1
Disrup)ng health insurance?
Na)onal University of Singapore
MT5016 - Business Models for High-
Tech Products, A/Prof. J. Funk
Nov 2015
Terence Deffenu A0147215L
Jessica Maria Teguh A0056967L
Loo Jian-Ju A0134495Y
Sun Jing A0120104J

1. US Healthcare Insurance: The state of the industry
2. Oscar Health Insurance
3. Value Proposition
4. Customer Selection
5. Scope of Activities
6. Value Capture
7. Strategic Control
8. Recommendations & Conclusions
2
Outline

1. US Healthcare
Insurance
The State of the industry
3

VALUE
NETWORK
4
Traditional Health Insurance
Intermediate in the Healthcare Value Chain
Sources: The World Financial Review – The Business of Healthcare Innova)on: Convergence in The
h]p://www.worldfinancialreview.com/?p=1451/

VALUE
NETWORK
Traditional Health Insurance
Value Network

High Barriers to Entry
• Residents may not buy policies from insurers located
outside of their state.
McCarran-Ferguson Act
• Universal Access - Insurers must offer and provide
health insurance for all applicants
• Rate Bands - Limits insurers’ range of policy premiums
Regulations
• Minimum amount of capital for the insurer to avoid
insolvency
Risk Based Capital

7
Opportunities: Obamacare
OBAMACARE: Obama
Administration's Affordable
Care Act (2010, effective
from 2014) shifted the
health insurance market
from a B2B focus to a B2C
• It gives consumers more
control over which plan they
choose
• It requires individuals to have
health insurance, or face
penalties, starting in 2014 and
increasing through 2016.

8
Opportunities: Obamacare
“Common-sense insurance
market reforms should be
implemented to increase
competition and improve
options for consumers as well.
Such a truly competitive
marketplace would have the
power to keep health insurance
costs lower and quality higher.”
Alyene Senger, 2013 (Heritage
Foundation)
Competitive Pricing
depends on the number
of suppliers available.
South side of the U.S has
lack of health insurance
carriers in Obamacare
exchanges
Source: http://www.heritage.org/research/reports/2013/11/obamacare-insurance-exchanges-and-
the-lack-of-competition

Sources: h]p://www.economist.com/news/business/21600147-a]empt-change-americas-most-arcane-industry-be]er-geek-guide-insurance
h]p://www.usatoday.com/story/tech/2015/06/24/oscar-uses-tech-to-make-consumers-less-grouchy-about-health-care/29150055/
9
Opportunities
Sources : h]p://www.cdc.gov/nchs/data/nhis/earlyrelease/earlyrelease201506.pdf
U.S. health care costs is 2X
more expensive compared to
other rich countries
Health Insurance cost keeps
increasing
• Results : 40% forego the
health insurance plan
Health Insurance Market Value
of $750B in 2015, expected to
grow annually by 1.8%

Opportunities
10
Private Insurance
2. Get Receipt Back
1. Go to Clinic
3. File Claims
4. Confirmation from the Clinic
5. Long process before approval
6. Payback to The
Insured (Very Long
Processes and
Time).. May Take
Months
● High complexity on health insurance claim process

Opportunities

2. Oscar Health Insurance
A brief overview
12

Simple, Smart & Friendly
"We wanted to build a company that was like having a doctor in the family"
Oscar ADV: https://www.youtube.com/watch?v=WZJMk2HEU1s

• Technology-Based Healthcare Insurance
Company
• Launched in 2013 after ‘Obamacare’
• Founders: Josh Kushner, Kevin Nazemi
and Mario Schlosser (CEO), all from Harvard
• Current Markets in US: New York, New Jersey,
California, Texas
• Funding: “Billion Dollar Startup”
• Valuation: US$1.75B
14
The Company
Notable investors: General Catalyst, Goldman Sachs, Li Ka-Shing, Alphabet

