Alignment Health posted a net loss of $37.3 million in the first quarter, but, in the wild world of insurtechs, that counts as a win, CEO John Kao told Fierce Healthcare.
Alignment’s total revenue compared to the first quarter of last year rose 27.1% to $439.2 million, while membership increased 16.5% to 109,700, according to the company's earnings report released late Thursday.
Kao said he expects that Alignment Health will break even next year and turn a profit in 2025. He said the company spent significant amounts of money bringing its Medicare Advantage plans to markets in Nevada, Arizona, North Carolina, Texas and Florida.
“I think we did great,” Kao said.
Alignment is the most stable player in a volatile world, where competitors Oscar Health and Clover Health posted losses of about $226 million and $84 million, respectively, in the fourth quarter of 2022, and Bright Health teeters on the brink of bankruptcy.
Kao said he is banking on Alignment's highly personalized approach for members who have multiple chronic conditions.
“We’re taking care of the people that need the care the most,” Kao said. “We can identify that 20% of the really polychronic, the frail, the vulnerable people who are really sick and we reach out to them.”
Alignment's team builds relationships with other stakeholders that enable much of the care to be offered in the home, Kao said. Through this approach, the insurer is "able to control 80% to 90% of the spend in healthcare that allows us to drive down the overall costs.”
Kao said that he leads by example, often fielding calls from beneficiaries directly.
“Literally this past weekend I spoke to three members,” Kao said.
Most beneficiaries that reach him do so through the company’s 800 number, although Kao said that has given out his personal cell phone number, as well. In one case, Kao said that he made sure that one member received a $50 credit on the plan’s flex card, while another complained because the transportation vendor Alignment uses didn’t show up. Kao made sure that transportation was provided.
“When I talk to them, first of all they’re surprised it’s really me,” Kao said.
And the calls aren’t always complaints, he said. One came from a woman who wanted to thank Kao for connecting her to a pal through Papa, a company that deploys college students to visit with seniors, provide light housework and assist with transportation to appointments.
The woman was thankful that she was sent someone who speaks Korean, her native language, Kao said.
Alignment's concierge approach is what Kao credits for keeping the insurtech competitive in a market with giant legacy companies like Humana and UnitedHealth.
Kao said that he sat on a panel at the recent Milken Institute Global Conference in which he likened Alignment Health to Netflix.
“We’re direct to consumer,” Kao said. “That’s the reason we do Medicare Advantage. There’s no employer in the middle. It’s a subscription kind of revenue. And a lot of the benefits like grocery benefits, of walking their dogs for them; these benefits address people’s mental health.”