What Oscar Does
America's healthcare system spends twice the portion of its GDP on healthcare than any other rich country in the world for results that are no better - and in many instances worse. Despite its high cost, our healthcare system is full of nightmarish stories - of complex, impossible to read bills and unpredictable prices, and bad outcomes for patients.
The core issue with U.S. healthcare is that it is theoretically structured as an open marketplace, but without any of the transparency or competitive pressures that an open marketplace entails. So we end up in the worst case scenario: no universal access, high costs, and little consumer-orientation.
Oscar aims to make a healthier life accessible and affordable for all. We believe every American deserves access to affordable, high-quality healthcare that fits their life.
- Some ideas about U.S. healthcare
It’s no secret that healthcare in the U.S is deeply flawed and inefficient. If we want to address the systemic issues within healthcare and drive innovation, the market needs to become more digital and interoperable. The core activities that an insurer performs are necessary components of the healthcare system –– but they should be simpler, more tech-driven, and API-accessible. At Oscar, we put this practice into play by unbundling the core building blocks of the insurer, to ultimately create a more consumer-centric, economic healthcare system.
We are well-positioned to deliver on this vision in large part because we have invested heavily in the modernization of the core activities of a great health insurer: sales personalization, member experience, care routing, and claims systems. We also believe in enabling a “decentralized” risk-based model that leverages the new world of APIs and interoperability by delivering brand trust, ubiquitous care delivery, personalized health incentives, and the ability to develop personalized campaigns to drive behavior change for our members. When looking at the macro level, healthcare may seem to be evolving slowly –– but we’ve been seeing meaningful shifts toward individualization, digitization, and value-based care.
The machinery we’ve been building since Oscar’s founding allows us to be uniquely suited to take advantage of these trends, power more of the system, and one day, transform the industry.
A model for why U.S. healthcare doesn't work:(1) Financial incentives are misaligned because most healthcare services still get reimbursed as fee-for-service.
(2) Most consumers can’t vote with their feet and thus put competitive pressure on the players within the system. In entirely elective procedures, where consumers can vote with their feet, prices have developed very differently.
(3) As a result, cost and value don’t align: unlike in every other consumer-driven market, there isn’t as strong of a market mechanism to force costs and quality into line.
- The average insurance member tenure is ~3 years3
- Private payers spend $27.1B a year on marketing and sales, while hospitals and physicians only spend about $3B.4
- With an average Net Promoter Score, or NPS, of three, according to Forrester Research, customer satisfaction for health insurers ranks among the lowest of any industry. For comparison, Oscar's NPS is 40.
We believe that healthcare today is not structured to incentivize the build of great tech solutions that will eliminate inefficiencies and allow for more of a consumer focus.
Insurers are needed for four core things.
They do four things that are critical within the system:
Insurers acquire premium revenue.
They are sales engines of risk in today’s healthcare system. Today, that mostly means building sales pipelines into HR departments and managing brokers and general agencies.
They identify and reduce risk per member.
Today, that means underwriting, capturing risk scores, and making limited wellness investments in members.
They guide people to appropriate care.
Today, that means using either authorization (prior authorization, utilization management) or persuasion (customer service) to steer people to the right care.
They manage cost of care delivery.
Today, that means contracting a provider network without gaps and at competitive unit costs.
For us, the two activities of building a great insurer and unbundling it are synergistic.Unbundling the health insurer into 4 core components is a direct evolution of modernizing the 4 core activities of a great health insurer. We can build a piece of technology once, and use it twice - to grow our own risk business, and to help others build/grow theirs.We are unique in our approach because we put the member experience first. Our overarching belief is that in a consumer-centric healthcare market, the company offering the lowest predictable total cost of care with the best member experience wins. So, improving the Oscar experience is core to our business model. When people have a better experience - armed with more confidence about the choices they are making - they can save money and become healthier.In summary, we aim to be a great health insurer focused on the member, unbundle the core building blocks of an insurer, and let others in the healthcare system build on those to create a more consumer-centric, economic healthcare system.
Modernizing the core activities of a great health insurerThese are the components we have built for our insurance business:
- Better Sales Personalization
- Differentiated Brand VoiceWe build member trust through a differentiated brand voice that results in reliable member engagement, no matter their health status or background.MyIdentity is functionality that allows all members – including those who identify as transgender or non-binary – to freely input their name, pronouns, and gender identity in the Oscar experience as a part of the company’s ongoing efforts to ensure that members get the access to care they need in an equitable way.
- On a weekly basis, almost a quarter of our members engage with one of our outbound communications.
- ~25.6% of our active brokers pay their clients’ bills through the broker portal, giving us a direct and regular communications link to them.
- Better Member Experience
- Digital ExperienceWe've developed a digital experience that is easy-to-use for members so we can maximize the share of healthcare shaped by Oscar. Oscar’s member app is designed to help our members with common healthcare problems by providing the kind of simple, straightforward experience consumers expect.
- 47% of our members are monthly active users.
- Our custom-built CRM tool to support our Care Team, Rosco, is a comprehensive management platform that empowers teams as they guide members on the path to better health. Handling member, provider and facility data sources, Rosco provides care guides with key insights to meet our members’ needs every step of the way. RTM (real-time task manager) is our Care Guide intervention platform that provides recommendations to the Care Guide for the member who is calling in.
- Better Care Routing
- Care Routing Machinery We help members find the best providers for them, with clear line of sight into quality and cost.Our care routing tools recommend the best providers at the most affordable price to our members. The underlying algorithms use provider performance and personalized patient data to guide patients toward the providers and care options best suited for them, based on member satisfaction, care quality and cost efficiency. High member engagement is a necessary precursor to do this well.Campaign Builder Engine Our workflow tool allows us to quickly customize, test and optimize campaigns based on member behavior and preferences.
