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In Search of 'Meaningful Tailwinds,' Clover Exits ACO Program. What Went Wrong?

Analysis  |  By Marie DeFreitas  
   December 11, 2023

By the end of 2023 Clover Health will exit the program after inadequate results in Medicare direct contracting.

After two years of poor performance within the ACO REACH program, Clover Health is exiting.

While the company will fulfill its obligations to the program for the rest of the performance year, after that it will move on in search of sustained profitability. The decision will have no impact on its ACO REACH beneficiaries, according to the Clover’s news release.

Clover’s decision to join the ACO REACH program in 2021 came as a way to expand the company in the traditional Medicare sector; they hoped to expand their number of lives under their AI program Clover Assistant, and to generally increase the number of physicians they worked with.

However, under ACO, the company saw millions in disappointing losses.

According to Clover’s 2022 earnings report, the insurer saw $84 million in loss in Q4 of 2022, albeit a sizeable improvement from the $187.2 million loss incurred over the same period in 2021. For the full year, losses were $338.8 million in 2022, compared to $587.8 for 2021.

At the time, Clover Health CEO Andrew Toy said the company was focused on continuing to make gains to quickly turn losses into profit.

"In 2023, accelerating our path to profitability is our top priority, and I am excited by Clover Assistant's role in helping physicians identify and manage chronic diseases earlier, which improves care for Medicare beneficiaries," Toy stated.

What went wrong?

Clover attempted to counteract their poor 2021 results by cutting back their number of physicians they had in the program by two-thirds, but still weren’t able to recover.

Despite the repeat losses, Toy remains optimistic about the company’s future into 2024 and beyond.

Toy mentioned in a statement that while Clover did see the benefits of joining ACO REACH, the insurer is choosing to stick with its Medicare Advantage (MA) plans, which have proven more profitable.

“We remain extremely excited about the success of our Medicare Advantage insurance business in 2023 and intend to focus our resources on building that business and continuing to invest in Clover Assistant as part of our path to profitability,” Toy said in a press release.

[Toy spoke with HealthLeaders about Clover Assistant earlier this year. Read more about it here.]

Toy went on to say that the company expects “meaningful tailwinds” in 2024 from a number of factors including their partnership with UST HealthProof to outsource their administration workload, which saved them $30 million.

“Overall, this narrower focus gives us even greater optimism that Clover Health can deliver profitability on an Adjusted EBITDA basis for full-year 2024,” Toy said.

Art Gottlieb, principal for A2 Strategy Corp, called Clover’s exit one in a series of “wise moves” by the company, in addition to their UST partnership.

Gottlieb went on to say in a LinkedIn post: “Now if they were to shut down the Clover Assistant and just focus on the MA plan and semi-quarterly, critically acclaimed Clover Living print magazine, they might actually have something of value that another company would be interested in buying. It won't be worth billions of dollars, but it certainly is better than the alternative…”

Currently, Clover falls in average ratings for Medicare. In 2022 the company received 3 out of 5 stars from CMS, and 2023 3.5 stars. The 10-year-old company is currently valued at $457.8 million.

Marie DeFreitas is an associate content specialist at HealthLeaders.

Photo credit: KAUFBEUREN, GERMANY - JUNE 12, 2021: Clover Health company logo on a website with blurry stock market developments in the background, seen on a computer screen through a magnifying glass./ Diatel


Clover Health exits the ACO REACH program after disappointing losses.

Clover attempted to counteract their poor 2021 results by cutting back their number of physicians they had in the program by two-thirds, but still weren’t able to recover.

Despite the losses, CEO Andrew Toy remains optimistic about the company’s future profitability, specifically focusing on their AI program Clover Assistant. 

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