In another sign that the healthcare industry is focusing more and more on expanding private Medicare coverage, a high profile group of executives will launch a new startup that will offer Medicare Advantage products in early 2018.
Devoted Health has secured initial funding of $7 million to begin operations in Florida and West Virginia early next year. Like other Medicare Advantage insurers, Devoted will be reimbursed by the federal government to provide services as an alternative to traditional government-run Medicare.
Devoted is focused on improving the quality of patients’ care while also focusing on holding down costs by working closely with physicians to avoid unneeded procedures. The new company will be tied to physicians groups in the markets it enters and will also assign guides to beneficiaries to help them do a better job of helping them navigate their care and the services they receive.
The venture is being launched by Todd Park, who will be the executive chairman of Devoted. His previous experience included working in the White House and as chief technology officer of the Department of Health and Human Services during the Obama administration. Ed Park will be the CEO of Devoted and seed money funding partner Bob Kocher of Venrock will serve as Devoted's chief medical officer.
The launch comes at a time when large managed care entities such as UnitedHealth Group Inc., Humana Inc. and others view the Medicare Advantage insurance business as a growth industry in the years ahead. Statistics bear out the fact that aging baby boomers are increasingly selecting private plans as the come of age for Medicare eligibility. The large insurers already have millions of customers in the government-funded program, but will face increased competition from the likes of Devoted Health, as well as other startups such as Bright Health and Clover Health, which has grown exponentially and was valued at $1.2 billion in a recent round of funding.
In general, Medicare is also seen by insurers as much more stable than Affordable Care Act exchanges which were the focus of other startups in recent years. With the uncertainty surrounding repeal or replacement of the ACA, investors are moving toward a more stable investment profile, which Medicare Advantage startups offer.
