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Capstone: Business Strategies

Executive Summary

McKesson is one of the largest and highly ranked health information technology (IT) service providers in the United States. The company intends to implement a new patient portal system that will address the problems that customers are currently experiencing with the existing portals. It recognizes that though the portal market is growing in the United States, some of the current solutions do not address patients’ needs. Specifically, most of the current portals are not compatible with such devices as smart-phones and iPad. The current portals are also prone to fraud attacks due to password theft causing financial risks or personal privacy risks. The proposed portal solution will seek to address the highlighted challenges. To achieve this objective, the company has put in place adequate financial resources and key human capital to execute the project. Once the plan is successfully implemented, the company expects to make a profit from the first year of its operation as it moves into the future.

Chapter 1: Company’s Profile

a. Introduction

McKesson Corporation was founded in 1833 and is now ranked fifteenth on the Fortune 500. It has also become a leader in its IT initiative because it has been implementing common standards with electronic medical record systems with its CommonWell Health Alliance. There is one product lacking in McKesson Corporation’s product – a patient portal.

b. Company’s Vision

McKesson seeks to put together its human and capital resources in order to enhance clinical knowledge, expertise, as well as technological advancements to change not only costs, but also the quality of health care services to its customers (McKesson Corporation, 2014). Therefore, the proposed patient portal will be a great step forward towards achieving this very important goal. Apparently, if McKesson applies its resource base, both human and capital, to develop the proposed solution, it will be able to set itself at per or above its peers in the field of technology solutions.

c. Company’s Mission

The setting up of the patient portal will contribute to improving the quality as well as delivery of healthcare. In this way, the company will achieve its mission. Besides, the portal will most likely contribute to the security of supply chain, the safety of patient health information, and the interoperability of the health information systems. It will also prevent the abuse of prescription drugs, ensure patient safety, and contribute to responsible management of health information. These are all the important components of the company’s mission statement (McKesson Corporation, 2014).

d. Product and Services

McKesson consists of several businesses that serve the health industry. However, its business can be categorized into two: technology solutions and distributions (McKesson Corporation, 2015). In the distribution category, the company delivers pharmaceutical solutions to pharmacies and institutions, such as hospitals or health systems, in all the 50 states. In addition, the company delivers health care products, equipment, technology, as well as closely associated products to physician offices. Other products are home care centers, surgery centers, or long-term care organizations (McKesson Corporation, 2015). Likewise, a consumer department within the organization sells health care products directly to consumers.

In the technology segment, the company boasts of providing important software solutions, services, as well as consulting with physician offices, hospitals, home care agencies, imaging centers, as well as payers (McKesson Corporation, 2015). Importantly, the company offers interactive connectivity solutions, which streamline financial, clinical, and administrative communication between providers, patients, financial institutions, pharmacies, and payers (McKesson Corporation, 2015). The connectivity services are designed in a way that enhances patient safety, cost reduction, healthcare efficiency, and management of revenue resources and streams. Currently, the company provides some of the best technology solutions in the market, including:

a. Enterprise Information Systems that support wide-ranging health record management, consulting services, as well as unmatched infrastructure to the health systems and/or hospitals (McKesson Corporation, 2015).

b. McKesson has the imaging systems that come with various information technology tools for hospitals and health care systems irrespective of their sizes. The solutions enhance collaboration, productivity, performance optimization, as well as quality of the services that the final customers receive (McKesson Corporation, 2015).

c. The company’s health solutions are rated highly in the market because they provide clinically-related evidence, as well as the technologies that both payers and expert care providers require to better outcomes for their customers at reduced costs (McKesson Corporation, 2015).

This solution will come with a friendly user interface that has not been witnessed in the market. The features and segments that are specific to customers’ needs will be incorporated. Besides, its security icons will not be easy to manipulate. It is also important to note that the solution will have a feature that allows users to interact with more than one physician at a time.