- Better Claims System
- Modern, Cloud-Native Core Payer Administration Solution Our offering lowers costs and drives efficiencies while enabling growth and innovation. The efficiency of our claims payments ensure speed and accuracy simultaneously, while building trust with provider partners.
- Note: The spike from January 2020 - February 2020 is attributed to the fact that we used to hold claims when we launch new markets to make sure we have no errors.
- In a pilot of 5,000 members, people who saw our total cost of care comparison tool while shopping were 2% more likely to renew their plan with us than those who did not see it.
- We see 84% primary medication adherence for Oscar Virtual Primary Care patients
So these are our versions of the core components of the “classical” health insurer.
However, in our view, we believe the best insurer is a “decentralized” insurer that builds these abilities as a tech platform to power others, not just itself. The classical insurer isn’t necessarily the most effective place to deliver the 4 core components discussed above. That is because other entities in the healthcare system (doctors, health systems, digital health players) are structurally better positioned to build risk-based, direct-to-consumer, longitudinal relationships than employers or B2B-focused insurers - which means that the classical insurer is destined to become obsolete, unless it evolves its capabilities and unbundles.
Unbundling the health insurer
A better healthcare system would be one where providers:(1) Can attract members.(2) Save members money by engaging them directly.(3) Retain members in long-term relationships and invest in their long-term health outcomes, allowing providers to share financially in the outcomes.(4) Directly control and personalize incentives.
So these classic insurance capabilities will be powerful ways to enable a more “decentralized” risk-based model that leverages the new world of APIs and interoperability.
A decentralized insurer delivers the following capabilities:
Health systems should attract members into branded plans and manage them there, but they lack member acquisition and retention capabilities - our tools can help them with that.
Ubiquitous Care Delivery
Digital health startups are a new, emerging channel, and they know how to reduce costs in a particular area of care, but they lack the capabilities and the “reg(ulatory) tech” to tap into risk payment flows - our tools enable that.
Personalized Health Incentives
Payers have powerful local market presence, but use a multitude of claims and utilization management systems to manage their business and can’t nimbly respond to market dynamics - our tools help them with that.
Risk-bearing physician groups have innovative clinical workflows and population health campaigns, but often can’t scale them and spread them to others - our workflow tools enable that.
Our +Oscar platform evolves the core components of a great classical insurer into the following components of a great decentralized insurer:
- From Better Sales Personalization to Growth Hacking
- Novel Direct-to-Consumer Healthcare ExperiencesWe are building novel direct-to-consumer healthcare experiences that enable individuals across the healthcare ecosystem to capture risk for the membership that flows through it.
- Health systems should deploy a “non-plan health plan” sitting on top of our novel claims system - a lightweight, direct-to-consumer, branded app that lets health systems take advantage of our cost-savings and attribution tools, including care routing, to engage a membership base as an eventual on-ramp for their health plan.
- A simple version of this is a recent configurable campaign that we launched for an at-risk health system partner to drive members in select zip codes to their underutilized primary care providers, leveraging a series of different messages to assess which would most significantly impact behavior.
- When Oscar launched our Virtual Primary Care plan offering, our core payer administrative platform allowed us to dynamically waive cost shares for certain visits referred or ordered by members’ virtual providers, creating a first-of-its kind virtual plan design that promotes obtaining necessary follow-up care. Because of our system configuration, we were able to go from concept to launch in ~8 months.
- Fast product iteration and the launch of member engagement campaigns that tested four hypotheses reduced first-time patient no-show rates for our Virtual Primary Care offering by 44% over 7 months.
- High member engagement is a necessary precursor to do this well.
- From Better Member Experience to Ubiquitous Care Delivery
- InteroperabilityInteroperability allows us to push data back into providers’ EHRs or share it with other insurers, so that they can better serve their members with real-time information and analytics.
- A critical piece of our Cleveland Clinic partnership is our EHR integration, which allows us to quickly surface care and coding gaps for fast remediation. It also enables direct scheduling, so that members can book an appointment with their Cleveland Clinic provider right from our app.
- Fast Healthcare Interoperability Resources (FHIR) is a standard describing data formats and elements and an application programming interface for exchanging electronic health records. New federal rules will require payers and providers to make their data available in FHIR format to everyone else in the healthcare system. The chart below shows an estimate of how much data in U.S. healthcare will finally become available in machine-readable format.
- In a recent survey, 76% of patients surveyed felt it was important to discuss the costs of their care with their physician, 21% said they received some, little, or no such information during a doctor visit.5
- From Better Claims System to Personalized Health Incentives
- Personalized Discounts & BenefitsPersonalized discounts & benefits delivered in real-time can help improve medication and treatment plan adherence, eventually leading to improved outcomes for the member or patient and overall savings for the healthcare system.We have explored offering plans that feature “care couponing,” an incentives program that makes an incentive available to members searching for a new doctor to select a low cost option.
- A recent study shows that an as-if-random increase of 33.6% in out-of-pocket price (11.0 percentage points change in coinsurance, or $10.40 per drug) causes a 22.6% drop in total drug consumption ($61.20), and a 32.7% increase in monthly mortality.6
- Reduce the setup and run costs for any new health plan
- Increase options available to members due to ease of set up and management
- From Better Care Routing to Programmable Routing
We have built highly configurable healthcare experiences that can be quickly spun up by a mix of clinical and non-clinical experts, without the extensive support of engineering or product resources.
We are building a FHIR integration with Campaign Builder to ensure that we can leverage a broader data lake and build even more personalized campaigns to drive behavior change for our members. That means we can code campaigns on other healthcare players’ data.