Jash mehta assignment 1Business Model

HEALTHCARE SELF INSURANCE AND CONSULTING GROUP

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ASSIGNMENT 1: BUSINESS MODEL

JASH MEHTA

GROUP 3

Mentor: Kshitij Chug

Weekly meeting time (Group meeting): 3-4pm

Weekly meeting time (Group + Mentor meeting): 4-5pm

Venue: Ice Box, Hinds Hall


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ASSIGNMENT 1: BUSINESS MODEL

CONTEXT

Healthcare in the USA is going through a serious crisis.

The spending of the USA on healthcare is 2X per capita than other industrialized nations.

Medical bills are a major factor in more than 60% of the personal bankruptcies in the USA, 75% have health insurance.

Between 2000 and 2006 health insurance premiums rose 87% and the average wages rose by 3.8%. In spite of this the USA ranks 37th in healthcare system.

PROBLEM:

The fully insured plans are expensive and one of the reason for the crisis in healthcare economy.

In fully insured the insurance sets the premium rate based on prior claims and some formula

to calculate claims.

This premium is paid by the employer irrespective of the claims. And for instance there is a

particular bad year the insurance company has the losses for that year but eventually the

premium rates are going to rise in the future.

Actual claims expenses during the contract period are used to calculate the following years

fully insured rate.

SOLUTION:

The alternative to fully insured plan is the self-insured plan. In this, the employer retains a portion of

the risk and instead of large premiums the employer pays the administrative bills and stop loss

company’s bills which are generally much lower than the monthly premium of fully insured.


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BUSINESS MODEL:

Healthcare SICG provides services to wide variety of clients. We offer health plans according to the need and what serves best for the customers.

Our company strives to provide increased patient-clinician interaction. So physician is an incoming entity in this business model.

Our company promotes self-management and tracking of diseases via healthcare apps and it is the only consulting group which uses different technologies at healthcare products. Therefore, developing IT infrastructure and maintaining it is very important. Hence IT infrastructure is one of the inputs.

Apart from that we partner with various pharmacies, wellness partners, physicians and stop loss companies. Therefore, they all come under inputs in the business model above.

Our goal is to provide the best services and IT healthcare systems to our customers in order to satisfy them. Hence the entities of Customers, Employers and Universities comprises of the outputs the business model above

Wellness

Partners

Healthcare SICG

Promote self-management Increased client-patient interaction Customized healthcare plans Utilizes different technologies Value based care Patient satisfaction Wellness activities

Stop loss

companies

IT

infrastructure

Physicians

Pharmacies

Customers

Universities

Employers


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PRODUCT MAP:

Healthcare

SIGC

Product Map

Brokerage

Fees (Stop

Loss

Companies)

Usage Fees

(Administrative

fees)

Services

(physicians,

wellness

partners,

pharmacists)

Serving

the best

health

plan

Promotes

Self-

Management

Utilizes

different

technologies

Patient-

Client

interaction

Tracking of

chronic

diseases

via Apps

Customization

of healthcare

plans


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BUSINESS CANVAS MODEL:


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Key Partners:

1) Stop Loss Companies (Reinsurer): As Healthcare SICG is a company which serves with

customized self-insured plans we need to partner with key reinsurers. In case of claims

processing if the amount is above the Individual Stop loss (ISL) then the reinsurer pays for

the amount which is in excess to the ISL. Therefore, Stop loss companies will be one of the

key partners of Healthcare SICG.

2) Universities/Employers: Healthcare SICG needs to partner with universities or employers

(companies or organizations) because they are the key customers who generally buy the

fully insured plans for the employees, students, staff etc. Universities/Employers being key

partners will get business for the company by signing contracts for managing healthcare for

the institution.

3) Pharmacies, Wellness partners, Physicians: Healthcare SICG encourages increased clinician-

patient interaction. Also, we see to it that our customers get value based care from

pharmacists and wellness partners. To achieve these it is utmost important partnering with

pharmacies, wellness partners, physicians.

Key Activities:

1) Consulting, Claims Processing & Bills Processing, Creating customized plans: As a consulting

group following activities will be very important for the overall success of the business:

Consulting on wide variety of issues such as

healthcare plan requirements

devising different plans

explaining risk regarding employee population

explaining the advantages of self-insured versus the fully insured

Claims Processing and Bills Processing

Managing customers (universities or employers) bank account according to the

claim amount

Sending bills, to the reinsurer, to reimburse in case of claims exceeding the ISL

Sending administrative bills and stop loss bills to the customers

Creating customized plans:

Healthcare SICG has wide variety of clients (universities, employers, organizations).

Each person in the institution cannot have the same health plan. For example, in a

university there are students, professor and the non-teaching staff; the students and

the non-teaching staff may not need the same health plan. Therefore, there is a

need to create and customize the plans according to the needs.


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2) Providing health monitoring tools, Build and maintain IT infrastructure, Hiring IT

professionals:

Healthcare SICG promotes self-management and tracking of chronic diseases via healthcare

apps and ours is the only company which utilizes different technology. Therefore, it requires

building and maintaining IT infrastructure and also hiring the IT professionals who will build

and maintain the IT infra; this will give Healthcare SICG an edge in the market.

