When his board of directors fired him as CEO of his gaming company in 2012, entrepreneur Mario Schlosser could have taken on any number of challenges. He’d worked at McKinsey and Bridgewater Associates, and later, while a visiting scholar at Stanford University, published ten academic papers in computer science.
But, his wife was pregnant at the time, and Schlosser, who is originally from Germany, was learning how dysfunctional the U.S. healthcare system could be. Meanwhile, his co-founder in the gaming company, Joshua Kushner, suggested the two start a health insurance company. “I was gearing up for a year or a couple of years trying to hit singles,” said Schlosser, “instead of trying to hit a home run and do something very complex.”
Schlosser and Kushner founded Oscar Health in 2013, raising $727.5 million from investors including Thrive Capital, Founders Fund, CapitalG (Google’s growth capital fund) and Fidelity Investments, among others. Oscar now offers insurance in six states, up from three states the previous year.
On Wednesday, January 24, 2018, Schlosser visited Bloomberg’s Global Headquarters in New York City, where he was interviewed by Bloomberg Television anchor Scarlet Fu as part of the monthly CornellTech@Bloomberg speaker series. The pair discussed the insights that led to the founding of Oscar, the company’s progress since then, and its use of data to create a very different patient experience from most other health insurance companies.
Once Schlosser started looking closely at health insurance, two characteristics of the industry were immediately appealing. One was the data. “The insurer has incredible data visibility into the system,” said Schlosser, “unlike any other actor in healthcare.” A primary care physician, for instance, knows which drugs he or she has prescribed to a patient, but might not know of prescriptions prescribed by specialists. A hospital discovers that a patient needs care only when they arrive at the emergency room. “The insurer sees all this,” said Schlosser, “because, at the end of the day, the bill has to get to the insurance company.”
The other important characteristic was that the economic interests of insurers and patients are actually aligned—they’re both better off if costs come down. If an insurer is able to help keep its members healthy, to the point where they need less care or even less-expensive care, both insurers and patients win. If a baby is crying in the middle of the night, for instance, Oscar would encourage the parent to call one of its teledoctors before rushing to the emergency room. With the tap of a button on the home screen of the Oscar mobile app, consumers can speak to a certified doctor who, within minutes, can help figure out what is going on and whether a trip to the ER is actually necessary. “That is a good alignment of economics,” said Schlosser.
One of the factors that led to the creation of Oscar was that in 2012, the Supreme Court of the United States upheld The Patient Protection and Affordable Care Act (aka Obamacare), and suddenly about one million people in downstate New York were looking to buy insurance on their own (the market had previously been about 20,000 people, says Schlosser). “In every company’s founding story, or at least every company that makes it to a certain level in its evolution, is a degree of totally dumb luck,” said Schlosser. In Oscar’s case, it was fortuitous timing.
Oscar assigns every member a concierge team, made up of dedicated care guides and a nurse. Anytime a member contacts Oscar, either by phone or secure message, they’ll always get one of their concierge team members. By establishing familiarity with the team helping you navigate the health care system, the company is able to build a relationship with their members. If a member goes to the emergency room, said Schlosser, a member of their concierge team will know very shortly. They will then call to make sure the member understands what their care plan will be or to remind them to pick up any medications and make follow-up appointments.
Oscar offers its members a narrow network of high-quality doctors that offer all the specialties they might need. “You won’t get these network designs without the member engagements. You won’t get the member engagements without the technology,” said Schlosser. “That is the trifecta we have.”
Schlosser said that argument has been persuasive to large healthcare players, including Cleveland Clinic and Humana, both of whom have set up co-branded insurance products with Oscar this year. Schlosser said Cleveland Clinic, for instance, realized that if they wanted to make money “in the right way,” they would have to adopt some of the characteristics of insurance companies, not only collecting premiums, but also investing in people’s health. In these new arrangements, Oscar will split its profits, or losses, with the healthcare institution under this joint venture.
“These very sophisticated organizations are saying that Oscar has something we can’t get anywhere else –technology and member engagements,” says Schlosser. He says Cleveland Clinic had talked with other potential partners, but weren’t sure those partners could deliver a member experience that would be compelling. “They trust us to manage people’s healthcare properly, to understand who people are. Otherwise, this wouldn’t work.”
Watch the entire discussion: