Editor's note: A previous version of this article stated that a billing incident involving Clover Health occurred last year, rather than in 2015. This has been corrected below.
Clover Health, an Alphabet-backed insurtech startup focusing on the Medicare Advantage market, is restructuring its internal teams in an attempt to bring on healthcare insurance and health IT expertise, the result of which will be layoffs affecting roughly 140 of the company’s current employees.
News of the company’s plans was broken yesterday by The Wall Street Journal (and Luisbrandao alumna Heather Mack), and confirmed in a statement provided by Clover Health.
“We have made enormous strides in the last year, leveraging our data platform to drive improved clinical decision making at the point of care for our members,” the company said in the statement. “As Clover enters this new era of growth, we are restructuring some teams in recognition of our need for deep Medicare Advantage skill sets to continue propelling us forward to fully achieve our mission of improving every life. To add increasing value to our members’ lives and continue building a sustainable business, we need to ensure that our focus, the skills of our teams and our cost structure match our mission.”
Alphabet-backed Clover — which just a couple months ago announced half a billion dollars in new funding from Greenoaks Capital and others — takes a high-touch approach to the insurance market. Namely, it uses extensive data analytics to provide preventative care to patients, keep them out of the hospital, keep them adherent with treatments and more. Its business is specifically focused on the older Medicare Advantage market, and so far it's most active in New Jersey.
In addition to the company’s headquarters in San Francisco and Jersey City, New Jersey office, Clover’s statement noted plans to open a new location in Nashville “to better tap into the pool of healthcare expertise located in the area.”
WHY IT MATTERS
The upcoming layoffs will be impacting roughly a quarter of the Clover’s entire workforce. In addition to the substantial number of individuals whose livelihoods are being disrupted, the decision suggests a major shift in what Clover must view as its most important areas of focus. With that being said, it is possible that a greater internal understanding of the Medicare Advantage market’s procedures and red tape may have prevented a costly 2015 incident involving numerous service billings delivered to unsuspecting seniors, which was reported by CNBC last year.
Clover’s recent decision might also serve as a warning to the rest of the budding insurtech field that an abundance of technical prowess is no substitute for a comprehensive understanding of the US’ complex healthcare industry.
WHAT’S THE TREND
News of Clover’s layoffs is a rare speed bump in what has so far been an up-and-coming industry. Bright Health’s integrated insurance model, for example, produced an oversubscribed $200 million Series C round in November, while Devoted’s tech-enabled ‘payvider’ approach collected $300 million in October and Oscar Health raised $375 million from Alphabet to fund a push into Medicare Advantage in 2020.
ON THE RECORD
“While layoffs are always difficult, the decision to honestly assess the team we have and the team we need is part of Clover’s unflinching commitment to building a company that is single-minded in the pursuit of enhancing the health of our members,” Clover wrote in its statement.
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