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

Perfect. All right. Great. Good morning, everyone, and welcome to day 1 of the Citi Healthcare Conference. I'm Jason Cassorla. I cover health care services here at Citi. We're happy to have Clover Healthcare today. Joining us in the company's CEO, Andrew Toy. Thanks for being here. We've asked Andrew to take us off Clover Health strategy, and then we'll jump into Q&A.

Sure. Yes. Well, thanks for having me here today. Clover, we are a Medicare dedicated company. So we are focused on the Medicare population and providing coverage for Medicare [ eligibles. ] We have this kinds of business mainly around Medicare Advantage, which is what we're most known for, the private form of Medicare, but we also want to cover every possible Medicare eligible. So we are participants in original Medicare known as fee-for-service by our ACO. And we also have a home care practice that we're doing much more with, where we look after actual seniors [indiscernible] disabled in their home where they become sufficiently sick that they require that kind of care. So we're very focused on Medicare. And what really changes our approach towards that, I think, is that we tend to work with doctors in a very wide network. So we don't do narrow HMOs, which is what Medicare Advantage is often known for. We blend the idea of a wide network, which maybe people get in original Medicare with narrower networks with HMO and say, well, none of those models are perfect. Let's have a Medicare Advantage plan that has a very, very wide network. And then what we do is we give our software platform, Clover Assistant, which provides data-driven insights to physicians, mainly primary care physicians right now. And what they do is use the platform so that they can diagnose and manage diseases earlier. So what we're very focused on is Medicare and then diagnosing diseases earlier, managing them earlier. Because as we all get older, we will all get chronic diseases. It's unfortunate, but it's just the way it is. So unlike younger folks who might be able to say the ACA, where it's more reactive care or where you're much sicker, quite young. As people age in, the diseases of aging, we believe those are all about managed them as early as possible, and that's what our software platform does.

Okay. I appreciate that. And then let's just get into what you guys reported fourth quarter earnings yesterday. Maybe just give us the high levels, your thoughts on the quarter, how it played out relative to your expectations, anything else along those lines.

Yes, we closed that Q4. We are pleased with the quarter. We closed out the year obviously as well, we closed out 2022. I think that what you saw there is that we have material growth in our top line revenue, which we're very happy about across the board as well as in the insurance division. MCRs were significantly improved year-over-year, which we're very pleased about as well. That continues a trend quarter-over-quarter and for the full year, significantly better than the year before, which was heavily impacted by COVID. So I think things started to normalize last year, continue to hopefully normalize this year, and that trend is we enjoyed last quarter. So very much happy with that. Also, we announced like as part of -- in the calendar year last year that we would be getting 3.5 stars again on our PPO plan, and then we would also get 3.5 stars on our HMO plan. That was something that we were proud of achieving, and I think will also help us as we go into next year. Also, what we discussed is that we are very focused on growing that home care practice that I mentioned just now. I think you'll see us talk more and more about that in the future as a key part that we're managing medical costs for the sickest portion of the population.

Got it. Okay. Maybe let's just start on your Medicare Advantage business. And I think with Clover, you guys have shifted from a growth outlook to more of generating profitability, much more in this near term. You're starting the year with around 84,000 members. Basically effectively flat from where you started in '22. Was that in line with expectations, the way you kind of priced your plans? Or are you seeing any incremental competition benefit design changes or anything along those lines that could have impacted where you thought enrollment kind of showed up at the start of the year?

Yes. So I think that we ended up where we thought that we would be. But the way I would change the framing slightly is that we've been very focused on looking at our insurance line revenue. And as we optimize for profitability, the revenue number, obviously, is a little bit easier to look at versus just a population and a number of members that we have. So while you're absolutely right that the year-on-year growth is about flat, I would note that we have material growth in our actual revenue, but that expectations we put out for 2023. And so that's a number we're managing because that helps us with our half the profitability. So that is attributable to, obviously, a PMPM revenue increase. Stars is in there, pricing our plans against the benchmark for profitability is in there. So there's a number of factors that drive that PMPM increase, but that's the number we've been managing towards.