• Revolutionize health insurance through technology, data
and design
Mission Statement
• Better plans, lower costs
• Better healthcare
• Better experience
What Oscar Offers
• Expand to become a national insurer and compete with
the established old big players
Vision
15
Mission, Offer, Vision
Sources: www.hiOscar.com
http://www.npr.org/2014/01/03/259432738/this-is-not-your-parents-health-insurance

16
Better Plans, Lower Costs

17
Better Healthcare: Network Effects
Using geofencing technology,
Oscar members can choose
amongst a list of available and
relevant doctors based on the
patient’s location.
Geo-fencing (geofencing) is a feature in a
software program that uses the global
positioning system (GPS) or radio frequency
identification (RFID) to define geographical
boundaries.
More doctors =
More choice for
Insured + Greater
Convenience
More Insured =
More potential
customers for
doctors

18
Better Healthcare: Telemedicine
In Oscar, Telemedicine is a core value-added service
• Cut down Oscar expenses
• Beneficial for both parties, doctor and patient as below

Better Experience
1. Short Claim Time due a digitalized process:
Claims are processed within 20 mins without troubling the
insured
2. Simple Sign-up Steps:
19

20
Better Experience
3. Billing made simple
● digitally printed/less paperwork
● more readable to the patients
● faster and more efficient process for the
doctors to key in due to technology
Oscar Bill Statement
Traditional Bill Statement

21
Wearable Technology for monitoring
Incentive for being healthy and
active
• Oscar takes a calculated risk by giving cheaper
health insurance if the insured is living a healthy
lifestyle
• Rewards for staying active with a free wearable
tracking device
• Partnership with Misfit Inc.: wearable given free
to the insured, to track and monitor the insured’s
lifestyle
• Partnership with Amazon Inc.: to provide gift
cards in exchange for meeting health goals

Compe)tors
Some examples
22

23
Traditional Companies

24
Competitors
Type Company Example Main Market Value ProposiDon
Tradi)onal
B2B (Main profit
from employers)
Nego)ate lower
prices using large
scale of demand
CO-OP Individual Non-profit
Startup Individual (Elderly) Data-driven care
Health Sharing
Program
Individual (Healthy)
Lower risk
customers, non-
profit

• Mostly Traditional
– UnitedHealth
Group, Fidelis Care
• Highly Competitive
• Market leaders
possess relatively
small market
shares
25
Competition in the NY state
Figure shows market share of the New York Health Insurance Industry in 2015
Source: http://info.nystateofhealth.ny.gov/sites/default/files/2015%20NYSOH%20Open%20Enrollment%20Report.pdf

26
Example: Average Pricing in NY, 2014
Market
Share
Company
Catastrop
hic
Bronze Silver Gold PlaDnum
19%
Health
Republic
$212.73 $307.12 $387.42 $438.69 $515.81
17% Fidelis $189.86 $323.75 $409.66 $501.60 $606.03
15% Metroplus $323.38 $365.30 $392.41 $432.28 $484.13
14% Empire $186.20 $391.97 $456.39 $544.32 $645.52
9% Emblem $202.83 $342.88 $396.87 $474.68 $570.85
8% MVP $238.09 $460.56 $598.90 $720.93 $850.19
3% Healthfirst $317.38 $379.41 $444.40 $519.47 $615.54
3% Oscar $217.95 $341.95 $422.41 $489.98 $570.42
2% United $418.93 $685.49 $803.68 $950.36 $1,121.38
Data Source: Informa)on Source:
h]p://www.capitalnewyork.com/ar)cle/city-hall/2014/09/8552029/tracking-premium-changes-new-yorks-health-exchange
Oscar pricing is compe))ve and some)mes lower

Value Proposition
• Saves time and simplifies selection process by comparing 13,000+ plans
from 180+ carriers
Customer base
• Individuals Market
Value Capture
• Fee for service/Commission/Referral
Signed agreement with Federal Government to access the Federal
electronic data hub to automatically determine tax subsidy eligibility
and amount of subsidy
27
Complementary Services
- Online Brokers

