More Related Content

Similar to Oscar health insurance(20)


More from Jeffrey Funk Business Models(20)


Oscar health insurance

  1. 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
  2. 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
  3. 1. US Healthcare Insurance The State of the industry 3
  4. 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://
  5. VALUE NETWORK Traditional Health Insurance Value Network
  6. 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. 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. 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: the-lack-of-competition
  9. Sources: h]p://]empt-change-americas-most-arcane-industry-be]er-geek-guide-insurance h]p:// 9 Opportunities Sources : h]p:// 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%
  10. 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
  11. Opportunities
  12. 2. Oscar Health Insurance A brief overview 12
  13. Simple, Smart & Friendly "We wanted to build a company that was like having a doctor in the family" Oscar ADV:
  14. •  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
  15. •  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:
  16. 16 Better Plans, Lower Costs
  17. 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. 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
  19. 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. 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. 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
  22. Compe)tors Some examples 22
  23. 23 Traditional Companies
  24. 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
  25. •  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:
  26. 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:// Oscar pricing is compe))ve and some)mes lower
  27. 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
  28. 3. Value Proposi)on 28
  29. Economic • Lower Insurance Premium • Affordability Functional • User Experience • Fast • Network Psychological • Simple Process • Health Coverage Assurance 29 Customer Needs Unserved & Articulated Need Convenience Cost
  30. 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
  31. 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
  32. 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
  33. 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. 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
  35. 4. Customer Selec)on 35
  36. 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. 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:// h]p:// Source:
  38. 38 Customer Selection Size of Individual Market increasing amer Obamacare Source:
  39. 39 Customer Selection
  40. 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.
  41. 5. Scope of Ac)vi)es 41 Agenda
  42. 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
  43. VALUE NETWORK Oscar Value Network Customers, Collaborators, Suppliers More Integrated Services between Healthcare & Health Insurance
  44. VALUE NETWORK Value Network Traditional Insurance vs Oscar Customers, Collaborators, Suppliers 44
  45. 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
  46. 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
  47. •  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
  48. •  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. 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. 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
  51. 6. Value Capture 51
  52. 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. 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. 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. 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. 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.
  57. 7. Strategic Control 57
  58. 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:
  59. 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
  60. 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 60 Sustaining Profitability
  61. 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
  62. 8. Recommenda)ons & Conclusions 62
  63. 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. 64 Priority Matrix for Consumer Engagement
  65. 65 Opportunities: After Obamacare Launch Source: 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. 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. 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. 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. 69 Thank You! Ques)ons Time
  70. Web References • • • • insurance • • • • • • • • • • • • • • • management/ • • • 70