Devoted Health, a health care startup trying to carve out a dual role as Medicare Advantage (MA) plan and home-based provider, launched earlier this week with a bang.
The Waltham, Massachusetts-based company officially launched Tuesday by enrolling eligible MA members across eight counties in south and central Florida. In addition to launching, Devoted Health also announced the raising of $300 million during its series B funding round, bringing its total funding to at least $362 million since forming in March 2017.
The series B round was led by Menlo Park, California-based private venture capital firm Andreessen Horowitz, with additional investment coming from Premji Invest, Uprising and existing investors.
As part of its business model, Devoted Health is looking to serve as both health care payor and provider, CEO and co-founder Ed Park said. The startup is specifically eyeing home-based care services to simultaneously achieve lower costs and improved health outcomes.
Currently, those services include clinician house-calls for high-risk patients.
“We are on a mission to deliver to our members the kind of care that we all would want for our own family,” Park, who co-founded Devoted Health with his brother, Todd Park, said in a statement. “To do that, we have started from a clean sheet of paper, building a ‘payvidor’ — a combination of a ‘payor’ and ‘provider’ of health care services — that in addition to partnering with the most trusted doctors and hospitals, will be a provider of care services in the home designed to help keep our members healthy.”
Before starting Devoted Health, Ed Park previously served as Athenahealth (Nasdaq: ATHN) COO and chief technology officer. Devoted Health Executive Chairman Todd Park served as U.S. chief technology officer under the Obama administration and co-founded Athenahealth, as well as Castlight Health (NYSE: CSLT).
Devoted Health declined Home Health Care News’ requests for comment.
Next-generation MA plans
Devoted Health describes itself as a “next-generation” Medicare Advantage plan and says it has received all necessary approvals from Florida and the Centers for Medicare & Medicaid Services (CMS) to begin enrolling members in Sunshine State.
As an MA plan, Devoted Health will be responsible for the full cost of care for its members, giving the startup a serious incentive to keep them healthy. Former U.S. Senate Majority Leader and health care entrepreneur Bill Frist is among Devoted Health’s backers.
Besides his political background Frist is also the co-founder of Nashville-based Aspire Health, which was one of the country’s largest non-hospice, community palliative care providers. Major MA player Anthem, Inc. (NYSE: ANTM) acquired Aspire in June for an undisclosed amount.
Roughly one in three people with Medicare are enrolled in a Medicare Advantage plan. Along with consumers, home care agencies are also targeting MA plans, which in 2019 will be able to provide certain non-medical home-based care services as supplemental benefits for the first time.
Devoted Health may have raised a significant amount of funding in its early days, but the startup is not without competition in the next-gen MA market. Oscar Health, backed by Google parent company Alphabet Inc. (Nasdaq: GOOGL), is also hoping to make Medicare Advantage a big part of its business.
New York City-based Oscar Health announced in August that Alphabet Inc. planned to invest $375 million into company. Oscar Health also offers a 24-7 doctor call service for its members.
Devoted Health plans to use the series B funding to further develop its technology and expand its team. Its launch and funding announcements come as the Medicare open enrollment period is in full-swing, remaining open until Dec. 7, 2018.
Medicare plan coverage for 2019 begins Jan. 1 of next year.
“More than 10,000 Americans are turning 65 every day, and they are entering a health care system that is not just confusing and complicated, but also often cold and impersonal,” Vijay Pande, a partner at Andreessen Horowitz joining the board of directors of Devoted Health, said in a statement. “We believe that the Devoted Health team has the experience and expertise to drive truly meaningful and scalable change in how health care is financed and delivered — from payment models to the patient experience and the technology needed to make it happen.”
Written by Robert Holly