Digital healthcare insurer Oscar Health is shaking up its business plan in its home market of New York.
Oscar, founded in 2012, sells individual health insurance plans, both directly and through health exchanges. The company serves select areas in New York, New Jersey, California and Texas and claims to have about 40,000 customers. The digital health insurer has been a favorite with big investors.
In fact, Oscar raised the largest funding round for a U.S. online insurance company in January, bringing in $400 million investment from a group of backers headed by Fidelity Investments, a unit of Fidelity Brokerage Services LLC. Oscar will use the funds to further develop its e-commerce platform that enables plan enrollees to research and buy insurance online and conduct digital doctor visits, among other uses.
In New York, meanwhile, Oscar is looking to raise premium prices and tweak its business model by pruning its provider network. The company has petitioned the New York Department of Financial Services for a rate increase of 16%, Ceo Mario Schlosser writes in a company blog post. At the same time Oscar plans to cut its provider network in half to 20,000 from 40,000 doctors and also reduce its number of affiliated healthcare facilities to 31 hospitals that are a part of the Montefiore, Mount Sinai and the Long Island Health Network systems.
“Individual insurers like Empire Blue Cross Blue Shield and United have requested rate increases averaging 25% and 52%, respectively, and Oscar itself was affected by these market forces in New York, having to ask to raise our rates by an average of 16%,” Schlosser writes. “But it would have been far worse if we continued with the kind of network we have had until now our rates would have gone up significantly. And there would be no end in sight.” The New York Department of Financial Services is still reviewing all rate hike requests and will issue final rates this fall before the November enrollment and re-enrollment season begins.
Oscar wants to up rates and realign its provider network to improve its financial position some published reports say the insurer lost $92 million last year. Oscar doesn’t publicly disclose financials, but does disclose numbers in some regulatory filings.
Oscar also wants to realign its provider network to only healthcare providers in the neighborhoods it serves in New York, the company says. “We’ve segmented the greater New York area into a series of 350 small sub-neighborhoods and our proprietary tool scans each neighborhood, flagging any weaknesses in our offering and automatically suggesting a great doctor who should be brought into the network,” Schlosser writes in his blog. “This allows us to be sure that our members in each sub-neighborhood will have access to all the different types of care they need for all of the 10,000+ distinct medical procedures they might require and the 2,000+ medical conditions they might develop.”
In exchange for offering access to fewer providers and charging a higher annual premium, Oscar says it will give plan enrollees access to more personalized concierge services, such as free digital doctor advice and online access to secure electronic health records and cash bonuses for getting a flu shot. “Our system partners’ healthcare data allows us to personalize our doctor directory and understand their strengths and weaknesses,” Schlosser writes in his blog. “We’re doing all of this to empower our members to choose the best doctor for them.”
Date: July 28, 2016