And then maybe to that point around driving that revenue, I think you're up 9% year-over-year. Maybe is there a way you can help bifurcate the differences between the pure rate and maybe just anything on the benefit from the Stars, just so we have an understanding just on what's kind of more in those numbers as opposed to specifically your benchmark kind of the way you're going to approach benchmarks in the [indiscernible].

Sure. Yes. So I think we'll have much more to talk about that as we have actual experience emerge into 2023. So it's a little early to talk about it right now, and we'll talk about it more in our first quarter 2023 earnings. I can reiterate that we shared that we believe that Stars will have an [ effect ] between 300 to 500 basis points this year. We'll check into that and talk more about that. But we've said that in the past. And I would also say that it is a great blend. It's just how we geographically look at our plans and made adjustments. To your point, like last year's season was a season whereby a lot of larger plans, I would say that, for example, Humana. Humana came very strongly in the growth season and priced their plans very, very aggressively is what I would say. That's common knowledge, I think. Bruce has talked about that. And that was a good strategy for them to be pushed really hard. I think that, that will then flow through in the opposite way to their plans. We were sort of on the other side of it. I'm very focused on looking at the core benefits that people really wanted pricing around those and maintaining those, pulling back maybe from some of the richer ones that weren't being valued as much by the member, be smart about that. And that's flowing through into those revenue numbers and also helping with retention, which is our main focus, and that higher retention capability, which then goes into this year also contributed to that revenue [indiscernible].

Okay. Got it. And maybe just to your point around retention and using the Clover Assistant, all those lines. What is your retention number? How has that trended compared to last year, now that your [indiscernible] is basically flat, just to give an idea of the sense of the retention.

Yes. So we're not sharing the pure retention number. But what I can say qualitatively is that we're absolutely focused on it because not only is it a systemic to MA in general, that retention drives better MCRs, because returning members generally have better MCRs, but also those returning members have Clover Assistant visits. We spent a lot of effort getting into a Clover Assistant doctor or maybe they are engaged with our home care program. So retention is absolutely a core focus for us and the driver of the business.

Excellent. Got it. Okay. And maybe you highlighted this a little bit on your Stars, right? Your PPO plan got bumped up to 3.5 in and '23, you maintained that in '24, your HMO plan. You guys saw a 0.5 point bump in '24. Can you just walk through some of the changes you've been making to kind of bolster those star ratings? How you feel about the sustainability of those ratings? And if you see a timeline or process in which maybe your star scores could get or improve to perhaps 4 stars and above, and then if there's anything functionally that needs to be added, we think Clover Assistant to?

Sure. Yes, lots of different things to touch on. I think in the stars. So let me go and you can ask more questions around it. But I think Stars overall important part of being successful in Medicare Advantage. So we're definitely looking at ways to stay at 3.5 stars and go to 4 stars like you said, that's how you look at these things. With Clover Assistant, I think that's something I would flag that's very differentiated about us. It's not only are we tending to be successful on a PPO harness, which is different than most -- the common wisdom, which is the go to at HMO. But we also recognize that on the PPO harness, when you're looking to serve a wide set of folks, there's a lot of benefits of that. We've demonstrated that we can grow very quickly because our [ attention ] is to serve people who are just broader than just living right around a given data health system, for example. We've done [indiscernible] a more diverse population, gives us access to a wider total addressable market. It does give somewhat of a headwind to Stars, though. That's something that's noted by CMS that plans which are offering wider networks, which means offering more physician choice, more physicians to go to and who are more ethically or socially [indiscernible] diverse, both have a headwind to stars. Now we've been managing under that headwind for quite some time, and we've had improvement, and we think we will continue to improve. So I feel good about that. The nice news is that CMS is officially acknowledging those dimensions and putting out rules where in future years, they are going to adjust against those, so that there's our tailwinds to plans that have more diversity which tends to correlate with PPOs as well. So we're not counting on those in order to get star improvement or maintain stars. It's just something that we're very excited to see CMS really focus on and actually deliver via their rule-making that they expect plans to actually perform on a broader set of the population and not just select to a population that delivers necessarily higher star ratings. Like I said, we're not counting on that. I think the benefits of our approach outweigh one of the headwinds to Stars where we have access to a much broader population and we've shown we can manage stars in that environment through our upgrades getting 2, 3.5 stars and then getting to 4. But I just wanted to say that I think that CMS is doing a good job [ on that front. ]

Got it. Okay. Sounds good. Maybe just jumping to the proposed '24 MA rates. On the fourth quarter call, you discussed that Clover is perhaps somewhat insulated, I guess, compared to others on the risk coating changes CMS is proposing. Maybe just unpack those thoughts a bit. And if the proposed rule is finalized as is, would it impact your go-to-market strategy in '24? Just any incremental thoughts on '24 proposal?

