Specialist
Former executive at Alignment Healthcare Inc
Agenda
- Key trends and developments in the MA (Medicare Advantage) insurtech health plan market, particularly relative to Alignment Healthcare (NASDAQ: ALHC)
- Alignment’s membership enrollment growth strategy and prospects for cohort performance
- Competitive positioning of major players surrounding Alignment in the California MA market
- Patient engagement efforts to better manage cost of care
- Feasibility of Alignment’s 2024 projected profitability timeline
Questions
1.
What are some of the most important trends and developments you’ve been following in the MA [Medicare Advantage] start-up health plan market over the past 9-12 months or so that might better inform our Interview today on Alignment?
2.
How saturated is the MA health plan market Alignment is playing in? Clearly, there was a lot of greenfield opportunity for start-up health plans, but how has this evolved over the past couple of years? Feel free to delineate by select markets where relevant.
3.
Alignment has pursued a prudent expansion strategy, starting out in California and establishing its brand and a plan for patient engagement and cost-of-care management before expanding into North Carolina. Do you think some of the macro cost pressures in the space and increasing saturation will force the company to change course and expand more rapidly? Why or why not?
4.
Why do you believe Alignment’s Florida and Texas cohorts have not performed up to expectations thus far? How much of that would you attribute to secular trends vs company execution?
5.
In which geographies do you see more white space for growth for Alignment?
6.
Do you believe five stars is attainable in California for Alignment?
7.
How is Alignment viewed by MA patients at the local level? We know the company’s CMS [Centers for Medicare & Medicaid Services] star ratings are fairly lofty, even in California, but how would you juxtapose those quality differentiators with the larger scale and brand recognitions of Aetna, United, Humana, etc, when trying to assess the company’s ability to continue to drive new membership growth against those large payers?
8.
How do you assess Alignment’s current benefit mix? How competitive is this with some of the major MA health plans given the existing price points?
9.
How flexible or nimble can Alignment be on the benefit-pricing mix year-to-year, based on what shifts are coming from the large health plans?
10.
How realistic are Alignment’s 22-23% raised membership growth projections by the end of 2023?
11.
Could you discuss the extended impacts of the 2024 final CMS Medicare Advantage rate notice? How should we be thinking about a trickle-down impact on Alignment’s financial performance?
12.
What are your thoughts on some of the newer regulatory restrictions around third-party marketing and even use of e-brokers? To what extent does this level the playing field for Alignment? What other membership retention benefits might the company realise?
13.
What do you believe are the key drivers of plan attrition at Alignment?
14.
What do you think Alignment has learned in North Carolina that it could potentially bring to Texas or perhaps Florida cohorts to reach potential quality parity there?
15.
How much does Alignment stand to benefit from the change in methodology around CMS stars, which reduces the weight in CAHPS [Consumer Assessment of Healthcare Providers and Systems] for 2026 stars and shifts more weight to HEDIS [Healthcare Effectiveness Data and Information Set] scores? I understand HEDIS is an area of strength for Alignment.
16.
What differentiates Alignment from other insurtech start-ups such as Oscar, Bright and Clover Health? I appreciate the company has taken a more disciplined approach to market expansion, but could you expound on how it looks to engage with populations to manage its cohort’s care or utilisation and overall healthcare costs?
17.
Could you discuss some of the training and engagement initiatives Alignment is looking to implement with providers and clinicians in select markets?
18.
Could you expound on the core structural challenges to increasing penetration and utilisation of the Ava platform?
19.
Is the apprehensiveness about utilising the Ava because it’s not superior or differentiated in terms of the ROI, or because customers are using another platform and it’s burdensome to switch?
20.
Of the providers who don’t have a plurality or a significant portion of Alignment members, how large of a chunk is that of the company’s plan base? What’s the approximate split of providers who have a significant portion of Alignment numbers and thus are more motivated to use the Ava vs the converse?
21.
Alignment expects to gain around 1.5-4.5% revenue tailwind from training and engagement programmes. Do you see that as realistic? How effective could these engagement initiatives ultimately be at scale?
22.
What are the upfront costs to going into a new market and scaling Alignment’s business? Perhaps we can use North Carolina as an example.
23.
What’s Alignment’s strategy, from a risk adjustment perspective, to know the risk scores on the population it’s working with?
24.
What are Alignment’s key outcome KPIs, and how are they weighted relatively?
25.
What are some of the keys to engaging with lower-income or harder-to-reach populations where a significant portion of the MLR [medical loss ratio] is driven and accurate cost-of-care or risk adjustment capabilities are typically harder to achieve?
26.
What kind of mix do you think Alignment is ultimately trying to strike across MA, dual-eligible – to the extent it’s exposed – people on the ACA [Affordable Care Act] exchanges, etc?
27.
Alignment is still spending around USD 106 to achieve USD 100 in revenues. What do you believe is driving that mismatch? Is that just a case of getting up to scale or is it still losing significant profits on some of those populations? If so, which ones?
28.
We’ve talked about a 3-5-year break-even point to profitability in mature markets. How dos MLR trend on older cohorts once Alignment gets fairly embedded in a market and population health management capabilities start to yield results?
29.
Where do you think MLR might ultimately plateau at optimisation down the road for Alignment, either in California or in aggregate?
30.
How durable do you think higher outpatient care utilisation will be, particularly in orthopaedics? Alignment noted this has been a prolonged trend since Q2 2022. What kind of headwind could ortho care costs be for the company if they persist?
31.
What do you think is driving the higher utilisation in ortho?
32.
What do you think Alignment’s appetite will be to take on more risk capitation going forwards, perhaps embracing value-based arrangements? It could be a longer-term initiative, but what are your thoughts on the company’s ability to embrace outcomes-based arrangements when we think about the macro shift from fee-for-service?
33.
Alignment expressed comfort with achieving its targeted 150bps of operating income improvement in 2023 and on its Q1 2023 earnings call, and actually raised to 190bps for the year. How does the company get to that metric, in your view, and where do the glaring cost reduction opportunities come from?
34.
Could you give us some insight on Alignment’s upper management team, including CEO John Kao and CFO Tom Freeman? What is management’s leadership style and how confident are you in its ability to bring the company to profitability?
35.
Is there anything else around Alignment that you’d like to highlight or reiterate?
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