After breaking into the
Medicare Advantage market five years ago with a focus on technology, San
Francisco-based startup Clover Health is in the process of laying off 140
employees with the intent of acquiring more people with health care knowledge.
Founded in 2014 by an
investment banker and a software engineer, Clover has reportedly raised close
to $1 billion in financing. Clover began offering MA plans in 2015, and now
serves nearly 40,000 members across seven states. At the time of Clover's
launch, its mission seemed simple: own the technology, control the outcomes.
But the insurer in 2016 was fined by CMS for marketing violations and later
reportedly ticked off customers when data-sharing negotiations resulted in
members receiving unexpected medical bills for blood work.
While there is a need for
"consumer-grade technology and service," plans should not
"underestimate the underlying complexity in health care or the underlying
importance of getting the technicalities right. You can’t gloss over those, especially
in MA," says Deb Gordon, senior fellow at the Harvard Kennedy School's
Mossavar-Rahmani Center for Business and Government.
Even with the right
technology, "the realities are that it’s very hard and very
expensive" once a plan starts performing the actual functions of health
care and navigating the web of federal guidelines, state insurance regulations
and consumer expectations, she adds.
Moreover, there's a
danger to acting "bigger than you are" when negotiating with other
service providers, which may have been Clover's downfall when attempting to get
data from LabCorp and Quest Diagnostics, according to a CNBC report from 2018.
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