Yes. So I think that this is good, this calendar year's AEP which will be the 2024 AEP. So speaking just as an MA plan in general, like we have not finalized our bids, almost no plan at this point would have finalized their bids. The advanced notice is not even finalized yet. RADV mostly is, but the new changes to the risk scoring algorithms that HCCs, et cetera, have not been finalized. But I think a couple of things make this upcoming sort of 2024 season interesting. Number one, just going back to the stars point you just said, while we maintained our 3.5 star rating, got a 3.5 star rating upgrade for our HMO, I do think that a number of managed care organizations have star challenges in previous years, which will emerge next year basically as well. So those are known knowns that were coming into this season, that has a bit of disruption to the environment. Second of all, on the risk adjustment side, these new changes are relatively recent, and some of them are surprising to the industry. We've always said, myself and Clover, that we really support the efforts of CMS to do revenue integrity. And what that means is that in Medicare Advantage, unlike most other EMEA managed care programs, what happens is that you actually have a different premium per person. That tends to not be the case of commercial, for example, even risk-bearing commercial that might not have that dynamic. Well, that's useful. What I think was emerging in the environment is that there was a lot of coding that was happening that was often correlated with having a lot of downstream risk-bearing providers where when the risk adjustment incentive was past the providers, providers were coding maybe fairly and maybe accurately, but there was a much higher privilege of certain codes in the environment than would be seen elsewhere. And then the higher privilege of code was not necessarily the correlated to a higher cost basis in the environment either. That's what CMS is now adjusting. And so any plan that has exposure to that. We have actually quite minimal exposure to that. We have very few downstream risk-bearing agreements, so we don't pass that down to providers, providers who are Clover Assistant, don't -- aren't taking risk when they're using Clover Assistant, just getting a technology tool. And so we feel while we are impacted everyone is impacted, because the rules are changing. The most impacted will be those who have exposure via those downstream risk-bearing providers, because those are the doctors who are -- do the diagnoses. So they'll either be directly impacted, or they will be impacted via those risk-bearing contracts at some point. And so what I think we'll see quite possibly, I'm not going to guarantee yet is that there will be a pullback in benefits if all these rules go through, because the revenue drop can be quite significant. I think in some of the reports I saw -- and this is not from our data, the report I saw, some risk-bearing providers are anticipating a 10% to 20% reduction in their total MA revenue. That's a lot of reduction. That's far higher than the 2% to 3% CMS is indicating in its advanced notice. So that's going to disrupt that environment, that will fill up to the payers who are taking those risk-bearing agreements. I think that some pullback and benefits might happen. And when those pullbacks happen, I think we will be well equipped to perhaps compete in those markets going forward.

Got it. Okay. Excellent. Maybe let's just shift to the cost side of the equation, on the [ MCR ] trends, right? There's a bit of prior period development benefit in the numbers. But would you say that the original 93% to 94% guidance you gave out for '22 kind of a fair way to pick from where you ended up for '22 on a normalized basis just for [indiscernible]?

Yes. Yes. I think that's a very fair way to put it. I think that looking at the year, the 93%, 94%, which is what we have said is a fair way to look at that year. We did -- while we don't quantify PPD, we did have PPD in most of our quarters last year, and that did affect the overall GAAP results coming into Q4. But I think that 93%, 94% is the way that we basically look at that.

Okay. Perfect. So then off of guidance, you're basically guiding to 400 basis points to your point of MCR improvement on a year-over-year basis. You've talked about some of the stars benefit the favorable rates, but just on an underlying medical cost trend, what are you seeing there? And maybe what is Clover Assistant coming to play to help manage those costs?

