Clover Health, which bet its technology would disrupt health insurance, will outsource health-plan operations and cut jobs to help it turn a profit
Clover Health bet its technology would disrupt health insurance, but it's struggled with losses.The move raises questions about the sophistication of Clover's technology platform.
Clover Health, an insurance upstart that bet its technology could transform healthcare for seniors, now plans to outsource basic functions like paying medical claims.that it will shift the responsibility of its core operations to UST HealthProof, a company that handles administrative operations for health plans. Clover also said it cut 10% of its workforce.
Clover said it expects these actions to save $30 million each year starting in 2024 and help it get closer to turning a profit. It reported a net loss of $338.8 million in 2022. It's not unusual for small health insurers to outsource some health-plan operations. Clover isn't big enough to compete with larger health insurers, so shifting some tasks to another company should help Clover improve its bottom line, said Ari Gottlieb, a consultant at A2 Strategy who tracks young health insurers. Clover had about
members at the end of 2022. Industry giants like UnitedHealthcare and Aetna have tens of millions of members. "In some ways this furthers the argument that Clover and several peers that like to claim they are 'insurtechs' really are just poorly-run, non-scaled health insurers without any meaningfully valuable technology," Gottlieb said.Founded in 2014, Clover competes for members in the lucrative health-plan market for older Americans, known as Medicare Advantage.
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