Chain  activities

Chain  activities

Step 1 :Please read all information begins from next page first before going to step 2.
Step 2: Then, please summarize all of each sections below:
• Inbound logistics
• Operations
• Outbound Logistics
• Marketing and Sales
• Service
• Firm Infrastructure
• Human Resource Management
• Technology Development
• Procurement (this section is long, so please summarize only important information:
around 50 words)
• Enrollment and Eligibility Process within the Value Chain (this section is long, so
please summarize only important information: around 100 words)
Step 3: No external source needed. All your paper should contain only below information
provided. Please do not mix them together. Please separate each sections when
summarize.
Note: please use simple words to easy to understand.
Aetna Background
The value chain for a Medicaid health plan at Aetna is very different from that of a
company that produces a specific product that begins with raw materials, becomes a produced,
tangible item like a washing machine, is distributed to stores where it’s sold by Marketing and
Sales, and then ultimately serviced by customer agents or a repair person. A health insurance
plan is ultimately a service and has very different outputs than a consumer product.
Primary Value Chain Activities
Inbound logistics
Rather than raw materials like steel and electronic components of a washing machine,
health insurance provides a network of care providers that ultimately deliver physical health,
behavioral health, and prescription services to a customer. A health plan provides financial
security for a customer, a way to pay for health services, and limit the liability of the customer.
The inbound logistics for a health insurance plan then includes building the covered network of
hospitals, physicians, dentists, pharmacists, and other specialists and facilities who have agreed
to provide care to Aetna’s members.
Operations
The operations of a health plan take the raw materials of the various healthcare providers
and then develops those raw inputs into a finished product. Network development puts all of the
contracts in place to secure the network of providers. IT creates and manages systems that
manage data, both of the provider network and the customers, services provided, etc. Operations
set up processes to service the members and providers, manage medical services, pay provider
claims, etc. Member Services provides telephonic and other forms of member assistance as well
as member materials such as provider directories and member coverage handbooks.
Outbound Logistics
As opposed to managing transportation to deliver washing machines to distribution hubs
and retail stores, an Aetna Medicaid plan serves two primary customers. It serves the payer, in
this case, a State Medicaid agency, and the end-user, a covered person with Medicaid. For many
of us that may receive our insurance through an employer, the primary difference is that in the
case of a Medicaid recipient, the payer is the State Medicaid agency and the federal government.
Aetna Medicaid delivers its product, the health insurance plan, accessibility to a network of
healthcare providers, and a mechanism to manage those services, to the State Medicaid agency,
and then provides service directly to the covered customers.
Marketing and Sales
In this value chain, marketing and sales are primarily targeted at the State Medicaid
agency initially. A Medicaid managed care plan such as Aetna, must first secure a contract with
the State Medicaid agency is a procurement process typically including a formal Request for
Proposal process. Competing vendors submit a proposal that is evaluated by the Medicaid
agency, culminating in an award to several successful bidders. At this point, each successful
competitor turns its marketing and sales efforts toward covered customers.
Service
A health plan is a service rather than a product, so service is inherent to the business. A
successful health plan provides service to its network of providers, service to the State Medicaid
agency, and service to its covered customers. In many respects, quality of service is one of the
key differentiators for a health plan like Aetna.
Support Activities

