Clover Health Reddit “Ask Me Anything”
Our CEO Vivek Garipalli sat down with our President and CTO Andrew Toy for Clover Health’s first-ever Reddit AMA (Ask Me Anything). The following conversation between the two has been edited for clarity and length.
Vivek: Hello everyone, welcome to Clover Health’s first Reddit AMA. Andrew and I are excited to take questions from the good folks at r/ CLOV, to offer some insight into the topics that our retail investors are most interested in. I’ve spent the majority of my career investing in and running different kinds of healthcare companies, from hospital systems to oncology research. I’m also an avid retail investor, and got my start in college with an online brokerage account. One component that’s always driven my investment decisions is knowing the leaders of the companies I invest in, so our goal with this is to provide some insight into Andrew and myself, and our vision for the company. Andrew, want to introduce yourself?
Andrew: Yeah, hi, I joined the company from Google, where I spent several years after they acquired the company I founded and ran as CEO. Unlike Vivek, who has spent decades navigating the healthcare ecosystem, my background is that of a technologist. I say this because the approach we’re taking is so different from what other companies are doing, and have always done, that many industry people have a hard time comprehending why we do what we do. In short, Vivek and I don’t think the current system works, and believe we have to do something fundamentally different to make healthcare more equitable. If you keep in mind that our north star is to “improve every life,” it should be clear why we couldn’t just build a “better insurance company,” but had to reinvent the way healthcare is delivered using a tech-driven approach.
Vivek: Thanks, Andrew. With that, let’s hop into the questions. We’ll do our best to keep answers tight, but no promises. So, our first question is from Next_Bag_2953, for an update on the DoJ investigation. We get this a lot and feel a bit robotic saying “we cannot comment on ongoing investigations” but that’s the answer we have to give.
Andrew: Yup. And just a reminder to everyone, as a public company, we actually HAVE to proactively give an update and disclose information in our quarterly SEC filings if there are any material developments regarding legal matters.
Vivek: All right, moving on. One for you from username Low Brow High Standards: Andrew, why do you believe in this company?
Andrew: I believe in the company because the physics of the healthcare marketplace are with Clover. When you look at other Medicare Advantage companies, they’re mostly built around specific provider groups or hospital systems with narrow networks and restricted choices. The truth is, there aren’t enough doctors in that narrow subset of providers to treat all the medicare patients in the US. We have patients who need health care, and as more and more enter the Medicare program, there simply aren’t enough of these doctors to build narrow networks around.
The physics of the market demand a different solution. That’s why we believe the Clover Assistant has so much potential. By providing it to physicians, we’re able to support them in making more data-driven clinical decisions, which should improve outcomes for their patients, our members. If our thesis is correct, we’ll be able to enhance the performance of every physician instead of further limiting an already constrained supply. The way it is now is clearly unsustainable so we have to find a better way.
Vivek: Andrew, I think you know, when we first met, this was one of the things that was very intuitive to you, but is not intuitive to folks who’ve been in healthcare a long time. When you think about the concept of flexible networks, and wide physician choice, and then you think about the incumbent models of narrow networks, it’d be great for folks to hear how you think about just tying that to like the physics of healthcare in terms of supply and availability of choice.
Andrew: Absolutely. I mean, that’s a Vivek question, but I’ll answer it. The way I think about it is the healthcare system is dysfunctional because it’s a dysfunctional marketplace, right? There’s a supply and demand dynamic that’s not natural between the payer, provider and patient. And so, when we look at that, we think about how we can align incentives. Firstly, there’s the payment models that we can bring in. And second of all, what we need to do is clearly increase choice which also increases the number of physicians available to provide great care to our population. By giving doctors the Clover Assistant and thus, hopefully, increasing the level of care available to all members, we are seeking to increase the supply of great care available. To my knowledge, we’re the only company with this focus. Everyone else is looking for great care that already exists and tries to win that value-based contract, or build a narrow network around that facility. But that’s not bringing any value to the marketplace. What’s unique about us, and what I think that people don’t understand, is through the Clover Assistant we have the capability to scale like software to superpower all physicians with great tools.
Andrew: I could keep going on about this forever, but let’s get back to the questions. This one’s specifically addressed to you, Vivek, from elegant mode 4056: How does it feel having almost 40,000 Reddit supporters who believe in your brand idea, stock, etc.?
Vivek: Yeah, I think it’s an amazing thing for Clover. What it really expresses is a very big disillusionment with healthcare in general in the United States. And, you know, one of the reasons why it’s really exciting to do an Ask Me Anything for Reddit is this is the forum where we get the most long term oriented questions. The questions that are focused on, how are you going to win long term? How is our technology platform truly differentiated? Because those are the things we talk about internally all the time, when Andrew and I chat about strategy. With a lot of the comments we’ve seen coming through, there’s almost a mesmerization as to why wouldn’t there at least be support for a company like Clover. One can always question whether we’re going to succeed or not, because we definitely have a very ambitious approach which is radically different from the incumbents. But at the same time, we look at who wins if we succeed. The impact is not just incredibly positive, but it’s really wide. I don’t think there’s very many companies that are in the public markets in healthcare that can say that with true authenticity. When we think about trying to create a movement in healthcare, that has to be true. Can the impact be wide? Can it be massive? Is the idea radical enough? And I think through the set of events, how we went public, in terms of the SPAC with Social Capital, the short report, and all the interest we’ve attracted. All those events together have created unbelievable attention that, frankly, would be really, really hard to garner for a company that focuses on the Medicare population.
Andrew: Here’s another good one for you Vivek, from Alarming-Wall4130: What exactly is the business model? MA and DC or being a software vendor to other MA/DC players?
