MARKETING-1

Case: American Well (Post Analysis)

PGP1 Section B Group 07 Date of Submission: 17 August 2012

Submitted By:Amit Kumar Yadav Preetam Joga Sourabh Waghmare Vanlalrosiama Rahul Kumar Nidhi Bajaj

Need Analysis 1. What need does the product fulfil ? A: The product fulfils the following needs for the patients. Affordable healthcare Convenient access to quality healthcare in terms of place and time of delivery Personalised care Choice of Physicians and specialists 2. Is the need being currently met? by whom? how? A: Yes, the need for affordable healthcare is being met to a certain extent through the local PCP and regional hospitals. The patients can also avail the services of the existing Telemedicine for easy access to healthcare through online means and Offline care centres for convenient healthcare solutions. The following are the Telemedicine services that are available to the customers RelayHealth MedFusion TelaDoc Cisco TelePresence Offline Care centres are as follows: Nurse Practitioners MinuteClinic RediClinic Take Care Clinic 3. How satisfied are the customers with the existing solution? [prior to AmWell] A: Prior to AmWell, the customers are satisfied to certain extent as in their basic requirement for the Affordable and convenient Healthcare is being met, subject to some trade-offs. We list some of the trade-offs in the existing systems before AmWell: Hospitals: The demand supply gap between patients and physicians is not met. With no distinction between urgent and non-urgent health issues, a single appointment with a PCP or a specialist takes a very long time. Also the demographic and geographic setup of a location is a major problem Telemedicine: these services offer convenient and affordable care through phone or online means. But there is a definite time lag involved, the synchronization between a PCP and a specialist is low and the customer isn't offered any choice in terms of PCPs and specialists. Also the personalised care element is missing. Offline Care Centres: These centres offer care at convenient locations but are often low in terms of expertise as a result of which they're only used for preventive healthcare like vaccinations and non-emergency health situations. Provided the customers do not mind these trade-offs, they will be pretty satisfied with the existing solution. But removing these trade-offs will be an added incentive for the customer. Business Model: 1. Is AmWell's value proposition superior to what competitors/substitutes provide? is it sustainable in the long run? A: The model that AmWell is using now is not sustainable in long run as the only advantage it leverage now is that it was the first mover in providing this service. However companies

like RelayHealth , TelaDoc and Cisco TelePresence have already developed similar models and all of them are competent enough and they also have enough capital to modify their models to compete with AmWell. Also there is a possibility that AmWells major most important consumer i.e. the Health Insurance Companies can develop their own online platform for patients- physicians interaction in the long run. If that happens AmWell would lose a major part of its revenue and most importantly it will also lose the entire network of patients and physicians which was available to it by HICs. Hence we can conclude that , in the long run it is not difficult for other companies to copy the services provided by AmWell. Hence in order to hold its position in the market AmWell would have to improve its services from time to time . One initiative that AmWell is planning to take in this regard is to come up with the Team Edition service which would differentiate it from its competitors and hence make it superior to them. 2. Who are the complimenters? What are their strengths that AmWell can leverage? A: The complimentars for AmWell and their strengths that AmWell can leverage are: 1. Doctors: AmWell provides a platform for doctors to interact with patients, where no infrastructure is required, it gives the flexibility to the doctors to work as per their convenience and they also get a chance to make some extra money. As more and more doctors are connected with AmWell its database would increase and hence it will be able to provide faster services along with greater pool of PCPs and specialists to choose from for the patients 2. Health Insurance Companies: By using the services provided by AmWell , HICs can significantly reduce their cost ( by approximately $3.36 per patient per month). AmWell can leverage the vast data base of patients and physicians available with the HICs. Moreover, since HICs are financially strong and hence they were the lucrative customers for AmWell 3. Patients: By enrolling more patients with it, AmWell can increase its database for patients and hence can increase the number of transaction and the revenue associated with them. 4. Hospitals: By collaborating with hospitals AmWell would get an option to widen its network of patients and physicians which would help it in establishing as a brand and to achieve its ultimate goal of becoming the market leader 5. Retail Clinics and Pharmacy chains : Retail clinics and pharmacy chains are usually located in the crowded and easily accessible locations of the cities , AmWell can leverage the prime locations of clinics to get more patients and improve the quality of service provided. Moreover, since there are no specialist available at these retail clinics and pharmacy , AmWell can provide specialist accessibility at these location and hence can generate revenue out of it. 3. What decisions on part of AmWell could threaten the mutual success of AmWell and complementers? A: If AmWell provides services to Health Insurance Companies and other health care delivery networks like hospitals, retail clinics etc, then there are chances of conflict of interest among them specially for the non insured people. As , in case of non insured person using AmWell service, the revenue would either be made by the insurance companies or the other delivery networks. In any case , it would not be a win-win situation for all , one has to lose out.

