Verily, the health company owned by Google parent Alphabet ($GOOGL) announced yesterday that it would begin selling health insurance. It’s long been unclear exactly what Verily does - various tabs on its website claims it’s invested in “Making a mark on the map of human health,” finding a “New way to see disease,” and other broad-strokes mission statements that make it hard to pin down what they’re involved in.
Yesterday’s announcement makes it clear, however, that Alphabet has noticed the health tech gold rush, and they want in.
Hiring data for three of the largest health insurance disruptors - Oscar Health Insurance ($PRIVATE:OSCARINSURANCE), Collective Health ($PRIVATE:COLLECTIVEHEALTH) and Clover Health ($PRIVATE:CLOVERHEALTH) - show trends that may have influenced Alphabet and Verily’s decision to move into the insurance disruptor space.
At first glance, claims of a “health tech gold rush” might seem thin. Combined, both Collective and Clover are only hiring for a total of 43 positions, down 63% and 62% respectively from last year’s highs. While it’s true that hiring for these two startups hasn’t weathered COVID-19 particularly well, It’s Oscar’s growth that is most representative of what Verily will be able to accomplish.
While Oscar’s job listings are down about 30 positions from where they began the year, they have rebounded from the mid-spring nosedive in hiring that affected so many companies; Listings have recovered 115% since their yearly low of 53 in May. Oscar is also thriving while many others are only rebounding or failing to do even that. The startup secured an additional $225 million in funding earlier this year, reaching a $2 billion valuation and signalling to investors that Oscar will come out of the pandemic and recession stronger than before.
Oscar has been hiring more than its competitors for a long time before COVID, and was co-founded by Josh Kushner. That scale and notoriety is what has allowed Oscar to succeed and use COVID-19 as an accelerant for its disruption. If there’s anything Alphabet has, it’s scale and notoriety.
With the resources available through its parent company, Verily will likely be able to seize up a meaningful portion of market share in the health technology and insurance spaces. Verily also has something of a head start over its newfound competitors - a head start which has created some controversy around this week’s news.
Verily has recently worked with the Trump administration to distribute coronavirus tests and direct patients to physicians based on their needs, part of a program called Project Baseline. The service required patients to set up Google accounts to access it. According to Gizmodo, Project Baseline also had partnerships with Big Pharma companies and asked customers to create detailed profiles of their health. When asked by Gizmodo whether the data would be shared with any of the project’s partners, Verily gave an ambiguous answer that, according to writer Shoshana Wodinsky, “left a lot of wiggle room [for interpretation].”
That ambiguous response may be taking form in Verily’s move towards insurance. Thanks to COVID-19, the company now has a detailed database of the conditions and needs of a wide swath of patients - information that would prove valuable to a business that wants to, say, offer insurance plans to such people.
Verily’s announcement also reflects a larger trend of FAANG companies launching or acquiring their own subsidiaries to seize growing markets, like Amazon’s effort to compete with Instacart and Facebook’s efforts to scoop up TikTok users.
