Group 30

Ebusiness

HEALTHCARE INSURANCE APPLICATION

In this report, we will develop a launch ready E-business plan, regarding the Appendix 1 of Feng Li.

INTRODUCTION The main goal of this paper is to provide an E-business plan. This new plan emphasizes on opportunities in the information and communication technology. We will present a new app that is made through an insurance company. This app can be downloaded by customers and from there on, the insurance company and the customer can interact we each other. The main functionality of the app is to store data about activities of the customer. First an analysis is made of the current and past e-healthcare activities and mobile applications. Then the app is more described in detail. This is done mostly through the framework of the book of Feng Li, appendix I. The business objectives and the product/service is described through the four Ws: Why, What, How, With what. After the description a pricing objective is described and also the competitor and customer analysis is made. Finally the projected cashflow of the new service is made. The figures representing only customers who downloaded the app.

I) Detailed description of the business idea The service we would like to explore and write about in our E-Business plan for is the introduction of a healthcare app for Dutch healthcare insurance companies. This app is a communication between the customer and the health insurance company. Those companies want to know nowadays which customers are healthier than others. With data like smoking and drinking they can calculate the risk of a customer. Nowadays different measures are used for calculating risks of patients. One of those metrics is the EuroScore (Roques et al. 2003). It stands for European System for Cardiac Operative Risk Evaluation. With different variables the predicted mortality can be calculated for patients who undergo open-heart surgery. Insurance companies have, with these metrics, an insight of how the quality of live of their customer is. With the latest trends in information and communication technology, customers can get information about health subjects more quickly and directly. People nowadays now more about their own health and how to optimize their own health. One of the problems is to motivate people to participate in their own health. People know which is good for their health, but this is not always achieved. Those people should be motivated by assets they find important. One of those assets is money. People look for the best quality/price goods and services to fulfill their needs. So insurance companies wants data about customers for different kinds of metrics, people needs to be motivated for taking care of their own health and one asset that can achieve this is money. The concept: We are a team of 4 people based in Groningen (Netherlands) since 2000,we work for insurance companies such as Cardiff, Eureco, Netherlands Insurances or ING and we aim at designing services with scalable, innovative, and cost-effective solutions for our client's needs. By each step of the design process, we attempt to follow our company's core values and brand image. Our client Netherlands Insurances asked us to design an innovative and forefront service, to get differentiated by a competitive advantage. 8

In relation to the lecture dated on the 11/25/10 about Zappos Family's Concept, we think that it is important that our strategy, our culture, our brand can be inspired by our core values which are the following: 1.Commitment 2.Innovation 3.Efficiency 4.Quality 5.Service excellence Consequently, through our work, we are going to apply the Mc Kinsey 7'S Model:

II) What is the main service? What is the added value for our company? Therefore we would introduce a healthcare insurance app. With this app, the health insurance company gets more actively involved of the health of the customer. The main functionality is collecting points by the customer. These points can be used for several purposes. With these points the customer can get discounts for healthier activities such as fitness or other sports. Also a discount on the monthly premium is one of the options. As stated before, money is a good motivator for people to take more care of their own health. With healthier activities, the risk of this customer decreases and therefore the customer can get eventually a discount on its health insurance. This app thus creates more customer intimacy according to Treacy and Wiersma (1993). Secondly, the company can get more data from its customers and target their customers more personally. The insurance company give discounts for customers who have a lot of points. You would say that these customers pay less and the profit of the insurance company decreases. But the aim of this app is to get healthier customers, hence lower risk of injuries, deceases and less recovery time from, for example, surgical interventions. Thus, on the long term, these customers give more value to the company, because with less visits to the doctor and/or hospital the insurance company have to disburse less for that customer. This healthcare insurance app can cause these effects by motivating people to take care of their own health. The app could do things like show subscriptions of your doctor and thus makes it easier to buy your products in the pharmacy. Secondly it could give you examples of nice offers by the insurance company in your neighborhood, like cheaper fitness for example or shops where you can have a discount on specific healthy products. Thirdly it can help you promoting healthy behavior like counting the 8