Value Proposition:

1) Accessibility: Healthcare SICG strives to give more accessibility of healthcare to the

customers. We encourage increased clinician-client interaction.

2) Convenience/ Usability: We provide healthcare Apps to promote self-management and

tracking of chronic diseases. Due to this diagnosis in particular cases and analysis becomes

very efficient.

3) Newness: Ours is the only consulting firm which uses different technology in the market.

4) Customization: Our consulting and services are based on the needs of an individual.

5) Performance: A customer will be happy only if we provide performance. Performance could

be through wellness partners, physicians, pharmacists, employee engagement programs and

patient satisfaction.

6) Cost Effective: Very important value proposition of our company is being cost effective. This

is the USP of our company and it differentiates us from rest of the competitors in the

market.

Customer Relationship:

1) Personal Assistance: Customers can have 24x7 helpline to access.

2) Dedicated personal assistance: A client (university or employer) will be assigned a team

from the company which communicates on behalf of the company.

3) Self-service and Automated service: Tracking of chronic diseases via Apps, diagnosing and

analysis via technology(health monitoring tools, healthcare apps, web portal)

Customer Segment:

1) Segmented: The customers’ needs are much diversified and the customer group has

different age groups etc. For example, in a university there are students, professor and the

non-teaching staff; the students and the non-teaching staff may not need the same health

plan. Therefore, there is a need to create and customize the plans according to the needs.

2) Diversified: Along with segmented customers we also have one more customer segment,

i.e., Diversified. Our company’s customers ranges from multinational organizations to

universities. All the customers have different requirements and needs. Therefore, the

organizations are divided under diversified customer segments.

Channels:

1) Direct Channel:

24X7 helpline, Web portal, Healthcare Apps, Offices

2) Indirect Channel:

Pharmacists, Wellness partners, Physicians


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Key Resources:

1) Human: Each and every company needs human resources; Healthcare SICG too has humans

as resources. They are IT professionals, consultants, HR, marketing etc.

2) Financial: Healthcare needs enormous amount of funds to build and maintain its IT infra

through investments.

Revenue Streams:

1) Administrative fees (Usage fee): Our company makes profit by charging its customer for the

services (Apps, helpline, web portal, consulting) it provides.

2) Brokerage fees: The client pays monthly stop loss fees which go to the reinsurer company.

Our company also makes profit by charging brokerage to the reinsurer company.

3) Licensing of Software and Apps: As our company builds the software and healthcare apps,

we hold the rights of all the software and apps. As a consulting group we are also in the

business of selling these rights to other organizations for generating the revenue.

Cost Structure:

The company will have major spending on IT investment, IT maintenance, Employees’ salary.


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COMPETITIVE ADVANTAGE CIRCLES:

Market Differentiator: The region of A is the market differentiator. It is the region of:

Technology (Apps, 24X7 helpline, web portal)

Value services (client-physician interaction, wellness partners, pharmacists)

Patient satisfaction (employee engagement, customized plans)

And all the above at a lower cost than the fully insured plans.

Competition’s offering: The region of C is the competitions offering. The region describes the

following:

No Risk on the employer/university: The employer pays a premium to the insurance carrier.

The employers/ universities are fully insured when claims are generated.

The premium is fixed for a year based on the number of employees or students are enrolled

in the plan.

Opportunities: The region of G describes the opportunities.

It signifies the customers who have a neutral opinion about self-insured and fully insured.

This customer segment can be attracted with our competitive advantage in technology,

value based services, increased interaction with clinicians, customized plans and cost

effective health plans.


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Non Value Add: The region F is the Non Value Add of Health Care SICG. The region D is the Non

Value Add of the full insurance companies. The region E is the Non Value Add of both ours as well as

full insurance companies. Generally the Non Value Add of the company is that area which does not

attract any customers. Thus it does not generate any revenue.

The region F signifies the variable and fixed cost for self-insured companies. This might

confuse the customers and keep them away from considering the self-insured plans. It also

signifies the extra load on customers of paying two bills (administrative and stop loss). Also,

there is always a risk on the employer having to pay the medical bills as these plans are not

fully insured. For example: A medical bill worth $75,000 is generated and the employer has

$50,000 as the ISL; the employer pays $50,000 whereas the stop loss pays $25,000. This risk

of paying such a huge amount might drive away the customers from purchasing the self-

insured plans. These are the few Non Value Add of the self-insured companies.

The region D signifies the burden of the customers of paying huge premiums every year in

spite of the probability of claiming the insurance being very low. It means increased

investment of an employer (customer) on each employee which directly increases the cost

structure (of the employer) thus it impacts the salary of each employee (of the employer).

This is a Non Value Add which drives away the customers from full insured companies. For

example: The employer is paying $1000 for each employee. Let’s say there are 50 employees

in total. Therefore at the end of the year the premium paid is $50,000. If there is one sick

employee in the company for a particular period and the medical bills are $10,000, the full

insurance would definitely fully cover the employer and the sick employee BUT the bottom

line is the rest $40,000 was the PROFIT of the full insurance company. If in this case the

employer would have a self-insured plan, then the employer would be paying $10,000

whereas the $40,000 is still with the employer.

Data & Analytics

Jash mehta assignment 1Business Model