Would it blow your mind if only five startup health plans interested in Medicare Advantage (MA) have collectively raised over $3.9 billion in private funding to-date? Well, readers, that is the reality. Now I know there are some skeptics out in the healthcare ecosystem, so I’m here to break down some of the investment thesis. Not going to necessarily defend, but explain some reasons why you should love and hate these investments. Let’s start with who raised these mind-boggling sums of money. The five startups are Oscar Health, Bright Health, Clover Health, Devoted Health, and Alignment Healthcare.
Oscar Health has raised $1.3 billion
Bright Health has raised $1.1 billion
Clover Health has raised $925 million
Devoted Health has raised $362 million
Alignment Healthcare has raised $240 million
I think it’s safe to say that the MA insurance market (also known as Medicare Part C) has captured the imagination of the venture capital and private equity community. The changing demographic trends of an aging baby boomer population, the increased selection of MA plans versus traditional Medicare fee-for-service (FFS), and the opportunity of technology-first MA startup plans to better reduce administrative fees (“Administrative Loss Ratio” or “ALR”) and control medical spend (“Medical Loss Ratio” or “MLR”) seems too good to pass up. If you were going to start a health plan, of all the lines of business you could be focused on, MA has highest profit margins, growing population, and better potential to impact patient spend and manage chronic diseases. It is certainly harder than writing the previous statement, but there are some real benefits versus the traditional commercial or Medicaid managed care.
Todd Park is known for being excited, but THIS TIME the co-Founder and Executive Chairman of Devoted Health is excited that it’s the 10th Anniversary of Health Datapalooza, a gathering and initiative he had a hand in creating when he served Barack Obama as the Chief Technology Officer of the United States. What else is energizing Todd? How about value-based payment finally taking hold and the opportunities that’s opening up for payment model innovation and that will allow the disruption of healthcare to achieve ‘escape velocity.’
Filmed at Health Datapalooza in Washington DC, March 2019.
Jessica DaMassa is the host of the WTF Health show & stars in Health in 2 Point 00 with Matthew Holt.
Get a glimpse of the future of healthcare by meeting the people who are going to change it. Find more WTF Health interviews here or check out www.wtf.health.
We missed our chance to do a Happy Hour Health in 2 Point 00 at Connected Health in Boston (but let’s be honest, those are usually not the most cogent pieces of information in health and technology). Join Jessica DaMassa as she gets my take on the conference starting with #S4PM’s event, where I met some incredible people, including Patty Brennan and Doug Lindsey, who spoke about their experiences with health care knowledge (deploying it and creating it!). Danny Sands and e-Patient Dave even had quite the musical performance there, singing about e-Patient blues. Susannah Fox, Don Berwick, Don Norman were at Connected Health 18, presenting their new initiative, L.A.U.N.C.H. I even interviewed Jesse Ehrenfeld, the chair elect of AMA, and his spoke to him about the digital health play book that the AMA just released. A company to take note of that wasn’t at #CHC is Devoted Health, who just raised $300m. Devoted is looking at building a better Medicare Advantage “payvider” for seniors. If you are interested in Guild Serendipity’s conference which empowers and engages female CEOs and Cofounders, come join us in San Francisco October 26-27, SMACK.health is sponsoring the women’s health houses – Matthew Holt