steps of your running exercises, suggest exercises, reward you for the exercises. All these advantages for the customers are thought with the fact in mind that current healthcare companies offer quite the same services (insurances) to its customers and that it would benefit to distinguish your brand from the other. So the health insurance company can get a sustainable competitive advantage for being in constant interaction with the customer. The healthcare app is able to do so by making health fun for the client, offering him a personalized service. III) How does it work? After the development the app is offered by the appstore of Apple, Android and Nokia. Therefore, a broad group of customers can be targeted. Customers can download the app and register their personal information. Also the concerning insurance company is registered. Now the insurance company can get information of customers through the app. First information is presented by the insurance company through the app. Now the customer knows what to do and see detailed information about discounts, functionality of the app and cooperating companies. The main functionality of the app is to get the customer active in different kinds of sport activities. A customer can go to the fitness, which has a partnership with the company. The fitness company has different kinds of programs like weightlifting, cardio and zumba. For every program there is a barcode. If the customer participated in one of those programs, he scans the barcode of this program and this information is stored in the app. Now the insurance companies sees that the customer has participated in this program and the customer gets points for doing this. This functionality can be further extended by registering every fitness machine. Every fitness machine can be equipped by a QR-code, for example and if the customer is done with a fitness machine he scans the QR-code and the fitness exercise is registered. Now the insurance company can see detailed information about the activities the customer is participating. A schematic view is showed in the following figure: Another example is the activity running. The app should have functionality where, through GPS, the route and the speed of his activity are registered. The longer and the more often the customer runs, the more points the customer gets. A function of choosing the right music during your running activities can be selected in the special iPod function for example, that it gives you the right pace in the music selection connecting to your running speed. If the customer is a member of a sports club and the club has a partnership with the concerning insurance company, the activities of the customer can also be registered. For example, after a hockey match, players should write their names on a match lists that is send to the hockey league. The league confirms that this match is played and all the participating players get points for this. These examples show how sport activities can be an advantage for the customer to get points, thus discounts for their monthly premium. This idea can also be done without an app, but with the simplicity of scanning by the mobile phones, less paperwork is involved. IV) With What? The app is offered by the stores of Android, Apple and Nokia, so this app should be designed in three different programs. Nowadays a lot of people can designs apps for these providers, because those coding programs are open source. V) Pricing strategy The main revenue comes from two sources. First the app will be offered by app stores from 8

different providers. This app will be prices at 4,99. This is a value-based pricing strategy instead of a cost-based strategy. Value-based pricing can be quantified as by assessing the monetary amount that customers are willing to pay for the perceived benefits they will receive if they accept the market offering (Nagle and Holden, 1995). Value-based pricing is more effective in case of strong competitive advantage. Because this product is new and therefore has a strong competitive advantage on competing insurance companies, the value-based strategy can be applied. We think that customers are willing to pay 4,99 for the app, because they now they can get discounts for monthly premiums and subscriptions to sport activities. The monthly premium is held the same as the last years. In the first year, you have a lot of costs for implementation, but on the long run, the insurance company has to pay less for example hospital costs. Therefore, the insurance company can continue their current pricing strategy concerning the monthly premium. After a while, more customers apply discounts to their monthly premium, because of their collected points. This causes also a decrease in churn rate, because if customers switch to another insurance company, all the collected points will be terminated. So the switching costs are higher. More people stay with the company and the more points they get, the healthier they get. That means that the health risk of they customers decreases and the costs of these customers are a lot lower. As stated above the insurance company gets revenue from the offered app and has lesser costs on the long run, because of the healthier customers. If the insurance company applies this app, the strategy of the company will be emphasized on the revenue and the costs. This dual emphasis is according to Mittal et al. (2005), the best emphasis for a good financial performance. But since the company would have partnership with sports centers, they also get money from them, because the app is making promotion for it. VI) Customers: Who are they? We chose to define them by their socio professional group, to adapt the content of our app in function of this. We will segment our market by addressing our service to men and women middle aged (25-45 years old), working population, middle/upper class. These people have a smartphone, and who wants to take care of their health VII) Competition In the Netherlands, the reform Dekker-Simmons (1987 - 1993) has led to the setting competition the insurance funds and to delete the obligation to contract with health professionals. Regarding the share subject to competition, each policyholder pays to a central fund of financement an assessment related to its income, and can choose among different health insurance funds. These one receive a budget from the central fund, linked to the structure of their population covered. Although recently, each fund may also charge a nominal fee paid directly by the insured, the centralized funding mechanism that involves competition between insurers is mainly done in terms of quality of service. Competitors: The public health insurance, by the reform, has been affected by these measures which have resulted in a significant improvement in the efficiency of public funds: the recruitment of younger executives and well trained in insurance techniques, by the improving service to policyholders and the creation of units of "managed care" within the structures. That is to say the government because he is responsible for the accessibility and quality of the healthcare. 8

Private health insurance is the primary coverage for groups of people without access to public health coverage. In the Netherlands, nearly a third of the population (the highest income category) is excluded from the public system in this category; almost all subscribe to a private primary coverage.