Firm Infrastructure

Aetna Medicaid’s infrastructure is designed to enable it to serve its State Medicaid
agency customer and ultimate covered customers in the community. Aetna Medicaid operates as
a Strategic Business Unit within the Government Businesses operation. Recent organizational
changes within CVS Health/Aetna have seen the addition of Alec Cunningham and David
McNichols, both experienced in the Medicaid and Medicare markets (Murphy, 2020).
Human Resource Management
Human Resource Management continues to develop Aetna Medicaid’s talent pool,
focusing on employee retention, as well as recruitment of talent with Medicaid experience. As
stated in its annual report, CVS Health/Aetna is seeking to expand its footprint in the Medicaid
and Medicare markets (CVS, 2020). This anticipated expansion would inevitably lead to a
growth of staff in this SBU.
Technology Development
In an attempt to stay ahead of competitors, CVS Health is investing heavily in new
information technologies like voice, artificial intelligence (AI), and robotics (CVS, 2020). Aetna
is already joined with other healthcare companies, Anthem and Health Care Service Corporation,
to partner with IBM and PNC Bank on a project to use blockchain technology in healthcare
(Murphy, 2019). Aetna is also a member of the Synaptic Health Alliance, another alliance
developed to pioneer blockchain technology, which includes Humana, MultiPlan, and
UnitedHealthcare as partners (Arndt, 2018).
Procurement
Procurement is an opportunity for differentiation. One of Aetna’s most critical raw
materials is the network of providers it builds to offer the customer a delivery network from
which to select healthcare services. Aetna can differentiate itself and add value in this step of the
value chain by using its information resources to create networks more effectively. Aetna’s
information management can use data to determine the primary drivers of value in a provider
network, cost, and quality. By using cost and quality data, Aetna can target providers that not
only provide quality care as measured by health outcomes and common measurements like
HEDIS, but it can also determine which providers provide quality care at lower costs. The advent
of value-based contracting is accelerating this evolution by putting much greater emphasis on
payment for health outcomes, rather than payment for services. Instead of providing payment to
physicians and other providers based on the services they provide, contracting includes
incentives and goals based on health outcomes. So, a provider could be paid more to keep a
patient healthy than by treating a member who becomes ill. Another raw material that contributes
to Aetna Medicaid’s product is represented by numerous subcontractors that may provide
services that the core organization isn’t performing. In some cases, this may be the result of thirdparty providers that have more expertise in an area or can perform the service more costeffectively. It is important that Aetna use its IT resources and data to ensure that these partners
are indeed providing additional value. Continuous monitoring of this data is necessary to ensure
consistent delivery of services and competitive costs. Using this data, Aetna could choose to shift
to new subcontractors to maximize value.
Enrollment and Eligibility Process within the Value Chain
The selected focus of our research centers on the information system-enabled business
process of patient enrollment. This specific process is considered an inbound logistics function,
as defined in Porter’s Value Chain (Wilkinson, 2019). The data collected and shared between
network administrative stakeholders provides for real-time, accurate patient information. This
functionality is the baseline process that all other internal processes rely upon in advancing
through the other functional silos of the value chain. The enrollment process directly supports the
operations silo of the value chain as the data allows for better underwriting, provider selection,
claims administration and product/policy development The robustness and depth of the
enrollment process is a quality-focused model that improves downstream components of the
value chain through a cascading effect of building upon more detailed data points that result in
optimization of quality service deliver seeking to mitigate costs, higher quality at lower costs,
adding to the additional marginal benefit (G. Krause, personal communication, April 8, 2020),
(see Figure 1).
The functionality of the enrollment process within Aetna is working and has improved
over the last several years, however, based upon the interviews conducted, Aetna has yet to fully
develop a strategy regarding the competitive threat of digitization of the industry. Artificial
Intelligence and Blockchain technologies could disrupt the traditional models of the Payer
component of the insurance industry. Organizations that deliver better consumer experiences are
those that will achieve success in the 21st century, and as technology wearables or home-based
medical diagnostics devices become more commonplace, insurance companies must direct their
attention to this trending shift in meeting customer expectations (Abidi & Abidi, 2019).
Massive amount of data is being collected throughout the clinical healthcare sector and
insurance claims. Even more, data is being collected and migrated to healthcare companies from
social interactions, health monitoring devices, and the Internet of Things. It is estimated that
health data is growing at an annual rate of 48%, nearly 1 gigabyte of data being created every
day for each person. The exponential volume of data has surpassed human cognitive capacity
requiring superior automated analytical methods (e.g., machine learning) to understand the
relationships of the data to become actionable information (Latko, Latkovic, & Ward, 2017).
Aetna is a technology market leader; however, the entire insurance payer sector is slow in
advancing the digitalization of healthcare from a technology viewpoint. Large technology-based
companies are viewing the healthcare sector. Although they remain on the sidelines, smaller
companies have emerged into this lucrative sector relying on smart claims management with
self-learning software as differentiators to lower costs and deliver a better customer experience.
This technology shift brings risk from innovative competition (McKinsey & Co., 2017), (see
Appendix B).
There is a strategic window for Aetna to adopt a business process shift that builds upon
and leverages AI and Blockchain technologies into a sustainable competitive advantage. Given
current market dominance, they would position themselves in a strong posture against highly
capitalized threats that are reviewing the sector and perhaps deter such entry by those
competitors.