Yes. So 2 dimensions. Well, firstly, let me caveat to say it's still early for us to look at real [indiscernible] trends because the claims experience has not fully emerged yet, right? We still have a lot of IBNR, et cetera, in the claims experience. What we do see more qualitatively, the 1 thing that we just know outside -- most people have talked about this is while COVID is certainly luckily less of a factor right now, this is a more intense flu season than I think in regular years like there's the whole triple-demic situation. I'm not causing any red flags there. I think it's a core -- same for everybody, but flu is a little bit more intense this season. That's a more qualitative statement. You talked about CA, I think that what we're looking at is that all of our approaches, what our wide network PPO but as well as our home care practice, is powered by Clover Assistant, which allows us to have a central view of care being delivered over that wide network or into the home. And you'll see us talk a lot more about the effects of that in those 2 different dimensions as we go into '23.

Got it. Perfect. And maybe just -- let's talk about your home care business, right? And that kind of goes under the radar for many. I think it's been part of the Clover model for some time. Just maybe discuss -- give us a little bit more detail in the home care business, economics, how you sell into that model, the growth outlook there? And then how much of a bigger portion of the business could it be? I think you said 4,000 members for 2023 you're targeting, but where could that go? Just give us a flavor of that home care.

Yes. We're targeting 4,000 members. We are looking at around like $150 million of MedEx. The way to think about it like MedEx under management is the way we think about it. And so that business, just to be clear, is actually doctors going into the home and delivering home care. I mean you could call it like home visits from a doctor, if you wanted to. But it's very different home visits from just a, say, hope health assistance. We're not talking about that kind of business. We're talking about actual primary care being delivered in the home. And the way that we think about it is, at some point, it makes sense for us to approach a member's PCP and say, look, you've been looking, seeing this person for a while. We still want you to be engaged and you can still see what's going on by Clover Assistant, right, if you would like to. But we would like to be part of the primary care journey for this member at this point. Because Dave becomes sufficiently ill or comorbid, I'm not talking about [indiscernible] or hospice yet, even though those are available under the program. But just sort of like enough comorbid that it makes sense that they get more frequent visits, and they're not going to come into a brick-and-mortar setting at that frequency. And so visiting them sometimes even like twice a month like that could happen once a week, for some members. We figure out what the level of frequency makes sense based upon the morbidity. We talk to the primary care doctor existing one, if there is 1 to coordinate and make sure that's okay. And then we see those members now in the home, and we take over really a primary care relationship. I'd say -- I'm using Clover Assistant, say, what can we do to manage those conditions in the home? And because these numbers tend to be amongst the sicker ones, there's a lot of MedEx -- anticipated MedEx certainly, per member, and it's -- we are able to manage those conditions. We are able to like do drug reconciliations. If they end up in the hospital, hopefully less, you can do post-acute management, all of those things in that home setting. And I think there's been a lot of discussion and the industry at home is going to be the future, but I think that home-based primary care is really powerful. And I think that pairs really well with telemedicine-based primary care, which emerged during -- longitudinal primary care, which emerged during the pandemic. These are 2 really big aspects which flow out of our [ hope jet ] practice. It has both of those dimensions available to our members.

Got it. And so does -- is it the doctor panels and they have half of Clover comes in and it's maybe half the other needs -- you need to be more in the home? Or just give us a flavor is this incremental membership that you're highlighting or you're taking share of? Or just give us a little flavor of how you kind of grow that number some and how you're managing that.

Yes. So right now, it is entirely Clover members. So what happens is, you can think of almost as a practice, which client is the MA plan or the ACO. It can go either way. And what's happening is they're enrolling membership that is thicker from the plant. It's optional, of course. We don't make anybody do it, but it's a very highly regarded program. It's got a very high NPS, and we're proud to do it because it's a great mission to have. So we are recruiting [indiscernible] . We grew to 3,000 members forecast, about $150 million [indiscernible] from just our own plan. There's nothing that keeps us from offering to service elsewhere. We haven't done that yet. But however, it's focused on Clover membership right now and making sure that, that MedEx -- the benefit to the plan is that MedEx gets [ plugged in ]. So we -- what we're doing to expand that is we're actually identifying additional cohorts that could benefit from home-based care beyond just the comorbid, [ they're not ] specific conditions where it makes sense to enroll somebody into the home. It might make sense to have a hybrid and we're looking at this, which we're really excited about, the hybrid between that [ tele ] PCP and home-based care. So maybe right now, we're doing a 4 -- I'm making it up, but like maybe once a week visit. And we say, you know what, let's move 2 of those visits a months to [ tele ] PCP session with the same doctor and then 2 of them maintained in the home, right? And so I think that in health care, we're seeing this very split. Like is it telemedicine, is it brick-and-mortar, is at the home? And I think the right after is a hybrid of that according to the circumstances of the patient, that gives very high satisfaction, that gives high engagement. And when you see high engagement with a doctor, then you can do a lot to actually help manage the patient. Like a lot of the ED frequent flying like being -- showing up and like going in and getting admitted a lot, these are all signs that someone is not just have a strong relationship in a given position, we believe. And our [ protease ] practice really helps with that.

