Clover Health Investments, Corp. (CLOV) Earnings Call Transcript & Summary

All right. Good morning and thank you for joining us here at the Credit Suisse Healthcare Conference. I'm Jonathan Yong and will be moderating today's fireside chat. Today, we are pleased to have Clover Health, a tech-enabled health insurer, focused on Medicare Advantage and direct contracting markets. From the company, we have Vivek Garipalli, Founder, Chairman and CEO of Clover; Andrew Toy, President and Chief Technology Officer; and Derrick Nueman, VP of Investor Relations and Corporate Strategy. So the format of this will be a fireside chat, and you can e-mail me questions at [email protected], which should also be on your screen as well. So with that, welcome Vivek, Andrew and Derrick.

So just to get started, you guys recently reported your third quarter. So why don't you provide a quick recap and some of the highlights from the quarter?

Sure. Thanks, Jonathan. Thanks for having us. So I'll kind of hit just kind of the key points that we think are most impactful. So importantly, we've seen a big narrowing of the gap between our GAAP MCR and normalized MCR. So I think one thing we've talked about throughout the year is COVID has hit our markets, harder than our population, harder than other markets this year. And so we saw about a 850 basis point quarter-to-quarter sequential drop in MCR. And so narrowing that gap between normalized and GAAP. And our normalized MCR is around kind of 94.5%. So I think the other exciting thing is we recently reported 3.5 Stars for last year. So when we pro forma our plan on getting to 4 Stars, even if you assume no upside from future Clover Assistant value, no upside from future increased coverage on Clover Assistant, no upside from new clinical programs, that 94.5% pro forma for 4 Stars is around industry average of mid- to low 80s MCR. So I think that's a huge milestone for us when we pro forma that. And I think taking it a step further to some folks who aren't familiar with our plan designs, embedded in our plan designs is an open access PPO model, but price as an HMO. So the vast majority of our established markets, we're the leader from a benefit plan perspective. And from a growth perspective, the vast majority of Medicare Advantage growth is in PPO, not HMO. 90% of our members are in a PPO plan. PPO growth compared to HMO growth as an industry is about 2x CAGR. And so HMO growth is actually much higher CAC versus PPO. So it's another built-in advantage. I think on the direct contracting side, huge improvement there and getting closer and closer to breakeven. I think it was probably an 800 basis point improvement compared to Q2. So we're pretty excited about not just the performance improvement there, but also expected growth going into next year. And then just additionally, we have about over 60% of lives covered in the direct contracting we had with Clover Assistant visit, and that's just in a short 7 months. So that number will continue to tick up. That's our big value driver in direct contracting. And I think for -- as we look to next year, we gave some guidance around Medicare Advantage growth. So continued strong growth, a little over 20%. And then Georgia, which is our next big established market, is essentially doubling, a little over 100% growth, which is a big milestone for us. When we look at Georgia now, it has similar characteristics to New Jersey over the years. And we look at New Jersey, we're #2 in market share in individual non-D-SNP MA. When you add in fee-for-service lives, we're getting closer to #1 in market share for lives being managed by Clover.

Okay. That's interesting. So kind of sticking with MA. The company is expanding into 101 new counties, the bulk of it is in Georgia, and you're adding Alabama as a new state. If we look at those markets, how did the company go about choosing those markets? And what is attractive about them for you to expand into those markets?

Yes. I'll grab that. It's a good question. We're very proud of our cap expansion. I think it's a validation. We see this validation of our wide network approach, which is that we can go into new markets, build adequacy more quickly than others and be able to deploy Clover Assistant as our care management solution to wide network PPO PCPs. Because of that, we're doing a land-and-expand strategy where you'll see us land in markets. And then because under MA adequacy does sort of correlate to geography, we will then expand around our core market to continue to build those up. We did that in New Jersey. We cover almost New Jersey now. We've done that in Georgia. We cover almost all Georgia now. And then we do that in other areas as well. So when we land in markets, it's because we think that there are -- we are -- obvious plans are very favorable to the competition. We think it's because there's some good network of opportunity to build there quickly, and we think it's good as a land for future expansion. You'll just see us continue to do that. That's on the MA side. Obviously, on the DCE side, we're also building out our network, and we expect to see a lot of new doctors join us in the coming year.

