Oscar Health is undoubtedly a digital health darling. The company is fresh off of raising another $32.5M from technology giant Google and has been in the news for the past several years as a startup leader, disrupting the old and stodgy healthcare industry. But it begs the question: Should incumbent health plans be worried or is Oscar just another flash in the pan of the digital health landscape? What is Oscar Health?
In order to answer that question, let’s start with – What is Oscar Health? Primarily, it’s a startup health plan whose mission is to disrupt the over 100-year-old health insurance industry. While they may not have the widest product offering, biggest brand name, or even the cheapest plans, what is interesting about Oscar (and their key differentiator) is their approach to offering and marketing health insurance. Oscar was founded in New York in 2013, around the same time online health exchanges were created and most people were mandated by the Affordable Care Act to have health insurance coverage. Their target market was millennials in New York and they positioned themselves as the ‘cool’ new startup on the block. They certainly don’t act or look like a traditional insurance company. Oscar’s simple subway ads and sleek video campaigns communicated a message that many people could relate to – the frustrations of dealing with health insurance. Many people’s first experience with the company is through their website – a simple and clean with flat design that emphasizes the focus on user experience and the end user. Oscar’s consumer centric approach of following up with a prospective member in the form of a healthcare “advisor” was wildly successful. This, coupled with their clean user interface and modern marketing campaigns, communicated the stark and clear distinction between Oscar and traditional health plans. Despite not offering the most comprehensive doctor network or product offering, they were still able to attract a very desirable customer segment of the insurance population – young and healthy 20 to 35 year olds.
Oscar acts differently than traditional health plans – they focus on technology as their core product and innovation in the form of wearables and telemedicine.
What Do Customers Think?
Oscar acts differently than traditional health plans. Oscar focuses on technology as its core product and innovation in the form of wearables and telemedicine. Another significant difference is their focus on insurance for individuals, rather than employers (although they plan to expand to employer groups soon). This distinction allows Oscar to focus on the end-to-end customer experience, from shopping for coverage to customer service. They send members frequent emails offering fun incentives or gentle reminders to get their annual checkups or tips designed to keep them healthy, all in a friendly and playful manner. Other examples of their consumer-centric tools include: the ability to type in symptoms in plain English and receive a list of treatments, user-friendly price transparency tools, and unlimited 24/7 free calls with doctors on call.
A large part of Oscar’s new business comes from referrals from existing customers. This is evidenced by the comments on their Google business page such as “I am very happy with my Oscar Health insurance” or “Oscar is such a great insurance company. I can use the app which works seamlessly and makes life so easy.” Many consumers rave about the customer service as being “so professional and pleasant” to the point of saying “Oscar is truly the only health insurance I have ever enjoyed.” These glowing comments stem from Oscar’s customer-centric approach, a refreshing reprieve from the typical consumer reviews and opinions of many other health insurance companies.
Not everyone is happy or satisfied with Oscar however, especially when it comes to the actual care and benefits they receive. Some people who have signed up for Oscar discovered the hard way that many procedures weren’t covered under their plan. Other members have criticized Oscar’s business practice, describing it as a “bait and switch strategy” and not being as transparent as their marketing portrays. Numerous members complain about the limited number of in-network doctors. Indeed, Oscar isn’t the answer to health insurance for everyone.
What Can Other Health Plans Learn from Oscar?
Disrupting an industry can be as simple as having a singular focus on the customer experience – which is essentially how Oscar was able to break into the health insurance market. They honed in on a single pain point of navigating and understanding the complicated health insurance industry. They provided prospective individuals with a better experience and have gained incredible attention as a result. In just under three years, Oscar has been able to build a base of 40,000 customers, a majority of which are millennials (a much coveted group within the healthcare industry). While these numbers pale in comparison to the millions of customers regional health plans serve, incumbent insurance companies still need to pay attention to what they can learn from disruptive digital health startups like Oscar.
First and foremost, focus on the core functions that members want and expect. Oscar started with a blank slate and redrew the insurance business model, focusing only on the core areas of value a health plan can offer members. This is exhibited in their mobile app, which simply allows you to search symptoms (in plain English), find a nearby doctor, compare medical services, and stay healthy by tracking steps, all on a simple and clean user interface.
Secondly, the faster health plans embrace the innovation occurring in healthcare, the more competitive they will become. New technologies are emerging to make life easier for patients/members, assist health plans to more efficiently manage population health, and help companies better understand members through big data analysis and insights. Health plans slow to change their old ways are going to get left behind.
Lastly, understanding the fundamental shifts in consumer expectations will be more important for local and regional health plans as the national competition begins to focus and devote more resources to creating a personalized consumer experience. Health plans should build direct consumer touch points such as a mobile app and make internal operational improvements to make the member experience more cohesive.
Startups disrupting and upending incumbents in other industries can be seen in examples such as Square in the POS market, Uber in transportation, and AirBnB in hospitality. Similar to these startup disruptors, Oscar leverages digital technology to remove complexity and streamline the user experience. The appeal of Oscar to venture capitalists is their ability to scale and replicate their approach across the US. It remains to be seen if Oscar can expand its product offering, grow geographically, and truly compete with the national health plans and ‘disrupt’ the industry. For now they are doing something right. At the very least, they’ve managed to get people talking about the possibility to make real improvements in a complex industry that has been incredibly slow to change. Whether or not Oscar Health is here to stay, incumbent health plans should take advantage of the opportunity to learn key lessons from this new comer.