By Tony Mecia, The Charlotte Ledger
To see the lines of cars weaving through parking lots of StarMed testing centers all over Charlotte, it might be tempting to think that the company running the show is drawing on a deep reservoir of healthcare experience.
In fact, it’s a relative newcomer, an unlikely overnight sensation that has successfully waded into the heavily regulated healthcare industry and become a household name, with more than a dozen testing centers in Mecklenburg County. It’s doing 40,000 COVID tests a week and employs nearly 2,000 people, up from just 100 two years ago.
StarMed’s voyage from obscurity to Charlotte COVID testing colossus comes from a combination of fortunate timing, acting on hunches and embracing a risk-taking startup mentality — much of it emanating from its fast-moving CEO, Michael Estramonte, a chiropractor who moved here from New York a little more than 20 years ago.
There have been rough patches along the way. His first medical clinic, in a converted Chinese restaurant off Freedom Drive in west Charlotte, was barely breaking even when COVID hit. As recently as a year ago, he had to take out a $1.5M loan to make payroll. And lately, he’s been feeling the pains of a growing business, with some customers complaining about long waits for test results.
In an interview Tuesday morning in his office off Tuckaseegee Road in west Charlotte, Estramonte marveled at the run his company has had, recalling a meeting with staff two years ago, as COVID was spreading in China.
“I remember saying, ‘If this comes over here, we need to find a way to be relevant to the community,” he said. “I had no idea at the time that it would wind up being what it became.”
A new venture’s rocky start: Estramonte, 46, went to college in Upstate New York, at SUNY-Oswego. He moved to Charlotte in 2000 to join the Keith Clinic of Fletcher Keith, a well-known chiropractor who started in Charlotte in 1960. Keith became Estramonte’s mentor, and Estramonte took over the Keith Clinics on Tuckaseegee and Central Avenue after Keith died in 2010, in addition to the one he owned in Sugar Creek.
The chiropractic business was successful, and Estramonte saw a need to expand into medicine in underserved areas. In 2018, he took some of the profits from the chiropractic office, spent $3M on upfitting an old Chinese restaurant and hired two doctors and three physician assistants to open a clinic offering primary and urgent care.
It was expensive, and his projections were off.
“I lost a lot of money in getting this up and going,” he said. “I remember saying to my [chief operating officer] a few times, ‘Maybe we should just get out of this and open up a bunch of Supercuts and manage those.’”
StarMed stuck with it, and by 2019, the medical clinic had a new director — Dr. Arin Piramzadian, or “Dr. P.” — and it was financially close to breaking even.
A gamble on testing: Still, it became clear to Estramonte that the company would need to look somewhere else to make money. In October 2019, he decided to open a lab sophisticated enough to run toxicology tests, instead of shipping them off to big testing companies like Labcorp or Quest Diagnostics. “It was a lot of STD testing,” he said, with a chuckle. “I was like, ‘If somebody is going to get paid for it, we might as well do it.’”
North Carolina approved the lab in January 2020. At the time, awareness of the coronavirus was starting to increase, though it was mostly isolated to China and, later, Italy. Estramonte needed to order equipment for his new lab and asked his staff what was needed for coronavirus testing, in case it came to the U.S. They ordered the needed equipment, from a company called Thermo Fisher Scientific.
“I had no idea if it was coming over here,” he said. “I had no idea if we could derive profit from testing. I just knew that, all right, let’s go and get it, and if it works out — I’ve done a lot of that type of stuff over the years. A lot of it fails.”
In hindsight, it was a smart move. The equipment arrived in May, and by then, everyone wanted one — but they were hard to get.
COVID testing wound up being financially beneficial for StarMed, which receives reimbursements from insurance companies and the government for tests that are free to patients. The amount of reimbursement varies, but Estramonte says it’s enough to cover StarMed’s costs — which are also ballooning as it quickly hires and trains staff. He said he didn’t want to discuss specifics of the company’s finances.
The company hit a financial rough patch about a year ago, Estramonte says. Insurance companies were slow to pay, and his company wasn’t billing them fast enough because it lacked workers. He took out a $1.5M loan to make payroll. He says it has since been paid off, after the anticipated payments arrived.
“I love the complexity and the urgency of stuff as much as I hate it,” he said. “I was told by an old business life coach, ‘The reason you put out fires is because usually you’re the one that creates them.’”
StarMed made another prophetic move as the Delta variant spread in the middle of last year. It ramped up hiring for an anticipated surge in testing. Its human resources department has increased in size from three people to 25. When Delta took off, followed by Omicron, StarMed had the infrastructure in place to handle increases in testing volume.
Guerrilla marketing: StarMed has also been breaking the norms of healthcare marketing, which in Charlotte typically consists of conservative approaches intended to be reassuring. StarMed, though, has a chatty and edgy Twitter account, and the company participated with ad agency BooneOakley in a risky marketing stunt in September: painting a black truck with a fictional funeral home name and the message “Don’t Get Vaccinated.” The fake funeral home’s website linked to StarMed — which reported a 22% increase in vaccine appointments the following week. It made national news. StarMed later said on Twitter: “We had to resuscitate our Marketing Director with one of our defibrillators and explain that this was all @oakleydavid and his team @booneoakley.”
Estramonte sounds clearly pained when talking about some of the criticism StarMed has received on social media, like recent frustration about delays in receiving testing results. He released a letter Monday saying the trouble was linked to a technology and communications breakdown with an outside lab the company uses for overflow testing. He says he wishes everyone could receive five-star service, but the company’s quick growth makes it hard. Maybe that’s inevitable when you go from a small business to a larger one. He says he’s unaccustomed to the spotlight, like the long profile Axios Charlotte published of him on Tuesday.
He says he’s looking forward to COVID settling down, and when it does, he says he envisions using some of the money to open more clinics in underserved areas.
As Estramonte talks, you can almost feel his mind moving forward to the next topic, the next tangent. Asked how his brain works, he says, “It’s obviously ADHD.” He said he held off taking medication for it until a couple years ago. “I thought I would lose my creativity and my imagination. If anything, it just got enhanced,” he said.
Matt Hanis, a Charlotte-based business of healthcare expert, says StarMed happened to be “in the right place at the right time.” He says it’s harder for large organizations, like the major hospital systems, to move quickly to change their workflows and information technology.
Estramonte says he works well with the local hospitals and the health department, and he’s happy to have found a niche.
“If StarMed’s role in a short period of time is to take the stress off the hospital systems, and we were able to figure that out in Mecklenburg County, that’s probably a service that a lot of other major cities in the country didn’t get,” he says. “That does feel good.”