Okay. Great. And then kind of sticking on to that. As you expand into new markets, how does the company think about hitting a certain level of growth in a specific state or county before continuing to expand even further within the state? So you're in Georgia, fell a little bit, but now obviously, you're going much bigger. What was the kind of threshold for you to say, "Hey, now is the time to really go a lot bigger into the state?"

Yes. And so I think that comforts well to the first question. So I'm not talking about the land part, but on the expand part of Georgia. But we have close to near full coverage now within Georgia as a state. That helps us from a network perspective, have a momentum. Also, as you mentioned, what we're seeing in our growth numbers is that Georgia looks like the earlier stages of our core homestays of New Jersey counties from a growth perspective. So we're very excited about growth in Georgia, and we fully expect that we would be able to continue to grow there quite well. So from a critical mass perspective, I think it's just making sure that we're in an area, we're able to lap the fact that our plans are available there. We grew very strongly if we were not that very [indiscernible]. And because of that, once we hit that level like we have in Georgia, we expect to continue a lot of momentum. And then we'll continue to do that in other states as well. But we're very happy with what we see in New Jersey and Georgia.

Okay. Great. And then kind of looking at some of the smaller -- or bigger states but smaller footprints that you kind of have right now, Texas and Pennsylvania kind of stand out where you're relatively small there. How does the company think about expanding in those? And is it a bit of refining your product before expanding? Or kind of what's your view there?

Yes. Absolutely. I don't think our product requires significant refinement. I'm not going to say we aren't going to refine it. Of course, we are. But we already -- if you look at -- it's [ AG ] right now, there's a lot of information on our plans out there. Our plans are already very, very strong compared to others -- other offerings in our markets. So we think our product is very good. But of course, there's other intangibles that need to grow in this market, which is buying share on PCPs, buying share amongst specialists and doctors, buying share amongst the local senior population. And so those take a little longer to develop sometimes as well. What you'll see us do is pair together Direct Contracting and Medicare Advantage. So I think a really key part of our strategy that others don't have access to is we play in fee-for-service and we play in Medicare Advantage, right? It's relatively rare to see that, especially on the wide network. So we can go to a doctor in these markets and say, hey, "We can work with you on your fee-for-service panel, right?" This is a new tool that we have this year and going forward that we think is very powerful that lets us bootstrap these markets faster versus the organic growth on the MA side. We think we would still get there on the MA side, but fee-for-service is a very powerful tool, because if you recall, Clover Assistant is used for 100% of the fee-for-service panel when a doctor signs up with us with Direct Contracting.

And I think just one thing to add in there, Jonathan, is when we -- on the expand part, our goal in any large market we get into is to get to #1 market share. So if we take New Jersey as an example, since 2014, the Medicare Advantage eligibles in terms of MA penetration has doubled since 2014. So United has been the leader in market share, but their MA lives have not grown that much since 2014. So Clover has taken a huge amount of share now getting to #2. I don't think there's another state in the United States where you would find an example of any plan going from basically a standing start to near #1 market share in a large state like New Jersey. And so in terms of going into Georgia, that's the goal there as well in terms of the expand part. And I think we've proven out something that other organizations haven't, whether they're large or small. There's definitely been examples of taking share in a county or so, but generally, that's due to some sort of provider alignment or broker alignment. What we've done in New Jersey is sort of the first example in Medicare Advantage across the country of getting close to #1 market share in a wide region. And then to Andrew's point of Direct Contracting, all of a sudden that jump-starts our ability to get to very quickly #1 share in New Jersey when we talk through all Medicare lives being managed.

Okay. Great. Kind of sticking to the state expansion. I mean how do you guys think about the time line to profitability? Is there a certain member threshold that you kind of need to hit before you get to breakeven or profitable status? And generally, what's your time frame? Is it 2 years, 3 years, 5 years? Just any color there.

