...AND CHEAPER...:

Clover has built data science, design, engineering and product teams with pedigrees from several Valley giants, including Facebook, Google and Microsoft. The technical groups are led by Kris Gale, who started the business with Garipalli after leaving Microsoft's Yammer. They're developing software to organize the trove of data coming from workers on the ground in New Jersey, mine it for likely health problems and suggest ways to prevent them before they happen.

A recent addition to the team is Sandy Ryza. He joined as a senior data scientist in March from Cloudera, where he was crunching data for banks and telecoms. He says he likes the challenge of bringing order to disparate health data and believes in Clover's mission of fixing the nation's health system. "By the time I'm an adult, we will have hopefully put our country on a better track," says the 27-year-old. "It may sound cheesy, but I really want to make a difference."

As an insurer, Clover pays all its members' bills. This gives the company an evolving health profile for every customer. Since Medicare members visit doctors more frequently and have higher costs than anyone else in the country, Clover is amassing a huge volume of data. The company has trained its system to look for anomalies, such as missed doctor's appointments, failures to pick up prescriptions or visits to the ER.

"We're building a learning machine, and we're using it for health"

This year Clover's system was tracking the recovery of a member in his 80s who was admitted to the hospital after a fall. Frail, with leg ulcers and Type II diabetes, the man used a walker and, based on his Clover risk profile, would likely fall again. When he was discharged, Clover alerted its customer care team in New Jersey, which dispatched a nurse practitioner to the man's home. She found a problem: To climb into his bed at night, the member was using a pink plastic stepstool designed for toddlers. The nurse called for a railing to be installed by his bed that day.

The incredible healing powers of data are a guiding principle for dozens of startup founders hoping to reinvent health care. VCs injected $1.2 billion into tech-centric health insurance companies last year, led by Zenefits, Oscar Health, Collective Health and Clover, according to research firm CB Insights.

But many of the new-generation health companies give off a whiff of "arrogance," says Les Funtleyder, a health care portfolio manager at E Squared Capital Management. He says they're overvalued and that their technology isn't all that different from what traditional insurers use. "A lot of people from Silicon Valley say, 'We'll just apply data to everything,'" he says. "So far, we haven't seen any of these new guys do anything interesting. This is going to end poorly with a lot of money wasted."

Donald Trump has promised to undo portions of Obamacare, which is causing panic among insurance giants and startups alike. But health policy experts say Medicare Advantage will likely remain intact and that the president-elect poses little risk to Clover's business. "There could be some small tweaks, but I don't expect it will be weakened," says Stacy Sanders, federal policy director for the Medicare Rights Center, a consumer advocacy group. The Advantage plan has "broad bipartisan support," says John Gorman, founder of government consulting firm Gorman Health Group.

Tweet   @brothersjudd