3. Value Proposi)on
28

Economic
• Lower
Insurance
Premium
• Affordability
Functional
• User
Experience
• Fast
• Network
Psychological
• Simple
Process
• Health
Coverage
Assurance
29
Customer Needs
Unserved & Articulated Need
Convenience
Cost

Oscar provides value to the insured:
● a simple technology interface for consumers
● unprecedented benefits (e.g. three free doctor
visits, free generic prescriptions, a home nurse visit
after giving birth and telemedicine)
● a broad and deep provider network (40,000
physicians are in it so far) at prices comparable or
lower than the rest of the market
● transparency and a great customer service
30
Value Proposition

Oscar brings value to healthcare
providers:
● Save time by automating the claim
confirmation process
● Connect to a wide network of patients
● Allow differentiation through review
system in platform
31
Value Proposition

Customer–Centered Health Insurance: target on “Individuals” and
not only “Employers”. This will allow Oscar to learn and know
individuals’ needs in-depth so as to serve them better
Bring Simplicity resulting in Higher Convenience and Lower Cost by
leveraging the telemedicine technology and predictive data analytics
intensively
(i.e offer customized pricing plan by analyzing the wearables tracking result, not
merely on historical health records)
Integrated software platform to quickly and easily find a doctor,
indicate one's question and make an appointment or speak directly
to a doctor within 10 minutes of one's request
Oscar keeps track of the patient’s medical history so they can
access their past prescriptions, lab work, and office visits without the
hassle of making phone calls and completing lots of paperwork 32
Value Proposition
Leveraging technology and data to make insurance simple, intuitive and human compared to traditional competitors

Price
Simplicity
(Sign-Ups &
Billings) Customer
Service
Innova)veness
Health
Services
Integra)on
Middleman /
Insurance Agent
Brand Reputa)on
Health Tracking
Doctor Consulta)on
Service
Oscar Health
Insurance TradiDonal Health
Insurance
New
Dimensions
Oscar
33
Strategy Canvas
Data
Analy)cs
Oscar offers a better value proposition because it
integrates technology to make the health insurance
simple, friendly and human

34
VP Recommendations
• What Oscar offers can disrup)ve. Tradi)onal health insurance
popularity is so low that as a new entrant, Oscar should
differen)ate themselves as a customer-centric insurer
Superior Value ProposiDon vs. CompeDtors:
Usability, Speed, Psychological Friendliness
• Simple, easy to use
• Share data between doctors, hospitals and pharmacies
• Integrated medical history
Unified plaVorm network for all the healthcare
players
• The data that Oscar own is one of their most important assets.
Partnering with the right companies will provide benefits to the
development of new products from both sides
Data to the right partners

4. Customer Selec)on
35

36
Customer Selection
Lead Users
Millennials/
Generation &
Tech – Savvy
Individuals
(B2C)
New Families
New Jobs,
Freelancers
Not eligible for
• Medicaid
• Medicare
Target Specific
Markets, starting
from NY & NJ
Why Oscar targets this customer segment?
• Healthy people → Lower Risk & Lower Cost

37
Customer Selection
Many did not take insurance at all (around
$45 million)
Most come from the Young (18-34 y.o)
Sources:
h]p://www.usnews.com/news/health-care-index/ar)cles/2015/05/07/us-news-health-care-index
h]p://www.aecura.de/Comparison-private-health-insurance/Problems.html
Source: http://dupress.com/articles/the-future-of-health-care-insurance-whats-ahead/

38
Customer Selection
Size of Individual Market increasing amer Obamacare
Source: http://kff.org/private-insurance/issue-brief/data-note-how-has-the-individual-insurance-market-grown-under-the-affordable-care-act/

39
Customer Selection

40
CS Recommendations
● Quickly expand in states with high population density
to increase the customer base, supported by a large
network of doctors
● Luxury plans for rich people promising premium
treatment and fastest response while keeping the
easy and technology-focused user experience
Once the US individuals market is conquered, adapt sales
division and attack:
● Groups
● Employers: According to S&P Capital IQ, by 2020, 90% of employees
with employer-sponsored insurance are expected to shift to individual
coverage. The easy access to health insurance exchanges following the
Affordable Care Act (or ACA) is expected to lead to employers paying a
stipend for employees to pay for health insurance rather than sponsoring
the plan themselves.

