Creating a value proposition for the health care industry (U.S) from an IT perspective

Abstract

The Healthcare Industry in the U.S is a $1.9 trillion (2004) industry, constituting 16% of the U.S GDP. National health expenditures are projected to reach $3.6 trillion in 2014,growing at a average annual rate of 7.1 percent during the forecast period 2003-2014. As a share of gross domestic product (GDP), health spending is projected to reach 18.7 % by2014, up from its 2004 level of 16%.IT spending by Healthcare Insurance firms in the year 2005 was close to $15 billion and is projected to touch a figure of $20.8 billion by2010. The Healthcare Insurance IT offers a lucrative market for firms offering IT products, system integration, IT consulting, enhancement and maintenance services. This course project endeavors at developing a methodology/frame work. The course project is divided into multiple sections, each of which addresses a specific topic. The first section (Section 3) defines Value Proposition and gives the Framework that is used to by the Project to develop a Value Proposition for the U.S Healthcare Industry. The next section (Section 4) gives an overview of the U.S healthcare industry the players in the industry and the challenges they face. Section 5 through Section 8 is devoted to Customer analysis, Competitor analysis, environment analysis and Internal Analysis all of form inputs to development of a Value Proposition. Section 9 is an endeavor at how an IT outsourcing firm in the Healthcare Payer arena develop a value model. The example taken here is that of a legacy Medical Management system that is being replaced by a newer open-system Medical Management system. This section introduces concept of Value elements, word equations, dimensions of value proposition and the formulation of a value proposition text. Section 10 gives insights to methods by which firms can deliver value to their customers-lead generation and creating a partner ecosystem. The final section, Section 11 gives insights to the relation between the Theory of a Firm, its Value Proposition and Shareholder Value creation.