A new breed of health insurers is taking a page out of UnitedHealth's book and providing care directly to patients, and it could reshape the US healthcare industry

• Health insurer upstarts have made care delivery a core part of their business strategies.
• Alignment, Bright, Clover, and Devoted all employ doctors and care for their directly.
• They're betting that doing so will help them lower costs and compete against industry giants.

A new breed of health insurers is betting that providing care directly to patients will help them compete against industry giants and grow their footprints across the country.

These young insurers, like Alignment Healthcare, Bright Health, Clover Health, and Devoted Health have made employing doctors and delivering healthcare a core part of their strategies.

In some ways, they're following a playbook etched out years before them by incumbents like UnitedHealth Group, which has worked for more than a decade to assemble a fleet of 56,000 doctors and counting by acquiring medical groups.

Humana, which deals in health plans for elderly people, has been buying and building out primary-care clinics for years. And Blue Cross Blue Shield insurers in Florida, Tennessee, and Texas have stood up dozens of retail clinics.

But while the big players have waded into providing care over time, the new-age insurers, which bank on using sophisticated technology to improve care and lower costs, have it in their DNA. Unlike the dominant insurers, they've largely steered clear of physical clinics, focusing instead on providing care virtually or in people's homes.

It's an approach that requires less capital, but still arms the upstarts with the tools needed give their members more ways to get care, and better control how much they spend on care.

"It gives us the reliability of making sure we can bend that cost curve everywhere we go without having to go into each market with a bunch of bricks and mortar," Alignment CEO John Kao said. Alignment employs about 150 clinicians that care for the sickest plan members virtually and at their homes.

Alignment and Devoted are seeing patients online and at home

Alignment, the California-based Medicare Advantage insurer with 83,000 members, uses its technology to find the sickest, most expensive plan members who have chronic illnesses and frequent the hospital.

Alignment's group of employed doctors, nurses, case managers, social workers, and behavioral health coaches care for 4,000 of these members, in partnership with their regular primary-care doctors. Being able to provide care itself is just more efficient, Kao said, and it helps save Alignment some money, which it can put back into better health benefits and attract more customers.

Waltham, Massachusetts-based Devoted, which had a little more than 20,000 Medicare Advantage members at the end of 2020, has its own medical group of employed doctors and other clinicians who provide virtual care to plan members at home.

Its services "wrap around and complement" the health care providers that Devoted partners with, so members get the best care at the right place and time, a spokesman for the company said in an email.

Clover is expanding its in-house home healthcare program

Meanwhile, insurer Clover Health also built up a home-healthcare program mostly run by employed healthcare providers.

The insurer, which had 66,300 Medicare Advantage members in March, uses claims data and medical records to look for people with multiple chronic illnesses, who are frail or home-bound, or visit the emergency department often. Its technology will then tell an eligible patient's primary-care doctor that they might benefit from home visits, which are conducted by Clover's internal care teams, Dr. Kumar Dharmarajan, head of Clover Home Care, told Insider.

Dharmarajan said the program increases access to care for older adults who don't leave the house. It also allows Clover to get a picture of non-medical factors that could lead to worse health, like disorganized medications or fall hazards like electrical cords on the floor. An office visit wouldn't reveal that kind of information.

In New Jersey alone, Clover expects to have between 3,000 and 3,500 Medicare Advantage members in its home care program by the end of this year, compared with just 200 patients in 2017, Dharmarajan said. It's set to expand further as Clover starts offering home care to traditional Medicare enrollees that it's managing through a federal program.

Bright is buying up medical practices

Most young insurers aren't building clinics, but Bright Health is the exception.

Its CEO Mike Mikan, a former UnitedHealth Group executive, is following his former employer's blueprint and buying up medical practices.

Bright, which provides health coverage to 623,000 individuals, families, and seniors, is tucking these acquisitions into its new care delivery business called NeueHealth. The business owns or manages care for 61 clinics, but it also works closely with outside provider groups and arms them with analytics and other tools to they can provide better care.

In both cases, the goal is for the insurer and provider to get on the same page and partner to improve patients' health and lower costs under a payment model where each side wins when it works.

That's different the old insurance strategy of restricting care, Mikan said.

"What we really want to promote is the healthcare system to move to a value-based model where you're really rewarding performance based on the quality of the care they provide, not just the quantity of care," he said. "Every consumer is better served when they're part of an aligned model."