Oscar Health on Tuesday announced that Google's parent company, Alphabet, has invested $375 million in the insurer, which will help Oscar to launch Medicare Advantage (MA) plans and to expand its Affordable Care Act (ACA) exchange business.
According to Modern Healthcare, the new investment comes after Alphabet and Founders Fund in March invested $165 million in Oscar. An Alphabet spokesperson said the company has invested money in the insurers over the past few years, and is "thrilled to invest further to help Oscar in its next phase of growth," CNN Tech reports.
According to CNN Tech, Oscar on Tuesday also announced that Salar Kamangar, an executive at Google and former CEO of YouTube, will join the insurer's board.
Oscar currently sells coverage only in the small group and individual health insurance markets. The insurer covers an estimated 240,000 individuals in six states.
According to Modern Healthcare, the company "is known for emphasizing the use of technology, telemedicine, and concierge teams to augment members' care." Oscar has said that 63% of its members' interactions with the health care system occur virtually. According to Healthcare Finance News, more than 40% of Oscar's members manage their health using Oscar's website and mobile apps.
The insurer has partnered with health systems including the Cleveland Clinic, Montefiore Health System, Mount Sinai Health System, and Tenet Healthcare to create narrow networks for some its plans, Modern Healthcare reports. According to Healthcare Finance News, 43% of Oscar's members' first visits with health care providers "are routed through Oscar."
Oscar to launch MA plans, expand ACA business
Oscar said it plans to launch MA plans in 2020 and to expand its exchange business next year. Oscar Co-founder and CEO Mario Schlosser said, "We will continue to build a member experience that lowers costs and improves care, and to bring Oscar to more people—deepening our expansion into the individual and small business markets while entering a new business segment, Medicare Advantage, in 2020."
An Oscar spokesperson did not offer any other details on the MA plans, Modern Healthcare reports. According to Forbes, Oscar is expanding its ACA exchange business to six additional markets for the 2019 coverage year.
Oscar says it will look to make health system 'work for consumers'
Schlosser said the investment also will help the insurer "accelerate the pursuit of its mission: to make our health care system work for consumers."
Schlosser in an interview with Wired said the investment will allow the company to hire additional clinicians, data scientists, engineers, and product designers. He said, "[P]retty much everything that we do internally to manage people's health care was reinvented and rebuilt from a technology perspective. And so that's what we can now go faster toward."
For instance, Schlosser said, "[A] lot around payments at the point of care … will get much easier." In addition, he said Oscar will look to increase user engagement on the insurer's mobile apps, transmit data in real time, and use artificial intelligence to process claims.
Some observers noted that hefty investments in Oscar have allowed the insurer to build projects that have helped it outpace other recent health insurance startups.
Jodi Hubler, a managing director with Lemhi Ventures, said Alphabet's funding "will put Oscar well over a billion dollars in investment." Hubler added, "What's interesting to note is Oscar is not just innovating insurance, they also have projects where they're building clinics, electronic health records, and claims systems. That is a big investment waterfront—literally racing against hundreds of other startups who are trying to do the same thing in each one of those categories, plus the incumbents."
But others said the investment shows Alphabet's increasing interest in accessing patient data.
Schlosser told Wired that Alphabet has not and will not at this time gain access to any data on Oscar's members because of its investments in the insurer. He said Alphabet has "been an investor for the past three years and there's obviously been no sharing of data before. That's going to continue to be the case."
But Michael Greeley, co-founder and partner at Flare Capital, said, "My suspicion is, as borne out by this transaction, [that] these tech companies will be able to take real risk on the populations because they are going to know more about these populations and be able to underwrite the populations far better than maybe some traditional health care companies." He continued, "[Alphabet] want[s] to continue to think about [its] portfolio of assets from YouTube to Search. [The company] know[s] an awful lot about us. [It doesn't] know a lot about our health care conditions. This puts [Alphabet] into that space to have a more holistic perspective of who each of us are" (Livingston, Modern Healthcare, 8/14; Luhby, CNN Tech, 8/14; Japsen, Forbes, 8/14; Morse, Healthcare Finance News, 8/14; Meltzer, FierceHealthcare, 8/14; Parmar, MedCity News, 8/14).
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