Behind Bright Health’s Dive into Primary Care
Minneapolis-based Bright Health Group has been a darling of the local startup community for years. Hailed as Minnesota’s first “unicorn” startup—a company whose valuation has surpassed $1 billion—Bright Health built its own health plan from the ground up. The company’s basic thesis is simple: Keep costs down by limiting the number of providers covered by its plans.
Now, Bright, which went public this past June, is testing out another way to rein in costs by opening its own network of primary care clinics. Late last year, the company announced plans to open 25 of its own clinics across three states. The goal, the company said at the time, is to operate more than 70 of its own primary care clinics through its NeueHealth care delivery division.
If that sounds familiar, that’s probably because plenty of traditional health insurance companies have done the same thing. Minnetonka-based UnitedHealth Group, for instance, runs its own network of primary care clinics through its Optum subsidiary. The move isn’t entirely surprising when you consider Bright Health’s pedigree: Co-founder Bob Sheehy previously worked as CEO of United Healthcare.
“This is not anything new,” says Stephen Parente, a professor at the University of Minnesota Carlson School of Management who specializes in health insurance and health economics. “The whole notion of insurers being together with a clinic goes back to group health models in the 1920s and ’30s. Essentially, what Bright is doing is a 21st century version of something already in existence.”
Theoretically, Bright Health also has 21st century tools to rein in costs. “We now have electronic medical records,” Parente notes. “We now have advanced analytics to try to find people who might have more advanced chronic conditions and manage them better, more actively. It’s taking a lot of tools that weren’t available 50 years ago, marrying them together, and selling them as a product.”
Health industry experts tend to agree that better primary care is one of the best ways to reduce overall spending. “A lot of health care spending initiates with primary care, and clearly, downstream spending relating to specialty treatments and hospitalizations are also linked to how effective primary care is,” says Jean Abraham, a professor at the University of Minnesota’s school of public health. “Insurers have a vested interest in having good primary care access for their enrollees.”
Bright Health’s play for the primary care business also fits into the national trend of health care integration. While insurers like Bright’s plan to buy or open their own clinics, some providers are looking to stand up their own health plans. “We are very much in a period of time where we are seeing vertical integration between health care delivery and health care financing organizations,” Abraham said.
Whether any of that will translate into reduced premiums for patients, of course, remains to be seen. Bright Health declined requests for comment on this article.
Allan Baumgarten, a Minneapolis-based independent health care industry analyst, noted that integration isn’t always in a patient’s best interest.
While he hasn’t studied the particular trend of insurer-owned clinics, he’s researched health care integration from the perspective of providers who have launched their own health plans. “The research to date shows that [cost reductions] typically just drop to the bottom line of a hospital system and don’t come back to employers or individuals who are paying premiums.”
“If you are reducing costs,” Baumgarten asks, “who benefits from it?”
Insurance Startups on the Rise
In the town that gave rise to one of the largest health insurance companies in the world, it seems almost natural that it’s also home to a bustling insurance startup scene. UnitedHealth Group, headquartered in Minnetonka, has seen its executives leave to start plenty of their own ventures. That includes Bob Sheehy, who co-founded Bright Health. Here’s a sampling of insurance startups of note in the Twin Cities. —Dan Niepow
Specialty: Health insurance, primary care
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This article appeared in the Spring 2022 issue of StartMN.