Bright Health Group’s former health insurance customers will drive growth this year, CEO Mike Mikan said.
The company grew too fast and its expenses mounted, he said. To keep the insurtech afloat, Bright Health eliminated its exchanges business last year and to focus on selling Medicare Advantage plans in California and operating primary care clinics in Florida and Texas.
Bright Health plans to incur a pre-tax charge of up to $90 million to wind down its exchanges operation and spend approximately $72 million to restructure, according to a filing submitted to the Securities and Exchange Commission Tuesday. The company plans to complete these operational changes by the end of the year. Mikan reiterated his goal of profitability on an adjusted earnings before interest, taxes and depreciation basis in 2023.
“We’re mindful of the challenges we’ve had in our business,” Mikan said.
Bright Health operates 75 primary care clinics under its NeueHealth brand, and last year treated 500,000 patients, including Bright Health policyholders, those with other insurance, and Medicare and Medicaid enrollees. This year, NeueHealth expects to serve 235,000 patients, 70% of whom will be former Bright Health insurance members, Mikan said.
All of these clinics operate under delegated risk arrangements with other payers, so the company’s familiarity with managing patient care will help drive profitability, Mikan said. “We have become a leader in value-driven care in the commercial market,” he said.
In its insurance business, Bright Health priced for profitability and expected the number of signs up during open enrollment this year to be “flat-to-net-slightly-down as we terminated some relationships,” Mikan said. “To our pleasant surprise, we ended up in the positive side of that, so we’re favorable net new adds,” he said.
Because Bright Health specializes in covering those who are dually eligible for Medicare and Medicaid, it does not rely as heavily as other Medicare Advantage carriers on its performance during open enrollment, Mikan said. People who are Medicaid-eligible can enroll in Medicare special needs plans at any time.
The insurer aims to sign up 125,000 Medicare Advantage members by the end of the year, which would translate into a 12% revenue increase. The company also aims to end the year with 65,000 members enrolled in its Medicare Accountable Care Organization REACH program.