Got it. And is there any way so far? I mean you've had 3,000-or-so members today. Just you've talked about the ability to get in there to help save right, the ins and the like. Any way to help quantify some of those medical cost savings or any way to kind of just give us a baseline or understanding just I think essentially, it makes sense, but just is there anything quantifiable at this point? Or do you want -- do you need a bigger base to kind of rectify or anything like?

We definitely look at the statistics internally and in that we haven't shared anything publicly yet. I think at some point, we might do that. But what we're seeing is that there's definitely a significant benefit to actually managing these patients. But it could be just blunting, meaning there might be no MedEx savings, but we believe that we're not having a trend increase, right? There, in some cases, definitely it decreases like the MedEx expectation. So there's a lot of different versions of how this delivers [ benefactor. ] It's what we even see when I look at this is that members who really like affiliate often with their doctor more than their plan and so our membership even sometimes affiliates with the care that we're seeing in the home more than -- and they know it's coming from Clover, but they think of it as a doctor service, not as a plan service almost. It's all coming from the plan, but that's a real -- we like that when we see that happening.

Okay. Got it. Perfect. I'll look out for that, more to come there. Maybe just switching gears to your noninsurance side of the business. You've taken a bit of a step back for '23. You got 55,000 lives down from 165 or so at the end of '22 as you focus on your profitability, you're not targeting a margin of the business that's over 400 basis points better than last year, 98% to 100% range. Maybe just help characterize the step back how that profitability is being generated? And what gives you confidence maybe in that target for '23?

Yes, absolutely. So our focus here as we shifted from a growth -- heavy growth [indiscernible] cost kind of mindset into the path to profitability, it made sense for us to look at every one of our businesses, look at MA, look at the ACO and then to some logic extent, look at the practice as well and say, well, what we want is positive margin contribution from these areas, like the dollars. So the ACO, I think that I'm very proud of what we did. We launched quickly into a CMMI program. We proved that when we say to doctors, we want to work with you under a full Medicare panel, and we want to work with you to help you get into Medicare value-based programs where you've not been able to do that before, there's a large set of doctors who want to do that. We were adding doctors every year very quickly. That led to a lot of volatility of the program. There's a wide range of performance within that, and we expect that. We expected that before. And we intended to use our tools, Clover Assistant, et cetera, to help like normalize that. However, we want to now generate positive contribution in a much shorter timeframe than we originally anticipated, which caused us to make an adjustment to the number of participating providers, as you said, in the program, which also reduced the number of actual sort of patients in the program. So from that -- and once again, we don't have 2023 results to share, but we anticipate from our data significantly less volatility in that program and hence, the guidance that we've put out. So it will be hopefully a superior MCR on a smaller base versus an MCR, which is north of 100, which we were not happy with on a very wide base, which caused losses in our -- obviously, in our financials.

Okay. Got it. So maybe just piggybacking off that notion. What is it or what about those doctors that you've kind of targeted, right, the 55,000 members? What are they doing, I think? Or how are you seeing them from a financial perspective that's differentiating these providers? Is it greater adherence with the Clover Assistant or anything maybe just help? You kind of noticed this wide range of outcomes right here in your first year. Of the 55,000 members in the providers there, how big of a difference is that swing factor in helping you kind of thinking about the?

