Clover Health is restructuring its operations and cutting jobs in a bid to turn a profit.
The insurtech said Monday it will outsource its “core plan operations” to UST Health Proof, a technology company that provides administrative services for carriers. Clover said the decision led to 10% of its staff being laid off. The company reported employing 656 people at the end of last year.
The contract is aimed, in part, at helping Clover Health more efficiently process claims. At the end of last year, Clover reported $137.4 million in unpaid medical bills, of which more than 10%, or $124.1 million, were incurred but not reported, meaning they represented management’s best guess about what the insurer owed providers.
Clover Health did not immediately respond to an interview request.
The company said the restructuring will result in a $9 million charge in the first quarter. The moves will generate $30 million in annual savings beginning in 2024, it said.
Clover Health is a Medicare Advantage insurer founded in 2014 under the premise that technology could so effectively manage members’ medical costs that patients could visit any provider.
The company narrowed its net loss 42.3% year-over-year to $338.8 million at the end of 2022. Clover Health’s revenue, meanwhile, grew 136.1% to $3.4 billion due to growth in federal Accountable Care Organization REACH membership. The insurtech had nearly 89,000 Medicare Advantage members and 164,000 ACO REACH participants last year.
Clover Health has said it will cut its participation by two-thirds in ACO REACH this year after failing to control members’ healthcare costs.