How to not loose money in Health IIC

1. How to not loose money in HealthIIC 26 September 2014

2. How to make Health profitable? Excellence across all parts of the value chain is needed

3. Some examples of supporting elements to make Health profitable • Introduce copayments • Bundling of products can allow to enhance the value proposition while controlling the frequency Product Design 1 • Develop intuitive and easy to use front screens • Have a specialised Direct Sales Force • Control the weight of your ‘bleeders’ • Ensure an end to end sales process that takes less than 10 minutes Distribution 2 • Have more than 95% automatically approved • Fraud detection • Pricing including some non-clinical risk factors like: • Income • Job • Area of residence • Leisure activities Underwriting 3

4. Some examples of supporting elements to make Health profitable • Utilisation management • Eg insurer determines which surgeries to be done on a day-case • Case Management Claims Handling 4 • Need scale for negotiation power • Smart negotiation process (eg more proactive follow-up of peer providers) • Contracting set-up; from fee per service towards package fees or capitation Network Mgt 5 • Automated • Integrated with medical providers IT & Infrastructure 6 Service 7 • Managed Care

5. Consistent good performance on all levers is required Consistenly scoring high on all levers will allow to build a product and offer it at a price that would never have been possible before

6. Example of successful Health operation in Portugal: Medis DESCRIPTION OF SKILLS Ability to develop actuarially based prices and underwriting standards UNDERWRITING Ability to develop a telephone customer service unit that provides primary care advice and channeling CLINICAL CARE ASSISTANCE Ability to design a high quality cost effective provider network Ability to negotiate with local providers including extensive local contacts, knowledge of relative quality levels of providers and an understanding of provider needs PROVIDER NETWORK Ability to develop standards for controlling medical costs while maintaining or improving quality of care given Ability to set medical care standards that are locally acceptable UTILIZATION REVIEW AND CASE MANAGEMENT Ability to set up a specialized IT system to support healthcare line of business Ability to design an integrated systems network SYSTEMS

7. Medis – KeyFigures GrossWrittenPremiums Claims Ratio Profit before taxes (million EUR) • Claims ratio decreasing since 2009 and significantly below market average • Lower claims ratios are achieved through: • Higher prices due to higher level of service provided to Medis customers • Quality of the Medis Operations • Medis Provider Network Control

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