIGINS

Spann accepted Cline's offer, left Accenture, and in 2007 cofounded Accolade with Cline. The start-up company established its headquarters in Plymouth Meeting, which was close to Spann's home. In February of that year, Accolade conducted a series A venture-capital funding round, raising $20 million from Accretive. Over the next year, Spann hired a team and developed a product. He then faced the challenge of persuading some organization to take a chance on the Accolade concept.

COMCAST AS FIRST CLIENT

In 2009 Accolade signed its first client, the Philadelphia-based Comcast Corporation, after Spann essentially cold-called the cable television giant and pitched a way to help employees better engage with the health system. “I had never seen something like this before,” Comcast Executive Vice President for Human Resources Bill Strahan told John George for a November 9, 2012, article in the Philadelphia Business Journal. “We decided to take the risk of being the first client for something that sounded like a good idea.”

A pilot program was launched with 15,000 Comcast employees in the Northeast. Because it was well received, the program was extended to half the company and eventually all of Comcast's workforce. The key to Accolade's success was its ability to save Comcast money and generate fees on a portion of that amount. The relationship began well, with Comcast saving money during the first three months. The following quarter, the money that had been saved was lost, but that performance proved to be an aberration. Comcast returned to saving money in the third quarter and subsequent periods. The company actually increased spending on prescriptions, primary care, and preventive care. “Where we've saved money is on people not being re-admitted to the hospital,” Strahan explained to George. “That's the magic of it. The health assistants help people get where they need to go for the right treatment the first time, and work to make sure they don't have to go back again.”

With its Comcast success serving as a calling card, Accolade signed other major companies, including home-improvement retail chain Lowe's Companies, Inc., and medical device manufacturer Medtronic, Inc. To support growth, Accolade secured $4 million in debt financing in January 2010. In June of that year, the company completed a series B funding round. Led by Accretive, it raised nearly $17 million. Also participating was Comcast Ventures, the Comcast investment arm, and Oak Hill Capital Partners, a private equity firm based in Stamford, Connecticut.

In 2011 Comcast acquired NBCUniversal and Accolade added those employees and their dependents to its system. As a result, Comcast now accounted for about 250,000 Accolade members. To keep pace, Accolade accelerated its hiring, more than doubling the number of employees in 2011 to over 150. Revenues increased to $47.4 million in 2012, and by the following fall, Accolade employed nearly 500 people. Not to be discounted in the success of the company was the passage and implementation of the 2010 Patient Protection and Affordable Care Act that prompted health care organizations to become more user-friendly to consumers.

HIRING OF CHIEF TECHNOLOGY OFFICER: 2013

Accolade also boosted its investment in technology to drive innovation and help increase the interaction between members and Accolade Health Assistants. In 2013 Accolade hired its first chief technology officer, James Snook. He was a 20-year veteran at Starbucks, where he spearheaded the development of mobile and digital capabilities to increase customer loyalty and engagement. Previously, Snook had served as a systems consultant for several major corporations, including Boeing, General Electric, Microsoft, and US Bank.

An undesignated funding round raised $2.8 million in May 2014. That fall, Accolade launched a member engagement initiative with Independence Blue Cross, the leading health insurance provider in southeastern Pennsylvania. The pilot program included 40,000 enrollees in 40 employer health insurance plans. Over the next several months, almost half of those people had been engaged by the program, which was well received by users.

By 2015 Accolade's annual revenues exceeded $60 million and the number of employees approached 600. In July of that year a subsidiary of Independence Health Group, the parent company of the insurer, participated in a $22.5 million series E funding round for Accolade that also included McKesson Ventures, the venture-capital arm of pharmaceutical and medical supplies company McKesson Corporation. The proceeds of the new funding round were meant to help strengthen Accolade's technology and analytics capabilities.

AN INFLECTION POINT

Spann now believed that the company had reached an “inflection point” and that someone with a technology background would be better suited to leading Accolade in the next stage of its development. “We needed to become much more of a technology company without losing our personal touch,” he told George in the Philadelphia Business Journal for a November 6, 2015, article. “I wanted a great technology executive and somebody who understood our culture and mission.” He found the kind of person he was seeking in Rajeev Singh. The two men were brought together by a mutual friend. In 1993 Singh had cofounded Concur, a Seattle-based travel and expense management company that became one of the world's largest software-as-a-service companies. In November 2015 Singh took over as Accolade's CEO. From Concur he brought Michael Hilton to serve as chief product officer and Rob Cavanaugh as president of field operations. Spann, in the meantime, assumed the role of chief operating officer and served as vice chairman.

To accommodate the new hires and serve as its dual headquarters, Accolade opened an office in Seattle in the spring of 2016. As part of staffing the new operation, Singh added seven people to the leadership team, including five former Concur employees, as well as one individual each from Microsoft and Expedia. They assumed positions in information technology, product development, strategic sales, marketing, and operations.

To fuel further expansion, Accolade continued its series E funding round, which in August raised an additional $71.1 million. The private stock placement was led by the venture-capital firm Andreessen Horowitz, based in Menlo Park, California. Also participating was Madrona Venture Group, a Seattle venture-capital firm. The proceeds were earmarked for a major expansion of Accolade's workforce, especially in sales and marketing, and increased investments in research and development.

Although many of the new employees worked in Seattle, Accolade did not forget its suburban Philadelphia headquarters, which had increased in size on a regular basis. In March 2017 the company revealed plans to expand the facility and create 250 new full-time jobs. The project received a package of grants and job creation tax credits from the state government.

INTRODUCTION OF MAYA: 2017

Accolade added to its capabilities in March 2017 through an alliance with Teladoc, Inc., a Texas telemedicine company that allowed patients to connect to primary care physicians and other doctors online. Three months later, in June 2017, Accolade introduced its most significant upgrade since its founding, the Maya Intelligence Engine. It used demographics and health care history to help determine what kind of assistance a member might need. Young and healthy members, for example, would be steered toward resources to help them maintain that status, while someone with a chronic condition would be introduced to the platform that triggered greater interaction with that member's health assistant. At the same time, Accolade released a mobile app that allowed members to better communicate with their health assistant and to share documents.

PRINCIPAL COMPETITORS

Castlight; ClearCost Health; Compass Professional Health Services; Health Advocate Inc.