Yes. So the way we think about it is that the #1 thing that we are focused on the KPI is lives under Clover Assistant management, right? And so that's the top of the funnel is people coming in through fee-for-service, coming in through Medicare Advantage. But if you -- how Vivek and I think about it, it's lives under Clover Assistant management. We have our ability to bring people under Clover Assistant management who are coming from original Medicare and who signed up by our MA plans. That's really, really powerful. Then doctors who are on Direct Contracting are all using Clover Assistant for their fee-for-service panel. And of course, we have the Clover Assistant -- those Clover Assistant doctors also managing the MA path, same product, managing quality, managing costs, better outcomes, lower cost for their patients there. So what we see is that's a number that we're pushing towards. We shared some information recently that where we definitely see a correlation between where we have higher Clover Assistant penetration and improved MCRs on our returning member population that we think are very good and favorable, normalized, of course, during COVID, but we see that converge with GAAP. And second of all, what we also see is that Direct Contracting is able to drive higher Clover Assistant CA usage because we're able to combine this original Medicare and MA panel for doctors, very powerful component of our strategy as well. So we will continue to be one of the fastest-growing MA -- Medicare companies. We intend to maintain that position. We look at it from both our fee-for-service lives under coverage and the MA under coverage position. And Clover Assistant is what then allows us to generate like those cost efficiencies, better outcomes, which will then lead to a path for profitability in a few years' time. We're not giving guidance clearly around that yet, but we do keep a close eye on that to balance growth with our CA growth.

And just a little bit of kind of relevant background on me. So my first phase of my entrepreneurial career was driving operating efficiencies and operating cost structure reduction. So the second business I built was buying hospitals out of bankruptcy. So those 3 assets I bought out of bankruptcy were losing over $100 million a year on an unlevered basis, and I led the turnaround of that and getting that to a pretty meaningfully positive EBITDA for about 18 months. So when we think about doing it in an intelligent way, we're excited about not just the synergies that Andrew described, but we do have kind of unique understanding of how to intelligently drive efficiencies in a way that doesn't impact growth, in a way that will probably enhance growth is really how we're thinking about it.

Okay. Great. So you achieved 3.5 Stars for plan year 2023. There were some pandemic-related adjustments that we think factored into the overall Stars improvement across the industry with one of your larger peers, indicating that they actually expect their Stars to actually reverse after stepping up in '23. Can you talk about your Star ratings profile? What kind of stood out to you? How you kind of believe you stacked up to the industry and your peers? And then are there any concerns that it may step back?

Yes. So obviously, the Star rating rules were changed for 1 year. I think that's what you referred to because of COVID. And a lot of plans who, honestly, I think did not find -- they feel they would be at 4 Stars, for example, or receive 4 Stars, and that's causing a lot of nervousness in the generalized industry is what we're seeing because if you weren't expecting it and you've got 4 Stars, you now have increased revenue, which will either go to MLR. And if you're near 85%, that will drop you below the threshold or you have to put that -- you mean to put that back into benefits. But if plans think that they're going to reverse, that will be a bad idea to put those into benefits, right, because you will revert and have to cancel those benefits. That's a bad idea. So I think what we might be seeing is a lot of plans to be nervous because they can't put in benefits. They're scared they're going to revert or they're worried about taking it out as profit, and they'll look like they're profit-seeking. So that's more on the unexpected 4 Star side. On our side, we definitely have always guided that we expected to get to be a 3.5 Star soon. We achieved it 1 year earlier, and I think that we're very, very proud of that, but we expect to sustain that. It has always been our plan is that we've been putting features into Clover Assistant. We've been rolling out operational improvements into our Home Care program around Stars. Stars is more challenging, as we've talked about on PPO. That's just known to be true in studies. It's also more challenging when you have a high underserved and lower socioeconomic population than most, and we do in our mix because we serve everyone. And because of that, Stars is generally more challenging in this population. But we have a strategy to Clover Assistant that we are very comfortable with. So we're comfortable with our Star strategy. We moved to 3.5. It's a year earlier. That's fantastic. As Vivek said, something I want to also emphasize is because our plans are so good already, many other MA plans will achieve 3.5 Stars, which gives you a higher rebate on your bid. And what happens is they then fund better benefits, and their MLR doesn't change. We already have very strong benefits, amongst the strongest in our population. We prefunded those effectively. So what we will see is when we get that higher rebate, that will then adjust pro forma into our MLR, and we've talked about that before. And we think that, that's always been part -- well, that's always been part of our strategy. So we'll see a significant MLR improvement from 3.5 Stars. That will happen in the future financial year '23, and then we will move onwards from there to achieve 4 Stars in the future -- I mentioned, in a year and receive the additional revenue increase from there. If you just take those adjustments from just Star rating, apply them to our Clover Assistant MLR, I think -- MCR, you'll see that I think that we are in actually quite a strong position.

