Clover Health, a three-year-old San Francisco-based health insurance startup that grabbed $100 million in Series A funding three months ago, is back in the VC markets for $35 million more.
The new round is led by Sequoia Capital, with participation by existing investors First Round Capital and Athyrium Capital.
The company plans to use the new funding to “rapidly scale” its engineering, data science and care management teams, officials said.
“We’re making final plans right now for markets we want to go into next year,” co-founder and Chief Technology Officer Kris Gale told me late Tuesday.
Clover Health has about 200 employees, including 85 in San Francisco, a large number in Jersey City, N.J., and others in other locations in New Jersey, where it first launched its Medicare Advantage insurance plan in late 2012.
Most of the San Francisco staffers are programmers, data scientists and other technology staffers, Gale said, and Clover Health plans to augment that group by roughly 50 percent over the next year or so.
“We want to really nail this model,” Gale said, “to do this very slowly and carefully,” as the company makes arrangements with health care providers in markets outside New Jersey.
It only has 15,000 enrollees currently, all of them in the nine New Jersey counties where it currently operates , but that is twice what it had before this fall’s open enrollment period.
The company is a Medicare Advantage PPO, or preferred provider organization, differentiating it from many so-called Medicare HMOs. It lets seniors see any doctors, in or out of network, without extra charges, and features zero co-pays, zero premiums (since the Medicare program takes the hit) and zero payments for generic prescriptions.
There are some cost-sharing arrangements on hospital admissions and some specialty visits, Gale told me.
Vivek Garipalli, the company’s other co-founder and CEO, said Clover Health’s use of data to better coordinate care has already resulted in “a significant reduction in hospital admissions” and hopes to continue and accelerate that trend.
The concept behind the startup is that integrating technology intimately into the health insurance process can result in better clinical outcomes at lower cost. It uses lab results, prescription information, and electronic medical records to identify potential risks and fill gaps in care, officials say. All that data is used to create real-time profiles of enrollees, identify those at greatest risk of having a serious “acute episode” and intervening before such an episode occurs.
Since senior citizens and other enrollees covered by Medicare Advantage plans often have multiple, complex medical conditions, better coordination of care has the potential to save the federal Centers for Medicare and Medicaid Services a large amount of money — which also means saving taxpayer dollars.
Prior to nabbing funding in September, the startup was self-funded by Garipalli, who’s based in New Jersey, and Gale.
Date: December 16, 2015