Mario Schlosser, CEO of startup Oscar Health, said they initially intended for Oscar to be a conventional health insurance company, but with a greater focus on technology. Soon they realized they would have to go “full-stack” and get involved in all aspects of healthcare in order to have a shot at building a truly innovative insurance product.
“The [initial] idea was, like you’re building a software project — let’s get the best APIs, let’s get the best platforms to connect to and work on, we thought that’s how we could build an insurance company very early on,” said Schlosser, speaking at CB Insights’ Future of Fintech conference. “That decidedly is not the case.”
When they started working with vendors within the healthcare industry (pharmaceutical companies, physicians groups, etc.) and trying to connect to their systems to get the data that they needed, Schlosser and his team realized that they couldn’t build the insurance company that they had envisioned in that way. First, there was a lack of technical expertise from legacy vendors in the space.
He described a meeting with an early vendor’s technical team that he said was indicative of the low-level of technical expertise in the space.
“We said ‘bring your technology guys, we want to talk about how to tap into your systems and get real-time data exchange between your systems and our systems.’ … [They were] the guy who unplugs the network cables and the guy who installs Microsoft Outlook on your PC … and they both fell asleep during the meeting.”
For a digital-native insurance concept like Oscar, not being able to secure high-speed, high-quality access to data from vendors and service providers was a problem. There was a second factor making things difficult as well: error rates.
“Healthcare vendors do not live in environments where they are beaten down on their error rates,” Schlosser explained. “Healthcare really tends to have a 10-15% error rate … and nobody seems to really care all that much.”
Schlosser and his team abandoned their initial plan of staying an “asset-light insurance company” to go “full-stack.” Going full stack, for Oscar, meant not just issuing insurance, but also gathering customer data, processing claims, getting involved with providers and clinical research, and more to help customers get higher quality care.
Building the system from the ground up let Schlosser and company do exactly what they set out to do: create an insurance company where they had increased access to data on all aspects of the care cycle. They also created their own policies around claims and service, which allowed them to make faster decisions and deliver better customer service. Schlosser railed against how complicated it usually is to choose a healthcare plan and said that using data to help customers choose the right plan is ultimately better for Oscar and the customer.
“We gotta be full stack, we gotta do everything ourselves, we have to build everything from the ground up,” he said.
“[Going full stack] is the harder way to go, but it’s the way to go for sure,” he added.