Okay. Great. I actually want to go to one of the comments you made about how some of the other MA plans are a little bit nervous about putting into the benefits or taking profit. Given how elevated, I guess, the overall Stars were this year because of the pandemic-related adjustments, is there a view from your perspective or you may have heard that there may be a tightening of the Stars moving forward? You have talked about health equity being an important component. Do you see that really changing because of how the Stars align, for lack of a better word, this year?

Yes. Yes, I don't think you've intended a pun but a good one. Yes. So honestly, very good framing. A lot of plans with the 4. I don't think that's meant. I'm speaking -- I mean, obviously, I'm not CMS, right? But I don't think that was necessarily the intention, but CMS was trying to be fair also during the COVID period. So support their intent makes sense, right? I think you have a very good framing there. Like plans don't know where they put this money, right? Like it's very weird for them. It wasn't part of their -- again, no pun intended, plan, right? But they're trying to figure out where it goes, I do think that there will be a tightening. And you said it right, the tightening will be around the fact there's already studies coming out of CMMI and CMS around how certain populations -- and you can just -- I'm not talking about just ethnicity or socioeconomic or area deprivation index, all of these things flow together, right, from a geography perspective and demographic perspective. The underserved population, when you look at it, plans who basically focus on not having those bad membership, I'm using a narrow network to basically avoid doctors who serve that membership, avoiding doctors who have Medicaid panels, right, plans who do those perform better on Stars, and that kind of logically what makes sense. When you think about it, that's not meant to be the strategy, right? They're not meant to be like, well, I'll get better Star ratings by just not having very, very many Medicaid doctors in network, in my HMO. That's not a good idea. So if you want to do that, fair enough, but you should be at 4 Stars because of it, right? And so I think you will see that CMS will make adjustments, we believe, to compensate for that. And that would be a headwind for other plans and [indiscernible]

And just when you think about it in terms of wearing kind of the investor hat as a public investor, so putting the Clover aside for a second, we obviously -- we're very clear that all these policy headwinds are actually massive tailwinds for Clover's model and our long-term free cash flow. So if you look at a lot of the incumbent Medicare Advantage organizations, I would argue, and I think I'm going to be right about this, is the long-term projections are overly optimistic. So the incumbents trade on P multiples. There's an implicit assumption that those earnings are sustainable long term, and they're really not. So if you take kind of the growth aspect, 2/3 of MA lives and incumbents are HMO. HMO's growth has stalled. It's half of PPO growth. So the CAC is implicitly higher on the HMO side. So that's number one. The second part is those large incumbents, even though the growth is on PPO, their business funnel for PPO is to funnel them into the HMO side. So again, not sustainable. When we think about Stars, there's a lot of visibility into Stars. So even -- let's say next year, the odds are decent that there will be very specific proposals in the call letter around health equity should be incorporated into the Star score and maybe into the risk adjustment side. So now would that take another year to cycle into policy and another year, so forth. But at some point, whoever is the first to take those numbers into account, into the long-term projections is going to avoid holding a falling knife from a P multiple contraction perspective. And that's just a matter of time. And we've seen this happen with health care services companies before where there's this assumption and the government will not make changes. But when they do, all of a sudden, you have a 1-day crushing of companies that have been relying on certain policies. You're seeing it all over the news now in terms of core parts of companies models are being called into question. And I think you have to really look at, are you invested in a health care company that actually has a tailwind behind it or a headwind behind it? That's going to have a long-term impact on valuations.

Okay. Great. Kind of shifting to some of the commentary from earlier about market expansion. When you think about Direct Contracting, you were talking about how it -- some of the lines in with the MA fee -- rather MA and fee-for-service lives. How does this factor into your market choices? And does MA lead DC? Or is it vice versa? Kind of how do you view that?

