Health Plan CEOs, Financial Experts Talk About Challenges Facing Health Care Startups in AIS Newsletter

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For its Oct. 19, 2015, issue, Atlantic Information Services’ Health Plan Week interviewed leaders at health care startups and financial experts about why it is hard to launch new fully insured medical plans.

The health care industry overall is a hotbed of new start-up ventures, but health insurance remains practically untouched, according to Atlantic Information Services, Inc.’s (AIS) Health Plan Week (HPW). For its Oct. 19, 2015, issue, HPW interviewed leaders at two health care startups and financial experts to identify the challenges health care startups face.

One such challenge is changes imposed upon the industry by implementation of the Affordable Care Act (ACA). “There’s just a lot of risk on the ACA business that I think they weren’t ready to absorb and that’s why you’re starting to see some of these CO-OPs [Consumer Operated and Oriented Plans created by the ACA] go out of business and some of these start-ups struggle,” Steve Zaharuk, senior vice president at Moody’s Investors Service, tells HPW.

Portland, Ore.-based Zoom+ Health Plan, for example, one of the startups featured in the newsletter, reported premium revenues of $67,228 and hospital and medical claims of $58,209. But with $1.5 million in administrative expenses, the company reported total losses of approximately $1.6 million. The company aims to turn a profit within five years.

Another challenge facing startup health plans is “build[ing] that franchise, that brand awareness, that recognition,” Mark Rouck, senior director at Fitch Ratings, tells HPW. To that end, some of these newer companies cater to niche audiences. In addition to offering insurance, Zoom+ co-founder and CEO Dave Sanders tells HPW, “We think of ourselves as being a lifestyle or even ultimately a performance lifestyle brand...primarily organized around millennial individuals, catering to their needs.”

Ohio-based Beam, has found its niche in dental care. “In the dental industry,” says Beam co-founder and CEO Alex Frommeyer, “the number of people who don’t have insurance or dental benefits of any kind so that they can more cost-effectively access provider services is staggering.” Beam began offering dental insurance in July, and Frommeyer says membership, which is now in the thousands, is growing at “tens of percent” each week.

Sanders sees parallels between what’s happening in the insurance industry and what happened in the American entertainment industry. “It wasn’t that long ago [that] we had CBS, ABC and NBC, and you couldn’t imagine a world where those three companies weren’t essentially the primary suppliers of entertainment content, which was then beamed to U.S. TVs,” he says. “The analysts in that space and the investors in that space were very skeptical of any other approaches. And then suddenly, overnight, ABC, NBC and CBS are sort of bit players in the world of highly individualized, highly tailored channels and content. What we’re talking about is the same sort of movement in health care. But it’s hard to see that before it actually happens.”

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About Health Plan Week
Published since 1991, the weekly newsletter Health Plan Week provides timely, objective business, financial and regulatory news of the health insurance industry. Coverage includes new benefit designs and underwriting practices, new products and marketing strategies, mergers and alliances, financial performance and results, Medicare and Medicaid opportunities, disease management, and the flood of reform-driven regulatory initiatives including medical loss ratios, exchanges, ACOs and myriad benefit design changes that are mandated. Visit for more information.

About Atlantic Information Services
Atlantic Information Services, Inc. (AIS) is a publishing and information company that has been serving the health care industry for more than 25 years. It develops highly targeted news, data and strategic information for managers in hospitals, health plans, medical group practices, pharmaceutical companies and other health care organizations. AIS products include print and electronic newsletters, websites, looseleafs, books, strategic reports, databases, webinars and conferences. Learn more at

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Jill Brown, Executive Editor
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Atlantic Information Services, Inc.

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