Alphabet's health-care unit Verily is moving ahead with plans in the insurance sector with new hires and partnerships.
Three people familiar with the company's plans say Verily, the group formerly known as Google Life Sciences, has been in talks with insurers about jointly bidding for contracts that would involve taking on risk for hundreds of thousands of patients.
In 2016, it mulled jointly putting in a proposal with Alphabet-backed insurer Oscar Health to manage care for thousands of low-income Rhode Island residents on Medicaid, one of the sources said, but ultimately decided against it. Now, it is moving ahead with plans to enter into this market, which health insiders often refer to as "population health" or "care management."
The population health market is large and growing, but crowded. To enter this space, a vendor like Verily would put forward a proposal to a payor — like the government, an employer or a private insurance company — detailing how it can bring down costs. If a company like Verily can deliver on that, the payor would share some portion of the amount saved. If costs don't come down, it might make no money from that contract. (This is a simplification, and the details vary by contract.)
A classic intervention might involve analyzing health data to figure out which patients would benefit most from having a nurse visit them at home so they don't end up in the emergency room, or figuring out whether patients are filling their medication scripts after getting discharged from the hospital.
This opportunity represents about $20 billion to $25 billion in annual spending today with huge potential upside of up to $1 trillion as more insurers move to these kind of risk-based agreements, said Ari Gottlieb, a director at the research group PwC.
A Verily spokesperson declined to comment.