- Oscar Health will stop pursuing new full-service deals for its information technology platform + Oscar for the next 18 months after problems implementing the deal with Florida-based insurer First Health Plans, it told investors. CEO Mario Schlosser on Thursday.
- In the past, the 10-year-old insurtech signed about one to two new +Oscar deals each year. The technology platform aims to help healthcare organizations shift to risk-based payment models, better engage patients and control medical costs.
- The decision to halt new tech deals does not change Oscar’s financial outlook for 2022, as the insurtech plans to reallocating resources to focus on achieving profitability in its insurance operations next year, and overall profitability by 2025, Schlosser said.
Payers and providers are investing in and developing digital tools in an effort to deliver cheaper, longer-lasting care to patients.
New York-based Oscar has promoted the success of +Oscar, sharing that 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 can mean “huge cost savings and increased profits in industry” at scale, Forrester said. analyst Kyle Rybarczyk in comments on Oscar’s second quarter earnings.
But Oscar is having trouble implementing +Oscar widely. Health First Health Plans Partnership, announced last year to give Medicare Advantage payers and individual members access to the platform, scheduled to go live in early 2022.
But the deal fell through post-launch challenges due to the “complexity of a comprehensive integration at this scale,” Schlosser said.
Seven months later, Oscar is still working on the implementation and doesn’t want to stretch itself by taking on new full-service clients in the short term, CFO Scott Blackley told investors.
“Because of the huge growth that we’ve had and because we want to support existing customers in the execution there, we really said for the next 18 months, let’s not shoulder another implementation of a large service agreement complete,” Blackley said. However, Oscar continues to see hospitals and payers that want to take on more risk and need the infrastructure to support it, so the insurtech is continuing to negotiate deals + Oscar, according to the CFO.
“At this point, for these full service agreements, 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 widened to $112 million compared to $73 million in the same period last year.
Membership nearly doubled year over year to more than 1 million people, largely due to gains in individual and small group enrollment.
Enrollment in Oscar’s joint plans with Cigna for small businesses increased 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 comprehensive health care and climate bill, the Inflation Reduction Act, which includes an extension of the Affordable Care Act’s expanded subsidies, pass the Senate. That, along with the Medicaid redefining that Oscar expects to happen most of next year, should be the impetus for an expanding ACA market next year, Schlosser said.