Clover Health, a health insurance startup that believed their technology could revolutionize healthcare for seniors, announced this Monday that they would be outsourcing the responsibility of the core operations of their health plan to UST HealthProof, a company that specializes in the administrative functions of health plans. In addition, the company has cut 10% of their workforce. This move is said to save $30 million yearly from 2024 onwards and put the company one step closer to turning a profit.
These measures are not abnormal for small health insurers. Being significantly smaller compared to industry giants like UnitedHealthcare and Aetna, the decision to transfer some of the tasks to another company may benefit Clover profit-wise. Nevertheless, it has brought about questions to the sophistication of Clover’s technology.
Clover Health first began in 2014 and works to provide members of special health plans like Medicare Advantage with their services. The Tennessee-based health care insurer suffers a terrible net loss at $338.8 million in 2020, alongside a drastically diminishing share price. Other big names of health insurance, such as Bright Health and Oscar Health, have also failed in recent years.
Chamath Palihapitiya, once a great supporter of Clover Health, expressed substantial interest in the company and its performance through his own SPAC deal. Since then, however, the stock has dropped by 95%. These losses have consequently forced Bright Health to suspend their Affordable Care Act altogether, while Oscar Health needed to appoint a new CEO to help revitalize the company. An example of deterioration for Clover themselves came in their failure of ACO Reach previously titled as “Medicare direct-contracting” where millions were lost.
In spite of this somewhat depressing outlook, Clover wishes to remain positive. With the shift of operations, comes the company’s attempts to focus further on their fundamental strength – Clover Assistant, a technology product that assists doctors in detecting and treating diseases earlier on. With these smart moves, the company will incur a hefty cost of around $7-$9 million but hopes that the outcome will be beneficial to their situation.
The company mentioned in this article is Clover Health, an insurance upstart that wants to revolutionize healthcare for seniors through technology. Founded in 2014, Clover competes with other giants in the health-plan market for older Americans, known as Medicare Advantage. After much success with the backing of Chamath Palihapitiya and his SPAC deal, the stock price has since gone down by 95%. Now, Clover is outsourcing basic functions to UST HealthProof and cutting jobs to help increase their bottom line.
The person mentioned in this article is Chamath Palihapitiya, an investor and entrepreneur involved in many business endeavors. In 2021, Palihapitiya showed interest in Clover Health, an insurance upstart that bet its technology could transform healthcare for seniors. This interest was expressed through his own SPAC deal with the company. Though his backing for Clover has improved their reputation, the stock price has nonetheless dropped extremely and many other issues have begun to arise for the company.
