Devoted Health and the Medicare Advantage Market

By Kevin Schulman, Natalie Yu
2020 | Case No. SM334 | Length 27 pgs.

Devoted Health aimed to build the next-generation Medicare Advantage health insurance plan, taking advantage of tech solutions to ensure cost containment for the company’s bottom line— and a high-quality health care plan that treated members like family. The technology platform would be critical to coordinate the logistics of patient-centered care, identify and recruit the highest-quality providers, and keep a tight control on operating and administrative costs.

The case discusses the cost calculations and competitive landscape in the fast-moving Medicare Advantage market, where start-ups and big insurers were jostling to provide America’s seniors with health plan options beyond the basic Medicare coverage. This type of plan covered one-third of Medicare beneficiaries in 2019, and this figure was projected to grow to 42 percent by 2028. To generate profits, Medicare Advantage companies focused on high-touch patient care to keep patients healthy and out of the hospital. In Devoted’s operating model, high-tech efforts and predictive modeling would also be key to its successful expansion to new markets.

Learning Objective

This case is designed to help students explore a growing component of the health care insurance industry, by understanding the financial complexities of Medicare and Medicare Advantage plans. Students discuss the company’s efforts to develop a tech platform that can deliver a higher level of patient care and enhanced profit margins, as well as a competitive business model that could scale to other markets.
This material is available for download by current Stanford GSB students, faculty, and staff, as well as Stanford GSB alumni. For inquires, contact the Case Writing Office. Download