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.
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