How come all of the big news happens when I’m on vacation?
Oscar raised another $375M from Alphabet. Verily, Google Capital, and Google Ventures have all invested in the company previously, including the $165M Series D earlier this year.
There are a few interesting specifics that Mario Schlosser gave in this WIRED interview connected to the financing. The company plans on entering Medicare Advantage (as we predicted) in 2020 and has been building different machine learning applications to do things like figure out which new market to enter and identify patients at risk for ending up in the ER.
Oscar’s bet on technology as a differentiator instead of scale is bolstered by its deal with Alphabet, which shares the same healthcare vision. This deal demonstrates a few key themes on how technology is changing health insurance and healthcare broadly:
Brand matters. People proactively go to Oscar when they have questions about their health because the company has invested in consumer experience. Oscar can also non-intrusively reach out to patients proactively because of the trust built.
Tech stack matters. Beyond anything else, Oscar’s real edge is its modern claims management system. Claims management (payments) is the glue that holds the health system together, but is also incredibly outdated (hence the numerous middlemen focused on cleaning and structuring the data properly).
With a modern claims system an insurer can have better real-time insights into patients (and reach out like we talked about above). Tech giants like Alphabet are only going to work with companies that have properly structured this data, which is probably why it made the big bet on Oscar.
Telemedicine alone is not a profit center, but should benefit a related business line. Oscar offers telemedicine for free and makes money by taking on risk as a carrier.
Healthcare is looking for a platform. To date we have yet to see a patient-facing platform that’s friendly for third parties to build on top of. Oscar has the potential to do this from the insurance carrier perspective by letting third parties access its claims management + aggregated patient data to potentially distribute their goods/services. I would not be surprised if Verily used Oscar as a jumping off point for its products. Especially as Oscar moves in the Medicare Advantage space, Verily’s products like diabetes management system Onduo would be useful.
A Group Of Unicorns Is Called A “Blessing”
We send out a client-only note several times a week with a collection of bite size insights, trends, and analyses of areas we think are interesting.
Last week, we looked at pharma investor track records and highlighted 9 pharma companies as potential future unicorns. If you’re a client, check out the note.
Transformers – Innovation In Disguise
You’ve seen our Innovation Benchmark Survey. Most companies say innovation is important, but few are pursuing transformative change. Enough talk. It’s time to walk the walk.