Where Smart Money Should Go in Healthcare Technology Right Now
Abstract
This essay examines current opportunities in healthcare technology through the lens of recently published compliance guidance from the Office of Inspector General regarding Medicare Advantage programs. The document reveals significant operational gaps, enforcement priorities, and structural weaknesses that represent addressable market opportunities for entrepreneurs and investors. Key themes include:
- Compliance infrastructure represents a $15B+ market opportunity across MAOs, providers, and third parties
- Risk adjustment accuracy remains systematically problematic despite being central to $400B+ in annual payments
- Prior authorization and utilization management create massive friction costs while generating quality concerns
- Provider network accuracy and directory maintenance remain unsolved at scale
- Third party oversight and FDR management lacks adequate tooling
- Marketing compliance presents both risk and opportunity as regulatory scrutiny intensifies
The analysis connects regulatory pressure points to product opportunities, with particular focus on software infrastructure, data analytics, and process automation that can address compliance requirements while improving operational efficiency.
Table of Contents
Introduction and Context
The Compliance Infrastructure Opportunity
Risk Adjustment as a Product Category
Prior Authorization and Utilization Management
Network Adequacy and Provider Directory Solutions
Third Party Oversight and Vendor Management
Marketing and Enrollment Compliance Tools
Quality Measurement and Star Ratings Infrastructure
Integrated Platforms vs Point Solutions
Market Sizing and Investment Considerations
Conclusion
Introduction and Context
The OIG just dropped a 42 page document that basically reads like a product roadmap if you know how to interpret it. The Medicare Advantage Industry Compliance Program Guidance updates their 1999 version, which tells you something about how much the landscape has changed. MA enrollment has exploded to cover more than half of Medicare beneficiaries, creating a roughly $450B market that grows 8 to 10 percent annually. The guidance document is nominally about compliance but really it is a detailed catalog of operational problems that MAOs cannot solve with their current tools and processes.
This matters because regulatory guidance documents reveal where enforcement will focus, which means they reveal where companies will spend money to avoid penalties. More importantly, they reveal systematic operational failures across an industry segment. When OIG publishes 40+ pages detailing specific processes that MAOs should implement, they are essentially admitting that current approaches do not work. Each recommendation represents a potential product.
The key insight is that compliance requirements and operational efficiency are not opposed. The areas where OIG identifies the highest risk tend to be areas where current processes are manual, error prone, and expensive. Building tools that make compliance easier usually means building tools that make operations better. Companies that can deliver both will capture disproportionate value.
The Compliance Infrastructure Opportunity
Start with the basics. CMS requires MAOs to maintain compliance programs with specific elements including dedicated officers, committees, training programs, monitoring systems, and corrective action processes. The guidance makes clear that current implementations are inadequate. MAOs operate with compliance teams that are too small, lack specialized MA expertise, rely on manual processes, and struggle to maintain oversight across complex organizational structures.
The market is roughly 500 MAOs ranging from massive national carriers to regional plans with a few thousand members. Below that are several thousand provider organizations acting as FDRs, thousands of TPMOs handling marketing and enrollment, and various vendors providing everything from utilization management to risk adjustment services. Altogether maybe 10,000 organizations need meaningful compliance infrastructure specifically for MA programs.
Most of these organizations build compliance programs using general purpose tools, spreadsheets, and manual processes. A dedicated compliance platform purpose built for MA requirements could command $50K to $500K annually depending on organization size. Even at conservative estimates, this is a $500M+ market just for core compliance infrastructure.
But the real opportunity is not selling compliance software to compliance officers. It is embedding compliance into operational workflows so that doing the right thing becomes the path of least resistance. Think about how Stripe embedded PCI compliance into payment processing or how Modern Treasury embedded banking compliance into money movement. The companies that win will make compliance invisible rather than making it a separate workstream.
The guidance document essentially provides a specification. MAOs need systems that maintain policies and procedures, track training completion, manage hotline reports, document investigations, oversee third parties, conduct audits, and generate reports for boards and regulators. Each of these represents a distinct module within a larger platform.
Risk Adjustment as a Product Category