Yes. I thought that's a really good question. So you put it well in that Direct Contracting is a vehicle for us, pure play in the fee-for-service market. I think that's the right way to think about it. One way or the other, the government and Medicare has to work on fee-for-service to get better outcome at lower cost as well. I don't think the government will intend to move everyone into MA plans, but we need to bring some sort of like ways to control the cost within and that increase efficiency within fee-for-service. That's why things like Direct Contracting exists, and we fully agree with that, and that's why we target the fee-for-service market and the MA market with Clover Assistant. Beyond that, to your point, Jonathan, I don't think we have to go one way or the other. Our strategy is flexible around both of those. It's all around our physician basis. We are a physician enablement company at our heart. We believe in improving the capabilities of primary care physicians and their ability to care coordinate and quarterback for their patients. And so the way we see it is what's the easiest and best way to get that physician, used to and up and running at high engagement with Clover Assistant. So obviously, it's a brand-new market for us where we are not there in MA or maybe just entering with MA. The fee-for-service population will naturally be a better place for them to use Clover Assistant first as we build up MA presence in that market. For markets where we are significantly more present, right, our home counties, well, it tends to be the other way around. What we've seen is we have both kinds of physician in our CA population. And so -- and both approaches work. Now from a pure strategic perspective, I do think that because customer acquisition cost is significantly lower with Direct Contracting, remember, we can get that with a purely B2B motion, right? We sign up an existing doctor who already have patients. There's no patient switching that were involved with, with our Direct Contracting Entity. They work with us. We bear risk, right? They're now in Direct Contracting, and all of those claims [ of live ] patients immediately move into our risk pool. With just a B2B motion, we've been -- we are able to get a lot of lives on the Clover Assistant management now and into our revenue pool and our risk pool. So you've seen us build our DCE very quickly that way, and I think it's really powerful. That lower CAC in DCE allows us to grow Clover Assistant, grow physician engagement, grow our presence in markets very quickly. And so generally, I think you will see us lead across the country with DC, but doesn't -- I'm just saying it doesn't have to be that case. It just happens to be because of the number of states we don't have any plans in yet.

Okay. Great. So DCE is obviously a very new business line for you, new program with CMS. How do you see the longer-term potential here, whether it be margins? Where do you think that could get to? And then do you see it as a bigger opportunity than MA given that there's obviously less incumbents that you have to compete against and different product lines that you have to build out?

Yes. Absolutely. So I mean love both lines of business. I'm not going to pick favorite child. But like all children, they have different attributes also that make them lovable. I think that DC, the Direct Contracting Entity, just go building on what I said just now. Really powerful is our ability to go to any state. Remember, we don't need to build adequacy for DC. This fee-for-service in every state, every county, go to a doctor and say, work with us in DC. You already have fee-for-service patients. You don't have to go with downside risk. It's super powerful. We don't -- you don't need to switch anyone in and out. We're not building clinics in those markets. We are not going in and saying we need to move people and say, no, no, this is an in existing panel for fee-for-service. We work with those docs. We get them on CA. They're in our risk pool. I think it's a differentiated model. Because of that, CAC is on that B2B motion. We can move really quickly on it. And what we're building -- and I'm not saying it should be a 0 margin business. But if you think about it as a 0 margin business, even if that was the case, we are immediately stacking up highly engaged Clover Assistant usage throughout the country with PCPs. And that's really, really powerful as a [indiscernible] platform, right? Now I do think there's an enormous number of opportunities because as we launch MedEx and care coordination capabilities, we've talked about our new oncology program. We're going to go through all the current diseases and make sure that we have really great programs for all of them, and we may put them at the fingertips of PCPs to order. We're already seeing that be very popular. As we stack that out, there is an amazing opportunity to improve medical expenditure and efficiency of both the DCE and MA side. That will drive margin within DCE. I just wanted to call out that even at, speaking as a technologist, even at margin 0, the fact that we're driving out highly engaged usage of PCPs -- independent wide network PCPs on our software platform is incredibly powerful, I believe.

And then just from -- again, kind of a valuation perspective, when you think about a DCF analysis, a huge component of it is sustainability of those cash flows. And there's an obvious reason as to why a lot of incumbent organizations have not gotten into Direct Contracting because essentially in Direct Contracting, the only real way to create business value is to drive clinical value. You have to drive total cost of care savings, and that is not the model of incumbent organization. So when -- and you think about MA, there are lots of strategies that organizations deploy that aren't necessarily sustainable long term from a margin generation perspective. And so when we think about generating free cash flow and Direct Contracting, we know the power of that. The sustainability of driving savings for the federal government in a way that's aligned with physicians and drives down total cost of care while not increasing cost of the government is something that's very powerful and sustainable when you look out 10, 15, 20 years. So yes, we look at it in terms of lines of business, MA or DCE from a technical perspective. But in reality, we really think about how are we driving sustainable clinical value that makes financial sense for us, drives value for physicians, lowers total cost of care to the government where consumers are benefiting from us. That's really what's sustainable. That's really fundamentally underpins our strategy in MA, our strategy in DC. Our strategy in MA is very similar to strategy in DC. The economics might be slightly different, but the way we drive clinical value is very, very similar. And that's something that I think again is going to become clearer and clearer in the next 24 to 36 months as to how do you value the sustainability of certain company's cash flows.