VIII) Projected Cash Flow for the New Service 1.Let's determine the initial capital investment for the service: To start the process of identifying cash flow,begin with the capital expenditure required to start the project.In our case,we would need funds for : An RSS feed buyout that is one of the most basic features of a mobile application according to an article of Alain Bastide (http://www.indexel.net). This feature informs the user of the latest updates of the company on the app. To get an innovative and funny service,the investment will be important,and we estimate the cost of an RSS feed buyout at 8000 euros to design the best qulity service,knowing that it fluctuates between 2000 euros and 10000euros for the more expensives ones. A store locator geosatellite positionned is also an investment,since we would like to make partnerships with sport centers,we will indicate where these centers are situated to encourage the customer to go there,take care of his health and get a discount. It will be linked to a scribble map,adapted for people in move,and according to the specialized agency we asked for doing this,it would cost around 7500 euros,depending on our database. Combining the mobile phone to a website is also one of our intentions to create a link between the information system of the customer and the app.Since it is a huge investment,with one full month work,the quotation is estimated around 80.000 euros. Then, a polished casing is necessary to make our app visible and attractive.The creative work on an app requests approximately a month and 10.000euros investment. Finally,we are going to invest the major part on our budget in promoting our app,since there is a lot of app on Iphone,we need to be visible,and differentiated.Mobile and website advertising, we would like to create a buzz by also promoting our app in the sports centers with we are in partnership.The promotion budget is estimated around 50.000 euros for the launch. The total cash outflow necessary to start this project is therefore approximately 160.000 euros.

2.Estimate the projects operating cash flows generated : We will pick a horizon of five years for the project Year 1 Revenue from app Revenue from the monthly premium (100 euros per month by the 5.000 1.200.000 Year 2 10.000 2.400.000 Year 3 20.000 4.800.000 Year 4 40.000 9.600.000 Year 5 55.000 13.200.000

person covered who have the app and the discount) Implementation costs Fixed costs EBIT IX) 160.000 4.000.000 2.955.500 euros 0 3.000.000 -600.000 0 2.000.000 2.800.000 0 1.000.000 8.600.000 0 900.000 12.300.000

Action plan / Marketing Mix

Previously,we detailed the Product and the Price,we are now giong to talk about the Place and the Promotion : Place : It will be the App Store,Nokia and Android Market. Promotion : Mobile and website advertising.As previously said,we would promote the app in our partners sports centers,by organizing an evening-event to present the concept. The potential customers/members of the center will have the opportunity to fill in a form to suscribe to the insurance company.It would be a win-win relation. We cant speak about new technologies without talking about social networks such as Facebook or Twitter.

Conclusion
In this paper a new e-business plan was described. In the research part it became clear that mobile applications could function for many industries and markets. Because the Dutch healthcare market is open for new opportunities we designed a new app. Healthcare applications on the mobile Internet will be the new trend. M-Health (Health Mobile) promises cost-effectiveness and improved health with a multitude of applications available on iPhone or Smartphone. The expansion provides an evolving value proposition exciting. The potential market is considerable, but cannot be fully achieved once the issues on the fragmentation of market, technology, regulation and value chain partnerships will be solved.

References
Roques F, Michel P, Goldstone AR, Nashef SA. The logistic EuroSCORE. Eur Heart J. 2003 May;24(9):882-3 Treacy, M., & Wiersema., F. (1993). Customer Intimacy and Other Value Disciplines. Harvard Business Review, 84-93. Nagle, Thomas T. and Read K. Holden. (1995). The Strategy and Tactics of Pricing: A Guide to Profitable Decision Making. Englewood Cliffs, NJ: Prentice-Hall. Mittal, V. Anderson, E. Sayrak, A. Tadikamalla, P. (2005). Dual Emphasis and the Long-Term Financial Impact of Customer Satisfaction. Marketing Science. Vol.24, No. 4, Fall 2005, pp. 544-555 Feng, Li, What is e-Business?, ISBN -10:1-4051-2558-6 http://lesrapports.ladocumentationfrancaise.fr/BRP/024000475/0000.pdf http://www.oecd.org/dataoecd/15/41/33915167.pdf https://commerce.informatm.com/reports/main/mobile-healthcare.html http://www.journaldunet.com/ebusiness/internet-mobile/w3c-applications-mobiles/ergonomie.shtml http://www.mediatech-softwares.fr/index/applications_mobile.html