5. Scope of Ac)vi)es
41
Agenda

Integrated Services
Health
Insurance
Technology
Tele-
medicine
VISION
42
Integration
In Vertically Disintegrated Industry
• Oscar does not hire the medical practitioners,
like doctors. Oscar partners with them to
obtain lower costs
• Oscar does not produce and does not own the
wearables

VALUE
NETWORK Oscar Value Network
Customers, Collaborators, Suppliers
More Integrated
Services between
Healthcare & Health
Insurance

VALUE
NETWORK Value Network Traditional Insurance vs Oscar
Customers, Collaborators, Suppliers
44

VALUE
NETWOR
K
Oscar Value Chain
Health Plan Core Processes
Finance, Legal, Compliance/Regulatory, Quality/Audit, Human Resources, 3rd Party
Wearables Technologies
Support Functions
▪ Product
▪ Sales
▪ Marketing
▪ Actuarial
▪ Underwriting
Health Plan Functions
▪ Network
▪ Care management
▪ Medical Informatics
▪ Telemedicine
▪ Enrollment
▪ Billing
▪ Benefits
▪ Claims
▪ Service
Establish & Manage
Customer
Relationships
Market & Promote
Products
Perform Pricing &
Risk Management
Develop & Manage
Products
Perform Care
Management
Develop & Maintain
Provider Network
Data Analytics and
Reporting
Provide
Customer
Service
Manage
Membership &
Accounting
Manage Benefits &
Claims
T
E
C
H
N
O
L
O
G
Y

Technology & Data Analytics
• software platform plays an essential role in Oscar’s activities because it’s
the main enabler of all the functions of the plan, from the data to the
customer relationships to the providers network
Marketing & Communication
• the design is crucial to customer growth and engagement
Customer Services
• membership, accounting, claims, relationships, services
Provider Networks
• developing and maintaining them is a strategic activity that cannot be
underestimated
Products Development and Risk Management
46
Scope of Activities

• Sales/Brokers: can s)ll rely on tradi)onal brokers
to a]ract other customers
• Finance
• Legal
• Human Resources
• Wearables and Internet of Things
• Health EducaDon
• Rural unserved areas acDviDes
47
Collateral Activities

• Managed Care Organizations to access their
network of providers. Healthix (NY), Qualcore (NJ)
• Technology Infrastructure: Amazon Web Services
can save cost through a pay per use model
• Selected Providers : CVS Caremark for pharmacy,
Value Options for behavioral health/substance abuse,
Davis Vision for pediatric vision and Healthplex for
pediatric dental
• Recognized Hospitals: e.g. UCLA in California
• Wearables companies for biometrics informations:
Misfit
48
Current Partnerships

49
Recommended Partnerships
Google:
• Alphabet invested in Oscar’s capital. This investment will lead Oscar to have
better deal in using Google Cloud Platform at better prices as compared with
Amazon (Amazon Web Services)
• Chance to leverage Google Analytics for better web analytics
• More digital devices: by having its own health insurer, Google has a
platform from which it can distribute drugs and devices (products from the
alliances with Dexcom (DXCM) and Novartis (glucose monitor lenses))
Apple:
• iPhone iOS is one of the major players of the smartphones market
• Partnership with major players will enforce Oscar recognition
featured in the Apple Store
integrated in the Apple’s Healthkit Platform
• Apple too will benefit from a synergy between the two companies.

