Moon Cube Podcast: Clov Chronicles Supplement

Welcome to the 3rd episode of Moon Cube.A podcast where we discuss healthcare economics, policy, technology and a little company called Clover Health that’s overpromising and over-what? Did I say that correctly?Today, we’ll have a little bit of comedic fun where I will play act an interview with myself pretending to be Andrew Toy on the other end. I’ve been dying to get these questions off my chest and I know you have been waiting for answers with bated breath.Matt - Something. Something. Technology will solve the problem of lower cost and higher quality of care. In that simple formula we derive from each robot according to its ability and to each human according to his/her/their/(insert pronoun) need or - in other words - better health outcomes . In typical Marxian fashion, I’d like to introduce fellow comrade Andrew Toy, CTO of Clover Health, Ex-Googler and avid reader of the AI Manifesto, Singularity is Here by Ray Kurzweil.Andrew - Hi. It’s great to be here. But just FYI, we just hired a new CTO. I’m still President, btw. His name is Conrad Wai. He’s really great at everything that’s related to the future of the Clover Assistant, our flagship technology that will drive better clinical outcomes, reduce physician burn-out, and serve as a platform for future health delivery. He’s had experience in start-ups, product management, data analytics and growth; pretty much everything. He’s worked and led at Hinge Health, Google and Yahoo!Matt - Yahoo? That’s a little concerning. Andrew, let me start off with this question that all immigrants, regardless of race or background must answer, “Andrew, are you a communist?”Andrew - No, I’m not a communist.Matt – Are you sure?Andrew – Yes.Matt – Are you Chiquita Brooks-LaSure? BaDumTischAndrew – Haha. Nice one. She’s the newly-appointed CMS Administrator who is advancing health equity initiatives and renewing a multi-year mission through policy changes that very much aligns with Clover’s mission of improving health for all lives.Matt - Is it really a good idea to build a company on a mission or a slogan like health equity when we change government every 4 years? Haven’t we learned from the Cold War that these 10 year plans by efficiency-obsessed communist Nazi planners simply don’t account for the spirit of entrepreneurism and democracy?  Why should investors support Clover’s mission to make a government official look good to another government official, isn’t that communism, careerism, bureaucracy?Andrew – I think you need to look at it a different way, Matt. There’s an opportunity in healthcare to make sizable improvements in the form of savings to the government and in the mean-time create impactful software that can be embedded to the fabric of society; we’re talking healthcare sector, right?, a public good, for decades to come. At Clover, we want to provide world-class technology to doctors to be better. But not necessarily just better in terms of tracking everything and critiquing just to point out mistakes and punish doctors; that’s a dark totalitarian world-view.  We want to help them be better at what they do in critical decision-making and grant them autonomy to do so and software that pays them more to help lessen the cognitive load in their day-to-day interaction with patients. We’re one of the only companies out there that have truly embraced the open-network or PPO approach where our plans allow customers to pick whichever doctor they want at a rate plan that is even more affordable than incumbent closed-networks or HMOs and benefits that are more competitive. There’s nothing more American than consumer choice and that’s what Clover is providing because that’s what technology ultimately can do.Matt – Whoa, whoa, whoa! You’re paying doctors to use your software that you provide for free? So when does the trial period end?Andrew – There’s no trial period. There’s no gimmick or gotchas. We believe the Clover Assistant improves clinical decision-making so when patients are healthier, there’s savings on the other end and everyone is happy and doctors are compensated for their time well-spent using the software.Matt – This is concerning to me. Everybody needs to trust each other. I don’t like this.Andrew – We believe that people, doctors and Clover should be self-interested but enlightened self-interest is how you gain a step-wise improvement, right? Otherwise, you become profit-maximizing while being two-faced and that usually doesn’t last very long. People want better health. Doctors want to pay off their medical school debts and be fairly compensated for a life-time of service to health and not to be burned-out and overworked towards the end of their careers in the midst of a physician shortage. Clover wants to be a different type of company that designs the incentives to create thinking and motion so doctors and patients act virtuously and set-up their own regular behavior of enlightened self-interest for better health outcome. It’s kind of like game theory, right? It’s a delicate balance to maintain trust but if you set it up correctly without gimmicks or gotchas, you encourage the right behavior that drives network engagement, learning, growth and market share.Matt – That’s still not reassuring but let’s assume you have everyone buy into this, what is to prevent competitors from coming in, copying your model after your bore all the risk and losses, I mean, my god!Andrew – So I mentioned all