Vivek Garipalli, Clover Health co-founder, wanted to be a doctor like his parents
Clover Health announced today that it will list on the New York Stock Exchange. Founded by serial entrepreneur Vivek Garipalli, 41, the fast-growing health insurance company uses technology to reduce health care costs for patients.
“I launched Clover…to fix fundamental flaws in our healthcare system, including unequal access, abysmal customer service and wasteful spending,” says Garipalli. “Our philosophy is that everyone should be able to afford great healthcare.”
Clover sells medical insurance policies to low income Americans who rely on Medicare, the government program for funding medical costs for those over 65 years of age. The policies, Garipalli says, offer $0 or low premium costs, low payments for doctor visits, and low costs for prescription drugs.
The company also helps patients apply for government programs that may help pay for their medical insurance premiums, drug prescriptions, and electricity and phone bills.
Currently, Clover serves more than 57,000 members in Texas, New Jersey and six other states, including a plan with Walmart. Clover is using technology to compete with United Health, Humana and other major insurance companies in the $270 billion market; the market is expected to double by 2025.
Clover’s software aggregates millions of health data points, including insurance claims, medical charts and diagnostics. It uses machine learning to synthesize the data with patient information to enable doctors to offer suggestions for medications, dosages, tests and other procedures to improve health outcomes. Better health care, Garipalli says, leads to lower costs that are shared with members through lower medical insurance premiums and rich policy benefits.
Clover is going public via a merger with Social Capital Hedosophia Holdings Corp. III, run by Chamath Palihapitiya, an entrepreneur, investor and former Facebook employee. The transaction gives Clover an enterprise value of about $3.7 billion. When the transaction closes in early 2021, Clover will receive $728 million. Existing shareholders will get $500 million in cash for their holdings.
Garipalli initially studied biology at Emory University, Atlanta, expecting to become a doctor like his parents. “I had no idea what I wanted to do with my career and was always changing my mind and all over the place,” Garipalli told Emorywire, the university’s alumni magazine.
In 1999, he left Emory in his senior year to start a business with a friend. “It was a total failure,” Garipalli told Emorywire. “It was like nine different things. We were going to build websites for small businesses, and …we were going to be an eBay for services.“ After the business attempt collapsed, he went back to Emory to finish his degree.
“Learning from failure is really important. You can’t let past failures make you freeze…What you want to do is just be able to make a better decision. As you get older you probably will still fail. Some of them might be bigger and more spectacular, more visible failures, but you'll be learning bigger and more spectacular lessons along the way.” he says.
Earlier in 2008, Vivek Garipalli founded CarePoint Health, a healthcare system in New Jersey to serve uninsured and underinsured patients. While running CarePoint, he experienced the conflicting interests between healthcare providers, namely doctors and hospitals, and insurance companies, which together with patients, cover the cost for the care. This led him to found Clover in 2013, combining the two sides into one business.
Garipalli was a founding investor of Flatiron Health where, as a member of the Board, he helped with business strategy. Flatiron runs a network of cancer treatment practices and academic medical centers in the U.S. Its technology platform tracks the experience of every patient. In 2018, Flatiron was bought by Roche, the Swiss drug manufacturer, for $1.9 billion.
An investor in numerous early-stage health technology companies, Garipalli also co-founded Ensemble Health. He worked at Credit Suisse First Boston, J.P. Morgan Partners and Blackstone Group. He earned a B.B.A. in Entrepreneurship from Emory University.
Clover’s co-founder and chief technology officer Andrew Toy earlier sold his company Divide to Google. He stayed on at Google, working on machine learning and other areas. Toy got his BS and MS in computer science from Stanford University.
Kumar Dharmarajan, Clover’s chief scientific officer, has over a decade of experience as a cardiologist and geriatrician. He is an assistant professor adjunct at the Yale School of Medicine. Dharmarajan's research covered the vulnerability of patients after hospitalization as well as ways in which health systems can help patients avoid rehospitalization. His work has appeared in the New England Journal of Medicine and other medical journals.
Asked about what advice he has for students, Garipalli said, “…whatever you're working on, you're probably going to hate most of it. But are you learning doing it? Are you having a lot of challenges? Is it tough? Those are the skills that you want to develop in your 20s—being able to deal with failure from a mental perspective, working with difficult people, solving hard problems, doing boring nuanced work, and learning to get into the details.”
Update March 8, 2021
Clover stock collapses
Clover’s stock has collapsed by nearly 60%, to $7.70, since peaking in December 2020, after it announced a merger with Social Capital Hedosophia Holdings Corp. III, run by Chamath Palihapitiya,
The collapse was triggered by a report last month from Hindenburg Research that Clover had failed to disclose to investors that it’s “business model and its software offering…are under active investigation by the Department of Justice…which is investigating at least 12 issues ranging from kickbacks to marketing practices to undisclosed third-party deals…”
The February 4 Hindenburg report added that “Chamath has done a masterful job marketing himself…to align himself with ‘everyday’ investors – but his public persona strikes us as the sugar that helps the poison go down.”
Clover responded that the Hindenburg report “is rife with ad-hominem attacks, sweeping inaccuracies and gross mischaracterizations.”
Chamath Palihapitiya, whose family got by on government welfare payments when he was a child in Canada, is described by former colleagues as “a great salesman,” a hype man, but a poor manager, according to a report in this weekend’s Wall Street Journal. The newspaper also reported that, while still married to his ex-wife and partner at Social Capital, Palihapitiya traveled with a new woman he was dating, according to people familiar with the matter.