50
Recommended Partnerships
GE Healthcare:
● GE sells and maintain big machines for hospitals, collecting data
including monitoring and diagnostics and operations intelligence.
Combining these data with Oscar would help improving clinical,
financial and operational outcomes for the healthcare industry.
● Contractual agreement with healthcare providers based on
services, quality of treatment, and prices.
Selected Network and Providers:
UniversiDes and Research centers, Pharma Companies:
● Providing data for the development of science and new
products to get more revenue and increase the base and the
brand reputation

6. Value Capture
51

52
$2.7 trillion in expenditures on Health Plans
$580.0 B
$286.7 B $952.6 B
$1172 B
$305.1B
$305.1B
Individuals
Government
Employers Health Plans Providers
▪ Health plans consume 15.2% of the
$1172 billion that flow through
insurance providers’ doors (2012).
▪ As cost pressures in the US
healthcare system continue to
rise, the pressure to reduce this
spending will continue to
intensify.
Source CMS
Healthcare Money Flow

53
Value Capture (Current)
Subscription
Gift Card
Data
Uncovered
Covered
Government
Providers (Doctors,
Hospitals, Pharmacies...)
Individuals
Visits,Assistance,
Prescriptions
Subsidies
ACA
Matchmaking
Lower Risks
Discounts on scale

54
Value Capture (Current)
● From the Insured
Main Revenue: Subscription Fee Model Monthly Premium
In future : Personalized pricing plan depends on the customer’s risk.
Healthier person gets lower premium fee
● From Oscar’s Data
Identify Risk → Lower Cost → Offer lower price
Oscar could determine that an unexpected sedentary period in a
person’s life, maternity, depression or even just an out of pattern
resting heart rate recorded from the user’s fitness tracker is more
than sufficient to triple a person’s health insurance costs.
In future : Sale of data to pharmaceutical or advertising companies
● From Healthcare Providers
Discounts for scale of demand

55
Value Capture (Future)
Subscription
Gift Card
Data
Uncovered
Government
Providers (Doctors,
Hospitals, Pharmacies...)
Individuals
&
Employers
Subsidies
Research
Matchmaking
Covered
Visits,Assistance,
Prescriptions
Advertising
Discounts on scale
Wellness
Programs

56
Value Capture (Future)
● Data play the biggest role
Partnering with Google (and Apple) to become an
integrated platform for all the players of the network,
Oscar can capture value from all the elements of the
chain. Advertising for health products, revenues from the
development of new drugs and new services,
development of new IoT devices for the home or
wearables, care management for the providers. The
possibilities are endless.

7. Strategic Control
57

No Brand
Recognition
• A newly built start-
up
• Have no Prior
Experience on
Health Insurance
Industry
Limited Area of
Expansion
• Only New York
and New Jersey
Simple, Fast,
Integrated
Service
Cheaper Option than
existing health insurance
industry
• Cheaper consultation fee with
telemedicine →Claim Is
cheaper → Oscar can provide
lower cost
• Its “Simple Plan” give one-
time payment for insurance
and health treatment.
Besides, it adopts “no copays”
method
Lower Capital
Expenses
• Fewer Human
Resources
• No Brick-and-
Mortar Store
Google has
faith in
Oscar Health
Insurance
58
Strength vs. Weakness
Leveraging technology and data to make insurance simply, intuitive and human compared to traditional
competitors
“Google Bets on Insurance Startup Oscar Health”
Source: http://blogs.wsj.com/digits/2015/09/15/google-bets-on-insurance-startup-oscar-health/

59
Competitive Advantage
• Agility to innovate with emerging technologies
Starting small
• Early Mover Advantage
Speed to Market
• the Oscar process-based innovation
• But may not be sufficient to stay ahead if not supported by a rapid
scale
Customer-centric service provider
De-Facto Standard
• integrated platform to hand the complexity of the healthcare system
Oscar platform can estabilish as a front-end

Proprietary Algorithm to calculate personalized fees and risks
Control of the Closed Architecture: Proprietary
Communications System between doctors, patients, insurance
and hardware
High Barriers: the barriers to entry in the insurance market are
high for rising costs on one hand, but on the other hand they
are lowered due to the industry’s vertically disintegrated nature.
Privacy and Security: a potential breach could affect negatively
the brand reputation, so they must be protected
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Sustaining Profitability

