Taped on the wall of the break room of Orchid Health, a clinic in Oakridge, Oregon, is a handwritten thank-you letter that describes the progress of an elementary-school boy.

A behavioral health specialist at Orchid had treated the boy once a week for almost eight months. “He was disruptive in class,” says the clinic’s office manager, Jenny Dale. “I believe his father had passed away, and he was just acting out.”

Since then, his participation in class has drastically improved, according to the letter, though he still sometimes needs prompting to do schoolwork. And he had earned back the privilege of using the school’s public bathroom instead of the one in the office.

Grief is part of life, often managed with only a little help. But even a little help can be hard to come by in Oakridge. The town, population 3,200, is mountain-locked and 45 minutes from Eugene, the nearest city of any size. Without Orchid, there would have been no one in Oakridge to help the boy, Dale says. He and a parent would have had to make a half-day trek to Eugene once a week for months, missing work and school—and that’s assuming they had a car. The bus takes even longer. Orchid Health has made an enormous difference to the people of Oakridge since it opened in August 2014. Unlike the other doctor in town, the new clinic takes any and all Medicaid patients. “We will take you as long as you have one of the insurances that we’re currently accepting,” Dale says. “And if you don’t have insurance, we’ll help you find insurance.”

Orchid had about 1,000 patients on the rolls when Dale started working there in mid-2015, and it welcomes one to two new patients a day. The facility has tapped into a demand.

But the little clinic in the woods also owes its health to a savvy business plan put together by its founders, two Oregon business school graduates who are still in their mid-20s.

TWO GUYS AND A DREAM

Just three years ago, Oliver Alexander was a business student at the University of Oregon’s Lundquist Center for Entrepreneurship, weighing entrepreneurship against finance. Orion Falvey, his classmate, had just returned from an international development internship in Cambodia. “I never thought I’d get involved in health care,” Falvey admits.

But when they decided to pair up for the Oregon Social Business Challenge, they turned to Ronald Severson, their instructor in a social entrepreneurship class, for direction. “He was, like, ‘Go for something big if you’re going to do it,’” Alexander remembers. 

They went huge—attacking the rural health-care crisis.

“There’s a 30 percent chance you’re smoking while pregnant in Oakridge,” Alexander says. “The alcohol-induced death rate is 2.6 times the state average. There’s lots of substance abuse, lots of hypertension. The normal things that happen when people don’t exercise well, don’t eat well, and are in low-income situations—that’s what we deal with every day.”

After Alexander, 25, and Falvey, 24, took second place at the challenge, they continued to develop their concept and put it in front of medical and finance professionals. One advisor was UO assistant professor of finance Stephen McKeon, who was introduced to the Orchid concept at a startup-incubator event. Ultimately, he invested in the company. So did Lorne Bigley, a doctor and IT specialist for medical giant PeaceHealth.

“I believed that Oliver and Orion were exceptionally motivated and capable entrepreneurs,” McKeon says. “Everything I’ve observed since then has reinforced this assessment. I was also attracted by the business model. Not only does it make financial sense, but the expansion of rural health-care services genuinely improves quality of life in those communities, so it’s a great example of impact investing.”

ORCHID IN BLOOM

To open their first clinic. Alexander and Falvey raised more than $240,000, including $70,000 from Lane County’s business incentive program for equipment and a loan from the city of Oakridge to refurbish a long-vacant medical office.

Now, they’re expanding. They opened with one part-time doctor, a nurse, a nurse practitioner, and one mental-health therapist, and have since added two more mental-health therapists and a physician’s assistant. And their plan to establish a chain of Orchid clinics kicks off in August, when they expect to open their second clinic in Estacada, southeast of Portland.

Orchid Health hopes to do for Estacada what it’s done in Oakridge. In fact, state data shows more than 20 rural communities in Oregon with demand that supports the Orchid business model.

Orchid aims to meet that demand while staying profitable. A big part of their plan is state-of-the-art information technology. Electronic health records are not only more efficient, but they allow the team to plot and track preventative measures by, for example, tracking the percentage of patients who regularly use tobacco.

When Orchid opened, it tried to promote preventive care by selling monthly memberships with unlimited doctor visits. But the newly minted Affordable Care Act made the membership plan redundant. Their main funding source became Medicaid, the federal-state assistance program for people with low incomes. Alexander says Medicaid pays out more to rural health clinics than Medicare, the federal insurance program used mainly by the elderly and people with disabilities. Still, Orchid plans to start accepting more Medicare and private insurance patients by summer.

MAYBE IT WAS ALWAYS PERSONAL

The evolution of Orchid’s business model is crucial in helping it stay ahead of the unique problems faced by rural medical care providers. “Medicare payments to rural hospitals and physicians are dramatically less than those to their urban counterparts for equivalent services,” notes the National Rural Health Association on its website. “This correlates closely with the fact that more than 470 rural hospitals have closed in the past 25 years.”

The transition from student project to successful business also came with its own learning curve. “We had a really good business model going into it,” Alexander says. “But we had no HR experience. We had no management experience. We had no experience training people.”

On the other hand, he says, recruiting is one of their core competencies. It has to be, for them to attract medical professionals. The pay is competitive with larger markets, he says, and unlike many clinics that expect their providers to see 20 to 30 patients per day, they set a limit of 14 for each provider.

This entrepreneurial challenge is perhaps a bit personal for them, too. Falvey grew up in the isolated panhandle town of Haines, Alaska (population: about 2,500). When his teenage sister found a lump in her chest, her small-town doctors weren’t able to properly diagnose it for months. “They actually thought it was a rib out of place. We went to a chiropractor who pushed on it, thinking it was a rib.”

The lump was not a rib. It was a tumor. She had Hodgkin’s lymphoma. Today, she’s cancer-free and working as an emergency room nurse in a small hospital in Juneau. “It’s been great to bounce ideas off each other,” Falvey says.

With his childhood as a backdrop, Falvey is beginning to envision health-care concepts tailored to the culture of small towns. He imagines developing rural clinics that allow patients to take their own blood pressure and access other resources without booking a formal visit.

“In rural communities, there’s this stigma on going in to see a health-care provider,” he says. “People are not going to see a doctor until it’s really bad. That’s something we’re really trying to work on changing.”

—By John Strieder

John Strieder, a writer and video producer, is a master’s degree student in multimedia journalism.