With the US healthcare expenditures pegged at $2.5 trillion in 2009 and estimated to reach $4.3 trillion by 2018 (17.6% of GDP), and with more than 80% of population under age 65 insured, online care is a very lucrative prospect. To capitalize on this opportunity, American Well is launching Online Care platform that offers different value proposition to different segments of the value chain. For patients, value proposition is that they will be able to get immediate medical consultation at cheaper prices. Also, they will not be limited to physicians from only their own state and will be able to consult the physicians across the country. Lastly, they can also save time and money by consulting the physicians from their own homes instead of visiting hospitals. For physicians, value proposition is that they can save significantly on the infrastructure costs of their own private practice setup. Also, they will be able to get access to the patients all over the country. For health insurance companies, value proposition is that they can access an all new segment of non-insured customers who are willing to pay out of their pocket. Furthermore, this model also provides significant cost savings to them as the amount spent would be less since online consultations are faster than traditional consultations and helps in the early detection and treatment of symptoms. On an average, the health insurance companies pay PCPs around $100 for new patients and $75 for existing patients depending on the complexity of the visit. By adopting Online Care business model, the health insurance companies can save around $3.36 per patient per month (10 minutes online consultation = $25 approx.), since online visits will cost less than physical visits.
With the Online Care business model, American Well would be able to seek a combination of upfront and recurring revenues. Health insurance companies will have pay one-time fee for every new customer and recurring fee which could include support...