Research Background Appendix

Appendix I: General Informations about Healthcare in the Netherlands In the Netherlands the largest healthcare costs are in the group of elderly (Meerding, Bonneux, Polder, et all, 2008), however every citizen in this country needs to have a healthcare insurance. Therefor a lot of individuals pay the costs of a smaller group who needs the health care. The health care market in the Netherlands makes it possible that every year individuals are able to switch from their insurance company. Several companies are striving to contract as much customers as possible. Especially the customers who are young are an interesting market because their costs are lower than those of elderly. Every individual thus pays a similar amount of money when being insured, which is obliged by law. The expenses per individual can change largely, also the total costs are big numbers; in 2009 it was 83 billion euros in the Netherlands (CBS.nl). If companies can reduce this costs by very small percentages then it still are improvements of millions of euros.

Figure 1: Total costs of Dutch healthcare (left, millions of Euro) and avarage costs per head (right: Euro) by age and sex in 1994 and 1999 (The Netherlands had 15.9 million inhabitants in 2000). From: Van Oers, 2002 Next to the to the large costs, also efforts can be done to decrease this large amount. The healthcare delivery can change for example. The management of health care is a second factor in which these improvements are going to be made. In this research the importance will be on the advantages reached by improving healthcare processes into E-healthcare processes. Metrics and trend 8

calculation can become more and more online (Goldstein, 2000). Also recipe prescription and attainment will be more online. Even easy diagnoses will be online. Finally the data gathering and calculating can become more of an ICT task then a doctors task. For our research the E-Healthcare will not lay in these functions seen as core-functions. It are supporting functions to create an extraordinary experience of healthcare, it will be a platform in which healthcare insurance ventures are able to give themselves an identity of their service to their customer. By having e-healthcare it shows they are the best insurance company promoting all kind of by health captured brand activities. This helps distinguishing and gaining extra customers. Of course the effects in fact will be there also in health care efficiencies, however this is only a subobjective Appendix II "The phone has really become a kind of digital Swiss Army knife that people are using in all sorts of new ways, said Michael Winnick, Gravity Tanks managing director. " What is the added value of an application and what are its pros and cons? On one hand,thanks to the success of the iPhone and the AppStore, mobile applications have become essential communication tool for professionals. Indeed, those fun little programs or utilities allow companies to increase visibility and accessibility of their products and reach new prospects. But companies have to keep in mind that a mobile application requires forethought, and several criteria apply in its design. On the other, the Internet Mobile access is becoming more democratic .The internet user is becoming a mobile user. He is both likely to access to the Web from his computer,than his mobile phone. Consequently,more and more companies wants to provide mobile applications,accessible by Iphones or other Smartphones. These programs are changing the way people use their phones, spend their time and organize their lives. We thought that it can be interesting to see what are the advantages and disadvantages of a mobile application for both companies and users. But before,we would like to share the figures founded on a study Apps get real : Among some of the findings from the report: respondents have downloaded an average of 23.6 applications to their phone and use an average of 6.8 apps every day. Nearly half (48 percent) of phone owners report shopping for apps more than once a week. About the same number (49 percent) report using apps on their phone for more than 30 minutes a day. http://www.gravitytank.com/apps/

I) What is the interest to develop mobile applications? Advantages for professionals: The use of mobile applications became popular with the IPhone, especially thanks to his excellent ergonomics with the use of the touch interface.

A mobile application increases the visibility of the company's products and services since it is first used to improve the visibility of the company by the user. As such, it allows brand awareness or the spread of promotional offers via a mobile interactive content. Moreover, it is a non-invasive method of advertising because it begins with a voluntary approach of the user to download the app. 8

 The mobile application allows the company to enhance its positioning. The Push feature of the Iphone allows professionals to send free messages through the app to the user. Advantages for users: The number of mobile applications available on Iphone through the Apple Store or with others Smartphones is quickly growing. Autonomous use, no need for Internet connection. Advantages for both: - Those fun little programs or utilities make the multimedia experience of mobile Internet users enriching. As such, it represents a high added value tool for advertising and companies marketing actions. II) Users/Professionals have to deal with diverse constraints Disadvantages for professionals: A mobile application is translated in different languages because there are several sorts of mobile phone (over 1500 models in Europe) with different platforms (OS phones). Consequently, it increases the cost of development, since the app has to be adaptable with the largest number of mobile phone. Disadvantages for users: - The app has to be downloaded from a website before being used. - The app is sometimes paying, which may represent an obstacle. Moreover, when its paying, the user needs to pay first before using the app, without having tried it the user can feel trapped .