Still, it's not easy to find profits, because so much of the money from the government goes directly into providing coverage, which can be very costly. There are ancillary businesses that insurers can eventually create, like a network of primary care clinics.
"The market is huge and disruptive models can do well," said Andy Slavitt, former acting administrator of the Centers for Medicare and Medicaid Services. Slavitt, who recently started a venture firm, said investors have to be prepared to write big checks, because "it does take significant risk-based capital."
Another benefit to emerging companies in the space is that politicians across the aisle approve of it. Republicans like that private plans can offer new types of benefits that aren't limited by government restraints, and Democrats support it because it provides another way to provide seniors with affordable care.
Investors also see a role for technology. As more seniors are opting to age at home, there are new products being developed for remote patient monitoring that can help keep people out of the hospital, where costs are the highest. And there are innovative ways to use data. Devoted hired DJ Patil, the former U.S. chief data scientist and an ex-LinkedIn technologist, to figure out who's most likely to get sick in its population using predictive analytics, so care teams know where to focus their attention.
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