Last Friday, Clover had its SPAC IPO on the Nasdaq, opening with a stock price of $15.30.
Clover Health, the Nashville-based technology-oriented Medicare Advantage company, made its long-awaited public debut on Wall Street last week.
In October, Social Capital Hedosophia Holdings Corp. III, a Silicon Valley-based special purpose acquisition company (SPAC), announced a plan to merge with Clover in a reported $3.7 billion deal. Last Friday, Clover had its SPAC IPO on the Nasdaq, opening with a stock price of $15.30.
Related: Clover Health Expands its Coverage to Eight States and Triples its Footprint
Andrew Toy, president and chief technology office at Clover, spoke with HealthLeaders this week about the company's public debut, what its growth plans for 2021 entail, and his advice for healthcare technology leaders looking ahead to opportunities after the pandemic.
This transcript has been edited for clarity and brevity.
HL: How does the IPO help with Clover's growth opportunities and what are you looking at in the insurance market?
Toy: At the end of the day, IPOs are about capital markets. So, we believe that we've proven our model in our core markets, but we're just touching a small percentage of the total U.S. Medicare market. Our mission is to 'improve every life,' so we want to be all over the U.S. You'll see us aggressively move forward to bring the Clover assisted care model to as many markets as possible, and we think we're poised to grow quickly because there are two dimensions.
First of all, there is the open network nature of our Medicare Advantage plans that lets us go to more MA markets than most because many MA markets are hyperlocal around their narrow network. We're already successful in a wide network, we can go to more places than most MA plans.
Second of all, this new program called direct contracting from CMS, which launches this year, is still Medicare, it's based around fee-for-service, but because we're good at open networks, we're also good at the fee-for-service style network. We can get into there, have fee-for-service lives in our risk pool, and then follow up with MA plans as well. It's almost as if we have a double-pronged growth and that's why we're super excited to have the extra capital from the public offering because we think it will allow us to expand quickly.
HL: What is it like working with Chamath Palihapitiya and Social Capital? He has often talked about upending industries, so how can that approach apply to healthcare?
Toy: Chamath is a great person. We were already far down the pathway of a regular IPO, S-1-style offering. The reason we decided to do a SPAC wasn't like 'Let's do a SPAC,' it's because we decided we wanted to work with Chamath. It's less that we chose SPACs and more that we chose SPACs by way of Chamath.
What we like about Chamath is that he's comfortable making long-range bets, and also making long-range bets that the deep, fundamental use of technology can change the nature of our business. When I talk about our technology, it's about helping physicians give better care; I'm not talking about, 'Let's add a member portal and better insurance technology.' To me, that's just table stakes; of course, you should do that and we do that. What changes things is changing the nature of [care] pathways that are more personalized and making it more data-driven to give every physician superpowers.
That nature of using technology is something I think Chamath got excited by and that's why we wanted to work with him.
HL: Can you walk me through the Walmart deal, along with both the short-term and long-term expectations?
Toy: At a high level, we believe in having members get care, wherever they want to get care; wherever it is most convenient for them to get care, they should get care there.
It [might be] a little controversial for your audience, but I think one of the problems we're seeing right now and we're even seeing it with the vaccine distribution is that healthcare is overly concentrated within hospitals and health systems; It's too concentrated.
What we need to do is move, and not say 'Don't [hospitals aren't] relevant,' because they're incredibly relevant, but there are services that can happen in alternate, more convenient, and cheaper sites of care that can be moved out of the concentration of those health [systems].
When you see [Clover] work with someone like Walmart, we're interested in having that plan and that's the only brand Walmart-branded MA plan, but as Walmart expands and thinks about building these clinics that they have, we are able to offer our members and say, 'Listen, if you want to get your immunizations from your PCP, go ahead but if you want to get those immunizations when you're shopping at the Walmart because you go there twice a week anyway, why wouldn't you just get it there?'
If [a patient] could pick up a FIT Kit colonoscopy quick test, why have them make a doctor's appointment when we could just have them pick it up at Walmart? So, the idea of making care convenient for the patient and member, not necessarily convenient just for the health system, is what we're excited by and what Walmart's excited by as well.
Related: Walmart's Next Health Foray is Medicare Plan with Startup Clover
HL: What's your assessment of where the health tech sector stands right now and what advice do you have for leaders in that space?
Toy: The way I see it, we all agree telehealth should have [been used] for a while, there was a lot of inertia, and COVID kind of forced us past that inertia.
Number one: let's not go backward and revert to old habits. Second of all, I believe that [we shouldn't] even stay where we are. As a technologist, what we're doing with telehealth, which is lauded in healthcare circles, is like a one-and-a-half out of 10 in terms of progressing on technology perspective. We can do so much more.
It's not a technology issue, it's not even a funding issue because I know the budgets, they're pretty big; it is a willpower, inertia, and stuck-in-an-old-system point of view. At some point, we have to ask ourselves, 'Is that OK or can we just do better?'
Nothing needs to be invented to do better; it is simply sheer force of will and saying, 'This is unacceptable and we need to just do better, and not just try to manage the next year's budget or something like that.'
So, that's my little bit of a plea to your readers to say, 'Hey, if you need help, you just need to go back to your IT departments and look at IT with a strategy; there are ways to have your physicians get better software because all of that data exists.' It is the inertia that is needed.
Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.
Photo credit: Courtesy of Nasdaq, Inc.