If AmWell decides to expand its business overseas at this point of them then it would have to either divert its resources or make additional hiring . In either case AmWell would undermine its presence in US and it will definitely impact its business in US. As AmWell shifts its focus from US business its consumers i.e. HICs patients , doctors would also be impacted. As the revenue for HIC would decrease substantial and for doctors and patients easy and quality service would not be available. 4. How does AmWell help the various stakeholders achieve their business goals? A: Various stakeholders involved are: HICs: Health Insurance companies can increase their profit margin by being associated with American Well. They can provide their network of doctors and patients to AmWell and use their products. Employers: Employers can be benefitted by the AmWell because it will reduce the cost of premium paid for insurance. Along with this it will increase productivity due to immediate care and less absenteeism from the job due to doctors visit. Also prepaid Insuarnce premiums will reduce the price sensitivity of the employees. Hospitals: Hospitals can increase their customer base and provide prompt service to patient through online communication between Customers and PCPs. It will also reduce physical dependence of doctor in hospital as he can connect to patient from anywhere despite geographical disparities. It will also boost goodwill and image of the hospital. Doctors: Doctor can be benefitted by this as they can leverage on AmWell's base instead of creating their own customer base. They can also work in flexible working hours instead of working in fixed timing in hospitals or clinic and they can work on weekends too, earning some extra money. Additional categories of doctors benefit from this proposition: Fresh Graduates: The need to setup their own practice, which tends to be very expensive (for fresh medical graduates) is eliminated. This is a very good prospect for them to get a foothold in the field. Retired Doctors: They can return to practice.

Context: 1. What demographic shifts favor AmWell ? A:The following facts and figures indicate a demographic shift: The U.S Health Expenditure estimated at $2.5 Trillion is expected to reach $4.3 trillion by 2018. 7 out 10 deaths in US were caused due to chronic diseases, which if detected earlier could be cured. Over the next 2 decades, Americans over the age of 65 would comprise 20% of the population. This population segment requires accessible quality healthcare. By 2006, 80% of the respondents of a survey of Internet users reported searching online for health related information. These According to a 2006 survey, 74% of the respondents were willing to communicate with their doctors online but only 4% were actually doing so, since the required service wasn't available.

According to a survey, physicians who communicated with patients online increased from 23% to 36% from 2001 to 2008.

The above statistics show an increasing need for accessible and affordable healthcare for all segments of the population. Also the increasing customer willingness for online care is a positive demographic shift effect for AmWell. 2. how does the current state of economy impact AmWell? A: U.S health expenditure in 2008 was $2338.7 billion, ($783.2 by consumer private health insurance, Exhibit 1) and was projected to reach $4.3 trillion in 2018. This indicates a vast scope of sales for AmWell in the long run. However, economic recession and volatile healthcare environment hampers the interest of insurance companies in the product. The deferring in the reforms in healthcare system as promised by the current President puts the insurance companies in a doubtful situation. The success of AmWell in the present scenario would be affected by these factors.

3. what common business practices / laws if amended would have a positive impact on AmWell's business? A: Presently, most state governments restrict a patient from consulting physicians, but not specialists, from other states. AmWell proves beneficial for patients to consult physicians when out of state. If some state or the federal government extends the rule to specialists as well, AmWells business would be benefited. Also, if it is made compulsory for even the small firms to ensure medical insurance of each of its employees, customer base for health insurance companies would increase which in turn would increase the business of AmWell.