Vivek: It’s a combination of MA and DC for phase one. We offer two models of care: affordable Medicare Advantage plans with extensive benefits, and care coordination for Original Medicare beneficiaries through Direct Contracting, aka, we partner with physicians who care for seniors enrolled in traditional Medicare, and use the Clover Assistant to manage those patients’ care. These models generate revenue based on premiums (which our members pay us to enroll in our plans) and reimbursements (which the government pays us to manage care for our members and aligned beneficiaries). And the Clover Assistant powers improved financial outcomes for us as well. Our Medical Care Ratio (MCR), which indicates the percentage of revenue that goes toward medical claims, has consistently been meaningfully lower for returning members attributed to a Clover Assistant doctor than for members who see a doctor not using CA.
Vivek: This one follows on pretty well to that, from Key-Fortune-8904: Do you see the Clover Assistant being utilized outside of Medicare or the USA in the future? Meaning, is there potential for it to be software as a service? Andrew, you want to answer?
Andrew: Absolutely. I really think the important thing to think about here is who is actually using the healthcare system. When people are young and healthy, they go to the doctor maybe once a year to get a checkup, or if something unexpected happens, an accident for example. Our members, on the other hand, are super-users of the healthcare system. What makes the Clover Assistant so impactful is that it’s able to sift through massive volumes of healthcare data to identify moments where the mis-management of a disease could lead to an acute health event. In other words it’s hard to predict the moment when 25 year old Jeff from Brooklyn is going to crash his bike, and prevent it from happening. But if we know Mary Beth stopped taking her diabetes medication, there’s a high probability she will end up in the hospital without an intervention. The Clover Assistant is the action layer that provides physicians with a holistic, data-driven view of their Clover patients.
Vivek: Like Andrew said, Medicare is where we can have the most impact at the moment, but we absolutely see potential to expand into other lines of business in the future. Keep in mind the Medicare market is huge. It’s expected to be worth $1.25 trillion by 2025, with Medicare Advantage making up $590 billion of that.
Vivek: Andrew, I’m going to make you answer this one from Tacticalhat: Why does your website suck so bad for the money backing the company? Looks unprofessional.
Andrew: Haha, this one really strikes a chord because, well, we know it does. Website design and accessibility guidelines are actually driven by regulatory requirements around Medicare Advantage, so we’re only allowed to be so creative. But a refreshed website that, let’s face it, looks much better than it does now, is coming!
Vivek: Now, I have a double header for you, from two different folks. Actually more like an octuple header given the number of questions. Let’s start with MoeBamba17: How do you market the Clover Assistant to physicians? What is the satisfaction rate or any general feedback on the software? What is the ratio of doctors converting to the Clover Assistant once they learn the product and meet with the team, i.e. what is the lead conversion rate? Does Clover provide a demo or trial period for physicians? If so, what is the demo conversion rate? What do you think is the biggest challenge currently facing Clover Health and how are you planning on overcoming it?
Andrew: Okay, there’s a LOT to unpack here. High-level, our unique value proposition is what sets us apart. We win as an insurance company and our members win when they get data-driven personalized primary care. That’s why we give the Clover Assistant to primary care doctors for free and pay them substantially more than the Medicare rate for what a PCP receives for an office visit, every single time they complete a Clover Assistant-powered visit. We financially incentivize doctors to use our technology because we believe it ultimately leads to better health outcomes and lower costs.
Now, onto the physician experience. Since the Clover Assistant is free to physicians and we pay them to use it, there’s no need for a trial period. And while we don’t share the metrics you mentioned publicly, I can tell you that we receive a lot of positive feedback from our physicians. Honestly, we believe the main reason doctors decide not to use our platform is that they don’t care for enough Clover Medicare Advantage members yet to, in their minds, justify adopting a new technology. We’ve started to work with a lot of these folks through our Direct Contracting Entity, and are actually launching a new version of the Clover Assistant that was built specifically with the needs of these doctors and their patients (not our MA members, but Original Medicare beneficiaries) in mind. In fact, for the doctors that use the Clover Assistant in both MA and DCE, the Clover Assistant has a very positive Net Promoter Score, which is essentially the likelihood of a doctor recommending the Clover Assistant to another doctor. Many EHRs have a negative NPS — so that’s one very telling metric.
Vivek: Okay great. A good follow-on question from homersimpsoniscute: How do you get doctors to adopt your software when it is an extra hassle for them to input data into an additional separate app?
Andrew: It’s actually much more simple than you would expect. Doctors don’t like the idea of software because they’ve always been given bad software that doesn’t help them be better at their job. Instead of making their lives easier, it creates more work. When designing the Clover Assistant, we think about the doctors’ motivations. Did they become a doctor to manage value-based contracts, remember billing codes, insurance formularies and the names of specialists to whom they can refer their patients? Or do they want to work with their patient to develop a care plan that works for that individual to keep them happier and healthier? I believe it’s the latter. So everything we build in the Clover Assistant is to support their clinical decision making in a way that is collaborative instead of demanding, while simultaneously reducing their administrative burden.
Vivek: Should we wrap it up with a fun one?
Andrew: I think so.
Vivek: Okay, here’s one from blahblahhundo. He says he loves spending time with family, bbq and smoking briskets, whiskey and golfing, good for you, blah blah. The question is: What do you do to unwind and enjoy the simple things in life? If you drink, any recommendations that you might recommend or share?
Andrew: I don’t drink, but could happily provide some video game recommendations, haha. I’m still waiting to get my PS5 as well — I refuse to pay scalper prices. I’d write a bot if I wasn’t so busy fixing healthcare.
Vivek: A nice, reasonably priced bottle of whiskey I always keep in my liquor cabinet is Laphroaig ten year. At fifty bucks it drinks like a bottle three times the price.
Vivek: I appreciate you all tuning in, and hope to do another one of these soon!
