Dive Brief:
- Oscar Health is losing Florida-based health insurer Health First Shared Services as a customer of its information tech platform +Oscar, amid ongoing struggles implementing the product on a broad scale.
- Health First’s decision to terminate their deal — Oscar’s first full-service tech agreement — will cause the insurtech to lose out on up to $60 million in revenue this year, Oscar disclosed in a filing with the SEC on Tuesday. Oscar said it does not expect the loss of the contract to affect earnings for 2022.
- Under an agreement signed last year, Oscar was meant to provide administrative functions and services for the insurer, along with giving it and its members access to Oscar’s technology platform. But in August, Oscar disclosed it was struggling to implement the deal due to its complexity and size, leading the insurtech to pause any new full-service deals for the next 18 months.
Dive Insight:
The +Oscar tech platform aims to help healthcare organizations transition to risk-based payment models, better engage patients and control medical spending. New York-based Oscar has held up the platform as a success, saying the platform has resulted in a 13% reduction in emergency room visits, a 20% reduction in no-shows and a 15% increase in annual wellness visits.
But the insurtech has struggled with implementing large deals for the platform.
The Health First partnership to give the payer’s Medicare Advantage and individual members access to the platform was slated to go live at the start of 2022.
But the deal faced post-launch challenges due to “the complexity of a comprehensive integration at this scale,” Oscar CEO Mario Schlosser told investors in August.
Oscar decided as a result not to seek out any new deals, though the payer is continuing negotiations with potential new clients, citing demand from hospitals and payers, CFO Scott Blackley told investors on the call.
In the past, Oscar aimed to sign one to two new +Oscar agreements each year.
In Tuesday’s filing, Oscar said it is committed to growing the +Oscar business and continuing to serve current clients. The company declined to share how many existing clients are using +Oscar, but said marquee clients include Cigna, which Oscar works with on its small group offering, along with Holy Cross Health and Memorial Healthcare System, which it works with on its Medicare Advantage plan in South Florida.
Despite the struggles facing full-service tech deals, Oscar is moving forward with the development and sale of a +Oscar platform that helps plans and providers manage risk, called Campaign Builder, the company said.
+Oscar will provide services to Health First at least through the end of December, at which point Health First will bring those services in house, according to the filing. Health First did not respond to a request for comment by the time of publication.
