Can Cost Control Be Profitable for New-Model Insurers?

Runaway healthcare spending that amounts to 17.5% of the U.S. economy is inspiring some entrepreneurial insurers to launch new models aimed at bridging the gap between patients and health systems—instead of creating friction between those two interdependent parties, which some claim traditional insurers are doing. One, ZOOM+, is headed by a physician and owns its own neighborhood medical clinics. Another, Clover Health, raised $135 million in venture capital to build a company that sells only Medicare Advantage plans according to a new article in Modern Healthcare; so far, 16,000 members have enrolled. Clover founder Vivek Garipalli is quoted as saying that the new model is going to be more technology oriented than the “actuarial engine” of traditional insurers. At the heart of the movement is creating new, niche plans based on the premise that all parties concerned are dissatisfied with the existing insurance industry and the Affordable Care Act (also known as Obamacare). And many are putting their money into the belief that cost control can be profitable; the article reveals that startups raised more than $1.2 billion from venture capitalists in 2015. [To read more about ZOOM+’s innovative approach, read Alan A. Ayers, MBA, MAcc of Practice Velocity article, From ZoomCare to ZOOM+: What Can Urgent Care Learn? At https://www.jucm.com/from-zoomcare-to-zoom-what-can-urgent-care-learn/.]