Okay. Great. So Direct Contracting launched in a pretty difficult time period with COVID and everything. I mean have you heard anything from CMS about how the program has performed kind of given all the issues right now with COVID? And then along that, are there going to be any adjustments that you're aware of or at least that they're talking about in terms of the benchmark rate, et cetera?

Yes. So great point. Obviously, COVID is not baked into any of the benchmarks right now, right? All the benchmarks were measured during non-COVID years. CMS is fully aware of that. They've talked about that. They have the ability to make adjustments based upon unexpected, meaning not actuarially calculatable changes in the fee-for-service real claims, right? So obviously, we can look at the claims and say, "Hey, that's not what we would have predicted for fee-for-service. Therefore, the benchmarks are probably wrong," if you see what I'm saying. So there's definitely ability to do that. And what -- I think the other thing that is very clear in the data is that it's a region-by-region change as well, right? Not the whole country is not affected by COVID the exact same way. I think we are very aware of that, and CMS is very aware of that. So as they look at, go through, they need some time to put through all that data, look at on a region-by-region basis and look at sort of regional-based impact. Then we'll see whether they do anything. I think everyone is aware that the benchmark's intent, which is going to be a fair measure of what spend should have been doing a DCE year or a fee-for-service year, that is obviously not valid during the COVID period.

Okay. Kind of just think about DC long term, it's -- obviously, there is an expiration date on the program. If you think about -- if you guys are successful, if all the other DC entities are successful, is there a concern from anywhere along the chain basically that if you guys are successful, the benchmark rates in MA will come down and this could have an effect on you there? Or kind of how do you think about that?

Well, top level, and this is going to be a little bit controversial [indiscernible], it's a good thing if rates come down, right? That means we're increasing sustainability on the Medicare -- of the Medicare program. It doesn't help anybody if we just run out of money as a country. We're not sustainable right now. So at some point, we have to make this be efficient. And I don't think that just being an insurance company who could just do profit-taking by increasing premiums all the time like happens in commercial, right, that's unsustainable at the end of the day. So a tough level, I think, hopefully, people generally like agree with me. I think the other thing we would say is we are a Medicare company. We started Medicare Advantage, but we are a Medicare company. And then from there -- fee-for-service and MA. And then from there, even higher, we are a health care company, right? It's about managing current disease burden, increasing -- making better options for people at lower cost. There's enough inefficiency through lack of coordination or data-driven care right now that [indiscernible] efficiency. So even if top level rates come down, there is not inefficiency in the market that we believe our technology-based approach, delivering personalized care, data-driven care will work in Medicare and will work in other forms of health care as well because we're all human being at the end of the day. So as the program changes, as Vivek has said, we believe that our generalized approach is flexible. It's agile. We will be -- just alongside that. It will be harder for incumbents who have just sort of built a model for MA, and they're like, oh, I like MA. I like risk adjustment. I kind of play this game. Like that's much harder when you're sitting on that local [indiscernible]. Those are the businesses we were referring to that sort of come down. We're building for the long term. We're building for the generalized view that as a country, we want those better outcomes, sustainable costs. And our platform can scale like software to deliver that. So I think we feel good.

Okay. Great. Turning to the technology side now. On Clover Assistant, when we think about the providers who are high utilizers versus low utilizers, I assume the low utilizers, they just don't want to use any other system beyond what they currently use, or to some extent, not even the systems that they currently have on their practice. But what do you hear between the high and the low, kind of what's the sticking point for the low utilizers? Why don't they use it? And is this just something that you have to accept that there will be low utilizers and there's really nothing you can do about it?

