Dive Brief:
- Oscar Health will stop pursuing new full-service deals for its +Oscar information technology platform for the next 18 months, following issues implementing its deal with Florida-based insurer Health First Health Plans, CEO Mario Schlosser told investors Thursday.
- In the past, the 10-year-old insurtech signed about one to two new +Oscar agreements each year. The tech platform aims to help healthcare organizations transition to risk-based payment models, better engage patients and control medical spending.
- The decision to halt new technology agreements doesn’t change Oscar’s financial expectations for 2022, as the insurtech plans to reallocate resources to focus on achieving profitability in its insurance operations next year, and overall profitability by 2025, Schlosser said.
Dive Insight:
Payers and providers alike are investing in and developing digital tools in a bid to provide cheaper, more longitudinal patient care.
New York-based Oscar has touted the success of +Oscar, sharing that 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 — something that could mean “large cost savings and increased profits among the industry” at scale, said Forrester analyst Kyle Rybarczyk in comments on Oscar’s second quarter earnings.
But Oscar is running into difficulties implementing +Oscar broadly. The Health First Health Plans partnership, announced last year 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,” Schlosser said.
Seven months in, Oscar is still working on implementation and doesn’t want to overextend itself by taking on new full-service clients in the near term, CFO Scott Blackley told investors.
“Because of the large growth we had and because we want to support existing clients in execution there, we really said for the next 18 months, let's not shoulder another implementation of a big full-service deal,” Blackley said. However, Oscar is continuing to see hospitals and payers wanting to take on more risk and needing infrastructure to support that, so the insurtech is continuing negotiations for +Oscar deals, according to the CFO.
“At this point, on these full-service deals, we're already talking about 2025 and beyond,” Blackley said.
Oscar reported revenue of $1 billion in the second quarter, up 93% year over year. Net loss increased to $112 million compared to $73 million same time last year.
Membership almost doubled year over year to more than 1 million people, mostly due to gains in individual and small group enrollment.
Enrollment in Oscar’s co-branded plans with Cigna for small businesses grew tenfold to 46,000 members. The plan is currently available in select markets in seven states, and will be available in Philadelphia next year, Schlosser said.
The CEO said he was pleased to see the Democrat’s sweeping healthcare and climate bill the Inflation Reduction Act, which includes an extension to enhanced Affordable Care Act subsidies, pass the Senate. That, along with Medicaid redeterminations that Oscar expects to mostly take place next year, should be a tailwind to an expanding ACA marketplace next year, Schlosser said.