Higher Switching Costs
• for patients: retention, fidelity, user experience not exchangeable
• for brokers: ease and convenience for them to work with Oscars, building
good relations
• for doctors: efficient platform to work anywhere anytime through
telemedicine, getting more patients by Oscar’s network effects
Advantages and promotions for new users and families
that contribute to the network effects, for active members
that contribute with contents, marketing and word of mouth
61
Sustaining Profitability

8. Recommenda)ons &
Conclusions
62

63
Crossing The Chasm
Things to do to Fix Healthcare
• Serve as the bridge between new tools and consumers
“In the first half of 2014, venture capital investment in digital health grew by
176%, spawning new consumer-centric companies with interesting approaches to
consumer health. But there’s a chasm between these unscaled point solutions and the
consumers who could use them. Payers can bridge the gap, using Amazon-style
analytics and personalization to better understand consumer types and then connect
them at the right place and time to the best-suited offerings. Better yet, payers don’t
need to build the bridge themselves: A growing set of powerful consumer-engagement
platforms are moving along this path.”
Can they win consumers over?
• Some consumers have had negative experiences with insurance → Key Success for
Oscar by bringing much better experiences, such as: more convenience,
personalization, 24/7 support for doctors and coordination of care
• Make health insurance industry more efficient, effective, humane, and sustainable.
Source: What the Insurance Industry Can Do to Fix Health Care (Sukanya Soderland, 23 December 2014). Harvard Business Review.

64
Priority Matrix for Consumer Engagement

65
Opportunities: After Obamacare Launch
Source: http://www.nytimes.com/interactive/2015/10/31/upshot/who-still-doesnt-have-health-insurance-obamacare.html?_r=0
The area where Medicaid has not
expanded to the State, the
uninsured level goes up
(as shown in Area not outlined in
Black)
• Continue expanding to other
States, benefiting from the
favorable wave of
ObamaCare
• New opportunities in the
areas with lower
competitors (the South and
Southwest area of the U.S)
• Financial evaluation is a
MUST, to minimize the risk
and sustain the growth
Expansion in other parts of
The United States

66
After the chasm: recommendations
Expansion in companies insurances (B2B)
• Attack B2B market with: deals, direct sales to companies to provide
insurance to the target employers.
Expansion in other insurance markets
• Expand and attack new markets other than healthcare market, such as:
home ins., car ins. , life ins., leveraging on the experience gained from
the healthcare market.
• Only applicable once Oscar has extremely strong network effects [Long-
Term Plan]

67
After the chasm: recommendations
Spend more in Advertising
• In marketing with Digital Advertising and Third Parties Recommendations
(Influencers, Blogs, Tech Magazines)
Continue to award virtuous behaviors
• Healthy behaviors should be always encouraged and rewarded with
discounts, as they not only serve as a promotion tool but also minimize the
risks and operating costs. It is a win-win solution for both the insured and
the insurance companies
Manage Chronic Diseases and provide the data to pharma
companies and researchers, in change of revenues of new drugs?
• Another way to capture value can be to provide a centralized hub for
providers to better manage metrics that are linked to improved health
outcomes for people with chronic diseases. A possible tradeoff could be
“patients data and tracking” in exchange of percentages from the selling of
newly developed drugs.

68
After the chasm: recommendations
Continue to be always One Step Ahead of Competitors
• Exploring partnership to improve its telemedicine to telehealth
• A big company can imitate
Expand and strive to provide better services to
build trust and lock-in the customers
(The importance of Network Effects)
Get more fundings
• Increase the capital to enter in the new market and absolve any needed
regulation

69
Thank You! Ques)ons Time

Web References
• http://www.hioscar.com/
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• http://www.economist.com/news/business/21600147-attempt-change-americas-most-arcane-industry-better-geek-guide-
insurance
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• http://www.bloomberg.com/news/articles/2015-09-03/for-health-insurance-startup-oscar-cute-ads-only-go-so-far
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management/
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• http://marketrealist.com/2015/02/affordable-care-act-hurts-managed-care-industry/
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