Businessmodel of Change Healthcare

Customer Segments

Change Healthcare has a segmented market business model, with customer groups that have slightly different needs:

• Providers – The company gives hospitals, physicians, dentists, and laboratories tools for verifying patient eligibility in real time, automating billing systems, managing payments across the revenue cycle, and submitting claims electronically.
• Payers – The company gives payers solutions for member engagement, administrative efficiency, payment accuracy, and the transition to value based payments.
• Pharmacies – The company gives pharmacies solutions for streamlining claims management, reducing claims submission errors, and automating accounts receivable. ### Value Proposition

Change Healthcare offers four primary value propositions: accessibility, convenience, risk reduction, and brand/status.

The company creates accessibility by providing a wide variety of options. It has acquired numerous firms since its founding, including Altegra Health, Adminisource Communications, and Capario. This strategy has enabled it to greatly expand its capabilities and diversify its portfolio. It also increases access by providing offerings to multiple parties, including hospitals, laboratories, pharmacies, employers, physician practices, consumers, and commercial and governmental payers.

The company offers convenience by making life simpler for customers. It offers a comprehensive, end-to-end solution that includes numerous features, including clinical solutions, clearinghouse services, e-prescribing, digital and print statements, and consumer payments.

The company reduces risk by maintaining high quality and security standards. It has received the following forms of accreditation/certification:

• Accreditation in the Healthcare Network Accreditation Program (HNAP) by the Electronic Healthcare Network Accreditation Commission (EHNAC)
• Accreditation in the e-Prescribing Accreditation Program (ePAP) by EHNAC
• Certification by the CAQH Committee on Operating Rules for Information Exchange (CORE) The company has established a strong brand due to its success. It maintains the Intelligent Healthcare Network, which it touts as the largest administrative and financial network in the United States. The network reaches over 5,000 hospitals, 60,000 pharmacies, 450 laboratories, 600 vendors, 750,000 physicians, 105,000 dentists, and 1,200 commercial and government payers.

In 2015, the network processed 8.8 billion healthcare transactions, covering $1.7 trillion in claims. Change Healthcare hs over 6,500 employees operating worldwide.

Channels

Change Healthcare’s main channel is its direct sales team.

It also promotes and sells its offerings through 600 channel partners, who include physician and dental practice management system and electronic medical record vendors, pharmacy system vendors, hospital information system vendors, and other vendors that provide software and services to payers and providers.

The company promotes its offerings through its website, social media pages, advertising, direct marketing, customer workshops, e-newsletters, trade shows, and participation in/sponsorship of conferences.

Customer Relationships

Change Healthcare’s customer relationship is primarily of a self-service nature. Customers utilize its software while having limited interaction with employees. The company’s website features an “Insights” section that includes white papers.

That said, there is a personal assistance component in the form of ON24/7, a web-based system that enables clients to submit service requests.

Key Activities

Change Healthcare’s business model entails designing and developing it software for customers.

Key Partners

Change Healthcare’s key partners are the firms that help promote and sell its offerings to expand its reach.

These include physician and dental practice management system and electronic medical record vendors, pharmacy system vendors, hospital information system vendors, and other vendors that provide software and services to payers and providers.

Key Resources

Change Healthcare’s main resource are its human resources, who include the engineers that design and develop its software, the sales employees that promote it, and the customer service personnel that provide support.

It places a strong emphasis on intellectual property, with numerous patents. Lastly, as a startup it has relied on funding, raising $48 million from 10 investors as of July 2014.

Cost Structure

Change Healthcare has a cost-driven structure, aiming to minimize expenses through significant automation. Its biggest cost driver is cost of operations. Other major drivers are in the areas of sales/marketing, administration, and customer postage.

Revenue Streams

Change Healthcare has two revenue streams: revenues generated from solutions revenues and revenues generated from postage revenues.

Solutions are provided to clients on a per transaction, per communication, per document,  per provider per month, per member per month, monthly flat-fee, contingent fee, or hourly basis. Contracts are typically one to three years in length.