Former UnitedHealth executive to launch new health plan

Bright Health received $80 million in venture capital and plans to start selling plans to consumers in 2017

April 7, 2016 at 3:39PM
Bright Health co-founders, from left to right: Bob Sheehy, CEO; Tom Valdivia, Chief Medical Officer; and Kyle Rolfing, President (Photo courtesy of Bright Health)
Bright Health co-founders, from left to right: Bob Sheehy, CEO; Tom Valdivia, chief medical officer; and Kyle Rolfing, president (The Minnesota Star Tribune)

With a fresh infusion of $80 million in venture capital funding, a Minneapolis start-up is preparing to launch a health insurance plan it says will make life simpler for consumers and be a more effective partner for hospitals and clinics.

"There's a better way to better health," said Bob Sheehy, a retired UnitedHealthcare CEO and one of three health care heavy hitters behind Bright Health.

The upstart health plan aims to start selling policies directly to consumers who don't get coverage at work in 2017, mostly through state health care exchanges and independent brokers. It plans to offer Medicare Advantage plans for those 65 and older starting in 2018.

Bright Health will create exclusive partnerships with a leading health care system in each market, providing billing and claims processing as well as mobile technology to help patients with wellness plans and to more easily communicate with their doctors and Bright Health.

Such narrow alignments with providers can give consumers fewer choices but, in theory, helps providers better monitor their patient's health by being able to see if they've filled prescriptions or wound up in the emergency room after a visit to the family doctor.

"Having a health plan structure with a single delivery system is a great way to evaluate and improve and coordinate care," Sheehy said. "If you don't have a group of people you're accountable for, it's hard to know if you're making a difference."

Bright Health is jumping into a health insurance marketplace that is becoming both more cost-conscious and consumer-centric as a result of the Affordable Care Act. It is more common for providers and insurers to team up to try to keep patients healthier and costs down. Tuesday's announcement that Fairview Health System will bring the UCare health plan under its corporate umbrella is the latest example locally.

"We're seeing new collaborations between health plans and providers to design and offer different types of coverage options that were not available in the individual market before," said Clare Krusing, a spokeswoman with America's Health Insurance Plans.

Bright Health is among a host of new players hoping to find ways to make the health care system more effective, she said, including Oscar Health Insurance, a $1.5 billion New York-based start-up that launched last year.

"When the exchange marketplaces started in 2014, it was the start of a consumer-driven market, where consumers were making choices about their coverage, the price and cost they would pay each month — whether premiums or deductibles," she said.

Bright Health will offer consumers a range of options, from high-deductible plans with low premiums to low deductibles and higher cost-sharing. It will work with providers to offer such things as bundled payments, in which something like knee surgery is assigned a single cost that covers surgery and all the other doctors visits and physical therapy.

Based in the North Loop area of downtown Minneapolis, the company is in the process of hiring 25 full-time employees. It expects to have close to 50 by the end of the year, and plans to be selling insurance policies in three to five markets in the next several years. It expects to announce its first market in the next three months.

Sheehy retired as chief executive of Minnetonka-based UnitedHealthcare, the nation's largest insurance company, in 2009. After working in the VC and private equity world for 13 years helping entrepreneurs, he decided to give it a go himself.

Sheehy is teaming up with Kyle Rolfing, a founder and leader of Definity Health, a benefits administrator that UnitedHealth Group purchased for $300 million in 2004.

Dr. Tom Valdivia, another Definity executive who also worked in health informatics at UnitedHealth's IT division now known as Optum, rounds out the leadership team and will be Bright Health's chief medical officer.

The firm received the bulk of its funding from Bessemer Venture Partners and New Enterprise Associates, along with Flare Capital Partners, which provided an early round of seed money.

Mohamad Makhzoumi, a partner at New Enterprise said in a statement that Bright's Health model "gets everyone to work together instead of against the other." Makhzoumi said it had potential to "drive down costs, improve clinical outcomes, improve satisfaction for members and providers in an industry screaming for help."

Jackie Crosby • 612-673-7335

about the writer

about the writer

Jackie Crosby

Reporter

Jackie Crosby is a general assignment business reporter who also writes about workplace issues and aging. She has also covered health care, city government and sports. 

See More

More from Business

card image

President-elect Donald Trump has selected Chris Wright, a campaign donor and fossil fuel executive, to serve as energy secretary in his upcoming, second administration.

card image