Yes. So I mean there's always going to be a long tail. Like I'm speaking to a technologist here, like it's impossible to say there isn't a long tail. There always is a long tail. However, I won't intend to see how -- I took at a high level is utilization is roughly -- not completely, roughly correlated to the panel size, right? Because the more you use something, the more it becomes -- it goes into your muscle memory. So I don't think it's 1-system, 2-system, 3-system thing. It's more about what are you using every day and where are you building your muscle memory around something. We feel very good about Clover Assistant product quality. So very rarely is it, oh, I just don't want to use anything else or about Clover Assistant itself. But if you have out of 300 members, you have 1 Clover member and you use Clover Assistant twice a year, it might be hard to build muscle memory around that. We can see that. So this is a very powerful approach where, once again, fee-for-service and Direct Contracting can help where we're seeing that if we bring that approach because the fee-for-service panel is almost always fairly significant for anyone who has a Medicare panel in general. That bootstraps us into higher levels where users can actually -- physicians can build that muscle memory. Now it's at the MA plan plus the fee-for-service panel, right? We're looking at ways that down the line maybe they can use Clover Assistant even more generally, right? And so it's always about building that engagement so that they're in it every day, using it as part of their regular motion. We don't see it as being a how many systems thing. It's a muscle memory thing.

Okay. That's interesting. As for new features or capabilities, what are providers looking for? And kind of what are you looking to add in the future?

Yes. Absolutely. So I think there's like a bunch of different areas that we go into. We're always adding what we call physician quality of life. Physician quality of life features are just saying what can we do to reduce bureaucracy, reduce friction. Like no health care technology system is free of those, especially like you said, Jonathan, when they interact with other areas. We're looking to reduce double documentation. We're building more EHR integrations to make the flow more seamless, all those things we've talked about and they're landing, right? Like we've already started launching those features. And we'll just keep on having those quality of life -- a cadence of launches around those areas. On the clinical side, we're extremely excited. Physicians are excited about. Now how do we support to make it that you can basically order a bunch of services to what -- use as physician superpower thought in a short amount of time, say, hey, what are personalized recommendations we could make to the physician? Remember, we never give financial incentives to physicians to agree or disagree with us. They can always use their clinical judgment. But when we say, hey, "Do you want to order -- this person might be unfortunately starting a cancer journey? Do you want to have free supportive services come around oncology?" We're seeing that be a really popular thing to say that people want to consider, hey, this person is very comorbid. They're seeing you less and less frequently than they used to. Do you want to order free supportive services around home care? Really popular track of thought from our physicians. So there's so many places we can go with that where we can make it easier for the PCP to quarterback and then say, "Yes, that's what I want. That's what I want. That's good for this patient." They use their clinical judgment. They work with us to say, that's something they want through Clover Assistant. We help deliver that service and then report back on how it's going to the PCP. That's a really powerful thing we could do with Clover Assistant that we will continue investing in.

Okay. Great. We're running short on time here, so let me jump ahead to a few of these other questions. But you provide CA for free right now to the practices and physicians. With any technological product, there's always a viewpoint of when can you monetize this, will you monetize in the future. How do you think about that? And is this perhaps something contemplated for further down the line?

Yes. So I think the way we think about it, Clover Assistant wasn't built necessarily for Medicare Advantage. It wasn't even built with just Medicare. It was built to help make data-driven personalized recommendation to primary care physicians, and that drives better outcomes and lower costs. And I think that is actually true for almost all part of health care. It started in Medicare Advantage and the Medicare fee-for-service because, obviously, the older population will all get sicker as we get older. There's just higher value you can deliver through that approach on a day-to-day basis within those populations. But we want to move as much of Medicare into our risk pool. We will help manage that pool. We will deliver savings to the government. We will deliver better care to their members. We will help the physicians for quality of life, they feel good. Every one, we hope, will win, will fit through our model. And then as we go forward, we can look into launching in other lines of business, like other things like outside of Medicare, potentially. Certainly, Clover Assistant, there's nothing that binds us to just Clover as a payer, of third-party payers. We have ways because we've built entirely in the cloud. We're built entirely on open standards. We can integrate that into a risk-bearing payer, into a risk-bearing provider. That is absolutely possible, Clover Assistant to be future-proofed this way. So while I have nothing to announce, I will say that my overall KPI is lives under Clover Assistant management. And I want that to [indiscernible] approach everyone in the U.S., like over time, right? I'm not going [indiscernible] next year, but that's where we market here.

Okay. Great. Well, with that, we're basically out of time now. So I'd like to thank Clover Health, Vivek, Andrew and Derrick, for joining me today. And for everyone else, enjoy the rest of the conference. Take care.

Thank you, everyone. Thank you, Jonathan.