the things like growth, learning and market share. But I want to emphasize mind share because physicians who use the software and their improvement at clinical decision making are the ones ultimately validating the value of Clover’s unique approach. If we can show that a holistic, branded experience that is the Clover Assistant has net promoter score that is consistently high, with eyepopping evidence of 13% MCR improvement in year 1, 20% MCR improvement by year 3, and having a strong track record of paying physicians near-instantaneous, why wouldn’t be on-board?Matt – Andrew, I’m an investor and not an investigator. I can’t learn all of these acronyms and code words like CMS, mind share and health equity. They all seem like mind control. Speaking of alligator, allegations. Hindenburg has noted that Clover runs a subsidiary that “sells” health insurance and could be a conflict of interest in the eyes of the government and tarnish your image. What is with that?Andrew - Healthcare is a lot to take in and very complex. That’s why incumbents have gotten away with being big and good without being advanced or innovative at improving physicians’ quality of life or designing a plan or system that’s better for the healthcare customer. It’s remained undisrupted for so long that the opportunity is now impossible to ignore. With regards to our Seek Medicare subsidiary, we gave out a response that there’s no conflict of interest. Seek Medicare actually signs up some competitors at a higher rate than Clover. We actually believe that as a full-stack insurer and a technology background, data is everything and having that customer experience data is vital to understanding trends and the health plan signup process. Obviously, Medicare Advantage star-rating is a perception obstacle for Clover AND a competitive disadvantage financially with respect to payments from CMS. That’s one of the insights we can draw upon, for instance that we simply cannot get if we contract tele-brokers and ask for a deeper dive.Matt – Wait a minute, your subsidiary was impartial and signed up customers to your competition? Well, I’m glad that the expenditure is down 70% yoy because I’m not too sure about that one. We only need to let customers know only on a need to know basis, am I right?Andrew – Actually, we think better informed healthcare customers are ideal members because by taking a responsibility outlook on health, members would engage the best with Clover Assistant because it can help them and their doctors care for them in that health journey. Although we like healthy members to stay healthy, it’s important to still do preventative check-ups at old age and engagement and responsibility are higher indicators for long-term success for health outcomes and our data-centric honest approach.Matt – Why is ubiquitous data so communist? And why are you building so far into the future with your expensive technology infrastructure now? Couldn’t you build that out after being a profitable health insurer first? You have a lot of employees distributed working remotely. Couldn’t you make a DAO blockchain out of Clover instead? Why am I investing in a Michelangelo painting in the Clover Assistant when you can be minting NFTs of healthcare software?Andrew – I’m not sure if I can answer all of that but the main thing comes back to what I was saying earlier about building out the right model first so trust is won and never lost. Second, once you kind of know what the global maximum is, it’s hard to deviate from it even if you want to. That’s why we chose to keep going deeper into the technology side of things with data analysis and information theory to help make the clinical decision making better and better. Our software design forces us to be constantly improving by iterating new versions every 3 weeks and that delivery helps drive clinical insights that are almost always relevant, and even when wrong, at least engaging enough for physicians to do what they do best. We also have to be a public company in order to enjoy this story-arc as a growing healthcare software company deriving revenue from the government. It’s heavily regulated and having anything that calls into question legitimacy, opaqueness, or health information violation would be an issue and that’s why security is taken very seriously.Matt – Well, I certainly enjoyed this interview and I want to congratulate you on your journey, your amazing earnings, and your new promotion as a one title only President of Clover. Welcome to the capitalist-class, comrade. There’s certainly a few things we agree to disagree with. I think it’s my right as an American to have unaffordable healthcare but it looks like Clover wants to tax me into paying for affordable healthcare for others.Andrew – Well, not really, we actually save the government money through programs like direct contracting and the soon-to-be ACO reach where it’s like DC but with health equity emphasis that aligns with Clover’s technological and policy-agnostic approach. Taxes wouldn’t be raised and Medicare Hospital Insurance Trust Fund would actually be saved from lowered utili….Matt – Okay, that’s all the time we have for today. Don’t forget to short $clov. C-L-O-V. This is Moon Cube. Signing out! Get full access to CLOV Chronicles at clovchronicles.substack.com/subscribe

Get full access to CLOV Chronicles at clovchronicles.substack.com/subscribe

Get full access to CLOV Chronicles at clovchronicles.substack.com/subscribe