Alignment Health CEO offers look at its medical benefits ratio strategy

Medicare Advantage plan Alignment Healthcare is targeting significant improvements to its medical benefits ratio heading into 2024, and the company's top brass offered investors a look at its strategy.

CEO John Kao said on the company's earnings call last week that the insurer is "laser focused" on steps to improve its member mix next year, which is critical to reach its long-term MBR goals. 

"I'd like to emphasize that we feel confident in our ability to drive our MBR lower in the second half and achieve our adjusted gross profit guidance for the full year," Kao said on the call.

The company has seen success so far in its Care Anywhere program, which offers members in eligible plans coordinated and preventive care that aims to improve outcomes while managing costs. Its proprietary tech platform AVA has also been critical pushing toward these goals.

Kao said Alignment is approaching new product development for 2024 with those successes and MBR improvements in mind. The team is designing products to bolster its shared risk segment, updating its provider networks and making investments to continue evolving AVA, he said.

To date, this effort has driven higher retention rates year over year, Kao said.

"We expect more of the total opportunity to materialize in 2024 following our transition to higher quality supplemental benefit vendors, retention initiatives with our distribution partners and continued deployment of our call center plan," he said.

Alignment Healthcare posted double-digit revenue growth in the second quarter, bringing in $462.2 million. That's a 26.2% increase year over year, according to its earnings report.

The company also reported a loss in the second quarter of $28.5 million, up from $11.6 million in the prior-year quarter. Insurtechs overall have struggled to turn a profit, though Kao previously told Fierce Healthcare that he believes Alignment will reach profitability in 2025.

Through the first half of 2023, Alignment posted a $65.8 million loss and $901.5 million in revenue. 

While profitability remains out of reach for now, the insurer did increase its membership by 17% to 112,200.