Yes. Yes. So the way I would think about it is, let's step back for a second and don't even think about like Clover, but let's think about the readiness of a given physician or a physician group or health system, you scale it out to go to value-based care. And there's a number of things that you have to do. You have to start -- you to get out of that fee-for-service mindset. You have to make sure that you have tooling like EHRs and data reporting and all those kinds of things. You have to train your physicians. You have to do all those things. We lost our ACO because we feel well equipped to have a very technology-centric way of doing those things, but it still takes some time. I think that the way I think about it is we who had a very wide funnel of folks. And let me just use a metaphor for a second. Let's say that you're using a college, we were taking on the progression, the seniors are ready to -- for full upside downside risk in value-based care, they need better tooling and we can get that to them through Clover Assistant. That's the last gap that they need, and we can give them that technology tooling. Otherwise, from a culture perspective and thinking and how they're working and their philosophies, they're ready and they're successful. And so we hope that we can select and look at for those folks, and we're working with those folks this coming year. Originally, we were also taking sort of junior sophomore freshmen venture. And every year, they'll progress up that funnel, and we were seeing that the people would progress. The only thing we've made an adjustment not to say is we believe that ACO reach really is best because it's upside, downside risk to take maybe the seniors maybe really talented juniors, and that's what we're going to focus on. And we've discussed -- we haven't formally announced like what we're doing, but we discussed the fact that we intend to go to something like MSSP where because it offers things like upside only and no downside, those programs are probably better to put the interest we're receiving from those freshmen and sophomores. We still have good interest. We want to just get them in a program that they are fits where they are in their journey, they're mature and then eventually progress in to the upside/downside programs.

Got it. Okay. Yes. And just maybe to that point around that, you noted this MSSP possibility. How is it working with it? I mean are they receptive to that argument? Are you working with them today just on this continuum of moving up on risk and getting to a more of an upside downside [ on the ACO reach? ] How is that kind of playing out for you? And how is Clover Assistant kind of helping in that kind of regard to in thinking about that?

Yes, absolutely. So I think that the lightweight approach and services-like approach is very popular, right? And I'll emphasize that the service is like part of it, because we are very much reliant on the -- I would say, other approaches to value-based care right now. And I'm not deriving these approaches. I think they can be very successful, but when your service is heavy. An analogy I would give would be like we're trying to give GPS kind of a tool to like in an Uber. So anyone can be successful like in that business, whereas there's another business where you just get a full chauffeur and you get driven around like -- and that's the way. When your service is heavy, I think that's 1 way to transform a practice. We're just going to come in and do stuff for you and embed with you can be very successful, but it's a very -- it's finite number of practices you could work with because of the level of lift that it takes. Our approach is wider, broader, able to accept many more physicians. And I think we absolutely demonstrated that through the interest we were seeing on our ACO. And so I think that it's -- we have a lot of people who need to go to value-based care, they see that need. They don't want full like embedded services from a -- for a partner or a vendor and our model fits very well with that.

Okay. Got it. So we got to look out for that too. Excellent. That sounds good. So maybe let's just take a step back on everything that you're kind of -- from a strategy perspective. You haven't given guidance on the [ out years. ] Obviously, model is continuously changing. But if we were to put the pieces together and you achieved a level of reasonable profitability over the coming years, how do you see that trade-off between growth and profitability over the long term, both for your MA book, both in your noninsurance business? And then maybe just said in another way, too, what gives you confidence that you can achieve profit growth over the long term as [indiscernible].

Yes, absolutely. So our focus right now just to be clear, is to go towards the world that you're just saying, where we have profitable -- I like the word, sustainable, right, sustainable growth, that makes sense. And I think that there's 2 dimensions to it. One is we have not retreated to what makes our product different at its core, right? When we changed -- at its core, what we're offering is physician choice, right? And so which members really like and that you can offer to the buyer there, co-pays like a wide network of the PPO, no referrals in HMO, geographic broadness, ethnic, socioeconomic diversity within the population, all great things. We've not retreated from that at all. We've made some adjustments to some sort of the other benefits, like I said, perhaps we're not being valued as much, but the core value proposition compared to the core value proposition of other MA plans, it's still there, right? Like you're like, "Oh, do you want an HMO around 1-hour health system? If you do join that HMO, that's great." That's not our general population we're targeting anyway. We're targeting folks who don't want to [indiscernible], so it feels good. All the people who are coming into PPO now as well. So we feel good about that because the way we look at that is, while they're trying to come into a PPO because it's an area of large growth within Medicare Advantage, there is no systemic way they're managing care with doctors on that PPO. The HMO gives you that by default, right? It's a narrow health system, so you can coordinate tightly with those doctors. We've not seen anyone who's coming to PPO have something like Clover Assistant, which lets you successfully coordinate care, diagnose diseases earlier and manage them earlier on that wider network. People are just coming in eating margin to try and grow more in the PPO. And so we have a systemic advantage on the PPS. So first of all, PPO is a differentiator, and we believe we have a systemic advantage on the PPO. We're not just tuning our model to make sure that we have sustainable profitability on that. And then our moat, I feel confident will be retained.

