The Next Billion-Dollar Exits in Healthcare: Why VCs Think Risk Is a “Sure Thing”

Here’s what became clear in our discussion. While most venture capitalists chase consumer health apps and point solutions, some of the largest healthcare exits of the past five years — Oak Street Health ($10.6B), One Medical ($3.9B), Signify Health ($8B), Livongo ($18.B), and CareBridge ($2.7B) — all shared one trait. They didn’t just deliver clinical outcomes; they managed financial risk.

Some founders build the entire healthcare pie — comprehensive, end-to-end platforms. Others pick the slice they can win — kidney care, cancer care, chronic disease, home-based care — and design everything around it. Both approaches can work, but they require the right timing, strategy, and team.

So, what slice is worth owning — and when is the whole pie the real prize?

That’s the question at the heart of healthcare investing today. Healthcare is a $4.9 trillion industry in the U.S. (2023) built on complexity. At its core lies risk: Who pays when someone gets sick and how much?

For decades, the system relied on fee-for-service (FFS) that rewards volume over value. But with the Centers for Medicare and Medicaid Services (CMS) now mandating that all traditional Medicare beneficiaries enter risk-based care by 2030, the ground is shifting dramatically.

The policy certainty is unprecedented. Keys to investing in the most valuable and defensible healthcare models of the next decade are understanding:

This blog is your crash course. From policy shifts to proven exit patterns, we’ll unpack who holds risk, what kinds, and why owning the right slice (or scaling to the whole pie) will define the next generation of healthcare winners.

Why Risk Matters More Than Ever

Risk in healthcare isn’t theoretical; it’s the business model reshaping healthcare in America. Under traditional FFS, more procedures meant more revenue. But it’s created a system where the U.S. spends nearly double per capita compared to peer nations — yet ranks near the bottom in access and outcomes.

The crisis is quantifiable.

The policy response is creating venture-scale opportunities. CMS Innovation Center’s mandate: move all Traditional Medicare beneficiaries into accountable care relationships by 2030. That’s shifting from volume-based to value-based payment. And it’s putting financial risk and reward squarely in the hands of providers and innovators who can deliver measurable outcomes.

For founders and investors, this means unprecedented policy certainty in a market historically plagued by regulatory uncertainty.

What Risk Means & Why It Creates Defensible Returns

At its core, risk in healthcare boils down to these questions: Who pays when a patient needs care, and how is that cost managed?

Value-based care (VBC) flips the traditional dynamic by paying for outcomes instead of activities. But VBC spans a spectrum. Upside-only arrangements give providers bonuses for hitting quality targets. Two-sided risk models enable providers to share both savings and losses against benchmark costs. Full capitation offers providers fixed monthly payments and holds them financially accountable for all costs — win or lose.

But risk runs deeper than dollars. Companies navigating these models face multiple types of risk:

Great companies don’t just take risk — they manage it. They build operational, clinical, technological, and financial systems to navigate these uncertainties, turning risk into competitive advantage. That’s where the opportunity lies: investing in businesses that understand, manage, and ultimately profit from the complex web of risk defining modern healthcare.

Slices vs. the Whole Pie: 3 Winning Strategies

Whether a startup tackles a single slice or aims for the entire pie shapes everything from business model to venture potential. Here’s where venture investing thrives:

Our HealthTech Portfolio: Ahead of the Curve

Alumni Ventures has invested across the entire risk spectrum.

The common thread: whether narrow specialization or broad infrastructure, each offers a pathway to impact and financial success.

Medicare Advantage: The $1 Trillion Epicenter

Medicare is the proving ground for risk-based innovation. With total Medicare enrollment reaching 65+ million beneficiaries — 31 million in Medicare Advantage and 34 million in traditional Medicare — the market represents unprecedented scale. The ACO REACH model* now covers 2+ million seniors managing $26+ billion in Medicare spending, with early participants achieving up to 13% cost savings versus traditional fee for service.

Medicare Advantage has become the epicenter of billion-dollar exits. Private plans receive fixed CMS payments and manage seniors’ care, creating powerful incentives to improve health while controlling costs. These models thrive because they align incentives: healthy patients mean higher margins and shared savings.

They’re highly attractive to investors because they combine sticky recurring revenue with strong policy tailwinds and enormous scale. The movement toward risk-based care is transforming Medicare from a payer into a partner with innovators who can deliver better outcomes for less.

*ACO REACH stands for Accountable Care Organization (ACO) Realizing Equity, Access, and Community Health. It’s a CMS Innovation Center pilot program focused on improving care for Medicare beneficiaries through value-based care models. The program aims to improve health equity, access to care, and community health for Medicare patients while reducing costs.

Medicaid: The $890 Billion Impact Opportunity

Medicaid covers 70+ million vulnerable Americans and increasingly turns to risk-based arrangements integrating social determinants like housing and food security. Section 1115 waivers give states flexibility to test innovative models, making Medicaid fertile ground for VBC growth.

The opportunity is enormous. States desperately need cost control as Medicaid spending grows 6% annually. Addressing social determinants isn’t just good policy; it’s a critical lever for bending the cost curve and improving outcomes. For venture investors, Medicaid offers high-impact, high-return models pairing technology with local partnerships and trust-based engagement.

Employers: The Half-Trillion-Dollar Sleeping Giant

Employer-sponsored insurance covers 160+ million Americans — the largest healthcare slice. Unlike government programs, self-insured employers bear direct financial risk for their populations and increasingly demand accountability from healthcare vendors.

The shift is accelerating. Companies like Transcarent offer employers at-risk pricing for high-cost services — promising savings and quality improvements or they don’t get paid. Risk-based arrangements yield 5-10% cost savings versus traditional approaches, with potential to scale rapidly in the private sector.

Why This Matters: The Future of Risk Is the Future of Healthcare

Risk-based care isn’t another payment mode. It’s the blueprint for a more sustainable, equitable, and innovative healthcare system. By aligning financial incentives with health outcomes, these models force every stakeholder to collaborate toward better health at lower cost.

For founders, this is the ultimate challenge: design care delivery models that manage risk intelligently while building patient trust. For venture investors, the time is now. Billions shift into value-based models annually, with Oak Street’s $10.6 billion exit, One Medical’s $3.9 billion Amazon acquisition, and Signify Health’s $8 billion CVS deal proving risk-based models create venture-scale returns.

At Alumni Ventures, we’re investing in the next generation of risk-based innovators — companies combining technology, care integration, and local trust to redefine healthcare risk management. These companies aren’t just transforming care; they’re building defensible, high-margin businesses with massive addressable markets.

The risk pie is enormous. The most valuable slices are being claimed now by those who understand the policy tailwinds, proven exit patterns, and defensive business models driving healthcare’s evolution.

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