Got it. Okay. Excellent here. Maybe I will just shift more strategically. I mean, on the Clover system, you've touted its capabilities and benefits for everyone involved. I guess, what is the biggest barrier adoption for a physician ultimately using or leveraging Clover Assistant? Is it just a critical mass of Clover membership on a physician panel? Anything else? And maybe what are you helping to -- what are you doing to help address some of these barriers that you're seeing from an adoption [ perspective on Clover Assistant ]?

Yes, absolutely. So it just simply like Clover Assistant right now is a software based -- it's a cloud-based software platform, entirely cloud-based, can be deployed, like feel very familiar to anybody who uses it. There's no installs or anything like that. I think a couple of different things. One, we normally -- when we have a conversation, a physician will see the benefits of Clover Assistant very quickly, like maybe 1 meeting, right? [indiscernible]. Also, in terms of training some of the Clover Assistant, probably 1, top 2, 1-hour meetings, like -- and then they're up and running, right? We designed it to be very self-learning, if you know what I mean, as people use it. So what's the barrier in that case? It really is that when a physician does not have enough of a Clover membership within our total panel, it's just another thing that they have to remember for 1 of their insurance payers. They accept 12 different kinds of insurance that for one of them, they have to do something different. That's not a big deal if they have a larger panel. Those folks are actually quite happy. But if you maybe have 3, 4, 5 Clover members, it's a lot of overhead. We recognize that in order to do that. That's why we've always said that our goal, and you'll see built into our strategy, the ACO is part of the strategy, is to try and cover as much of a physician's Medicare panel as possible with Clover Assistant, right? And so the first big stride on that was the ACO, because we can now cover the Clover membership and all of fee-for-service. That gives us a lot of critical mass in that particular case, right? But our goal is to track over as much of that as possible. And when that happens, we see any position where that occurs, Clover Assistant is like we're past that [indiscernible] work and it works out very well for all times.

Got it. Okay. Good. So then maybe what leads maybe to that point. So not just the Medicare Advantage, the fee-for-service, mentoring into new ACO reach or new MSP however you want to frame it, much less [ catch light, ] much easier to kind of net through. Is that how you're going to lead the future growth piggyback on Medicare Advantage, how would you kind of frame?

Yes, great way to think about it. So when we look at something potentially like MSSP, right? Like when you look at that business, I think there are some businesses where you're generating significant margin from MSSP. If we can do that, and I'm not giving any guidance [indiscernible] top level thoughts, of course, like, of course, it was that. But I think we have a better way of looking at these programs that others don't, which is these are great ways to get our software integrated into physician practices, add value to the physician practice and get software embedded. And at that point, we can work with them to move them into value-based programs in a number of different areas, downstream of that. So we see MSSP as potentially a good business in its own right, but really what it is a way for us to work with as many physician groups as possible to generate coverage of the Medicare panel. We were going to do that originally with ACO reach. However, the downside component that causes us to actually take economic losses on folks who are not quite ready yet, we fully intend to work with any doctor, right? So I love working with these doctors, but let's move them into a program where maybe like those losses aren't incurred so early and then move them across when they're ready, while still getting the benefits of early software integration.

Got it. Okay. Understood. That's helpful here. Maybe with the Clover Assistant, you're continuously improving that product, thinking ahead of any capabilities or clinical features you want to highlight is the next area of focus, build out or focus anything on those [indiscernible] that you want to kind of [indiscernible].

Yes, absolutely. What I'd like to point to is we put up some material recently, which focused on the benefits and the data that we're seeing is about diabetes, about chronic kidney disease, where I've mentioned several times that Clover Assistant and Clover itself is about the early detection and early management of chronic disease. And in CTD and diabetes, we're seeing and we're sharing some of the information we have in those conditions about doctors who are [ using Clover ] Assistant. Remember, these are not employee doctors or anyone like that. These are the wide network doctors who are actually using Clover Assistant. And we're seeing earlier detection of disease, and we're actually seeing a bending, and we're not using the cost curve because we want to do it to be a clinical examination. We're seeing, like, for example, like an early detection and therefore, earlier management, and then we start to see slowing -- not slowing, but we actually overall slow the progression of chronic kidney disease, [ the generation ] of eGFR, which is a clinical biomarker of chronic kidney disease. So because you manage it earlier -- and very simple, there's not this no magic here, if you catch it earlier, you'd probably go on the drug earlier. It might get the same drug that you would go on if you were, call it, a year later, but you're going on that drug a year earlier. So obviously, that slowing of the progression starts a year earlier. And when you do these things together, they compound to just keep someone healthier for a longer period of time is what we believe.

Got it. Okay. Excellent. Maybe just -- we discussed this in the past, but I kind of want to return to the potential utility of licensing Clover Assistant as a product to be leveraged by other health plans, bolster and adoption [ with that ] software as a service kind of format. You highlighted this before, but are you still considering at this point? Or based on where you're at, how would you [ refer to that? ]

Yes. So speaking as a technology -- coming from like an enterprise software background, I'll split it into 2 different dimensions. One is that like is Clover Assistant built to be a cloud offering that can be ramped up quickly based upon account logins, no heavy lift, all those kind of things, all the dimensions of having a [ cloud-based ] enterprise software, existing Clover Assistant already. It's just built that way from the ground up. So I feel really good about that. So it's really been, do I intend to have physicians, do I want physicians to be able to use it for their entirety of their Medicare panel, which is more than just a Clover Assistant by definition? Yes. Yes, I do because I already said that, that really helps with the soaking of Clover Assistant into the workflow, the physician and now many more people are benefiting, patients are benefiting, which I love from a mission perspective. So the only thing that we haven't discussed yet is sort of a timing or a business model around those kind of things. We're not ready to discuss that yet. But I'll say that's just the final component of this because we've already stated that the technology is built that way, and we intend to try and cover as much as that Medicare panel as possible.

Got it. Okay. Excellent. We're kind of coming up a dense time here. Give me -- is there anything that we haven't discussed, you want to highlight or anything that investors should be considering about Clover on a go-forward basis? Or any other kind of themes that you want to [ flag at this month? ]

I think, number one, I think it's just a very easy way for everyone to think about it because we think about insurance or managed care, Medicare, early detection of disease, early management of disease helps with the cost basis of Medicare, it helps people stay healthier longer. It is the -- now we've seen with the latest rules coming from CMS, it's where CMS wants to go, because they don't want to be paying for things that don't actually provide value, right? And so the key to this and the key to unlocking everything is to help as many physicians as possible, and there aren't enough physicians in the United States as it is. So we cannot solve this problem with narrow networks. It has to be every physician we've got, we've got to make them as good at Medicare as possible as quickly as possible, so when they manage patients, they are doing all the best standards of care on the biggest areas, right, COPD, CHF, CKD, diabetes, right, and managing those conditions. And we believe that simply software, Clover Assistant is the way to solve that particular problem. That's our philosophy. That's our thesis. MA, our ACO, these are all ways of practice. These are all ways to get that philosophy to as many Medicare eligibles as possible, but it's about that early [ detection, ] early management. We already have so many drugs that can manage these diseases, right? We don't have cures for a lot of them, but we will at some point. It's missing the management opportunity or leaving the management opportunity to too late that is affecting the quality of life and affecting the cost of care for seniors in the Medicare problem. If we could solve that, a lot of probes are being solved, and that is the mission that we're focused on. I think that sets us apart from almost every other [indiscernible].

Okay. All right. Got it. Well, Andrew, thank you for coming. Thank you for Clover for being here. We're going to wrap up at this point. Thank you.

Yes, thanks for having me. Thank you.