e. Management Team and Key Personnel

The company has different executive officers or leaders who are in charge of different solutions that it offers. In the executive office, there is John H. Hammergren. He is both the Chairman and President with a number of Vice Presidents (VPs). Hammergren ensures that the various departments implement the company’s mission. There is also James Beer who is serving as the Executive VP. Beer is also the company’s Chief Financial Officer who ensures that different projects receive financial commitments for their successful implementation. Patrick J. Blake is another important figure in the company’s decision-making process. Blake is serving as the Executive VP, as well as the Group President. Jorge L. Figueredo serves not only as the Executive VP, but also as the Human Resources Director who ensures that only the best human capital joins the company. This is vital for the implementation of various projects, for instance, the proposed patient portal system. Paul C. Julian the company’s Executive VP is also one of the group presidents. Bansi Nagji holds the all important title of the Executive Vice President, as well as Corporate Strategy and Business Development’s Head. Nagji ensures that corporate strategies are evaluated to ensure that they are viable options. Thereafter, such strategies are used for the company’s development. Finally, in the executive team, there is Lori A. Schechter who is an Executive VP. In addition, Schechter serves as the company’s Counselor, thereby ensuring McKesson’s copyrights and patients are guarded against any form of infringement. Schechter also ensures that the company has adequate representation in cases that require the services of counsels (McKesson Corporation, 2015). For example, in this project, Schechter will ensure that the new portal is registered and that no person uses the benefits that accrue from the success in its implementation.

f. The Team that Will be Responsible for the Implementation of the Proposed Solution

Rod O’Reilly is the President of the company’s health solutions segment. As the overall leader of the segment, Rod O’Reilly liaises with the executive office and informs them of the projects to be implemented. He also reports on the progress made and the type of resources that must be available for the project to succeed. With the help of many vice presidents, the president comes up with decisions. Carolyn J. Wukitch is one of the senior vice presidents. She serves as the General Manager in charge of the network, as well as financial management. Wukitch has to come up with financial targets for the company’s projects, which are then submitted to the executive for approval.

The other senior vice president in the company’s healthy solution’s department is Jackie A. Mitus. Her main role as the General Manager in charge of decision management is to ensure that the decisions made are geared towards achieving the company’s goals. Therefore, with the plan to implement a new patient portal, her contribution and approval will be very critical. Other senior leaders are Vice President and Head of Strategic Marketing (Melanie Marcus), Vice President in charge of sales and account management (John Leonard), Vice President in charge of human resources (Elain Lemke), Chief Officer in charge of technical services (Michael Wood), and Vice President in charge of strategy and business development (Mathew Zubiller) (McKesson Corporation, 2015). The management team that will be responsible for implementing the proposed patient portal system is up to its tasks and will be able to effectively execute their mandates.

For instance, Rod O’Reilly has successfully led portfolio management, acquisitions and mergers, as well as integrated planning. During his tenure at McKesson, O’Reilly has overseen product development and implementation of services. He has also overseen sales and marketing for the company’s successful systems, such as STAR, Horizon Clinicals®, Health Quest™, and series among other classic systems. He has a wealth of experience that is required to accomplish the set task. For instance, while working with the Enterprise Medical Imaging Group, he oversaw the implementation of a program that covered approximately 2800 facilities that were running under McKesson’s diagnostic imaging solution.

Michael Wood is the other critical member of this program implementation team. Wood will be able to execute this project because of his extensive knowledge in research and development, particularly software development. Previously, he has worked at Siemens as a programmer and systems analyst (McKesson Corporation, 2015).

Apart from the technical officers, Elaine Lemke, who is in charge of human resources, will oversee the recruitment of talent that is required for the successful implementation of the program, and compensation that will be based on skills and knowledge of each team member. Besides the senior management personnel, the company will require three senior information technology experts. They will be required to have not less than 5 years experience in implementing such projects. Also, there will be four marketers who will be responsible for creating awareness of the new solution. These individuals will be required to have not less than 3 years of marketing experience, preferably marketing online products.

g. Patient Portals

Patient portals are tools utilized in the web to enhance how patients can communicate with those providing them with healthcare. Importantly, it makes it easier for those patients who want to have a view of all information about their health. They are convenient because they can be used all day through to access any individual’s information from part of the world as long as there is an internet connection. All patients require is a username and a secret password to view their information. They can simplify patient communication and access to their medical records. Patient portals can exist as a stand-alone website, or they can be connected to the healthcare providers EMR system. These portals also allow providers to restructure workflows. Consequently, non-urgent communication can be moved online.

Without the use of patient portals, a facility would have to pay staff to access and disseminate the same information. Providers can send and receive messages to the patient and pharmacy, send reminder notices, make billing information available, and even post patients’ consent forms. All this information is secure and confidential with the use of patient portals. The notable health information that a patient can retrieve from such portals includes: any visit by doctors and reports with regards to discharge. Others are any medications prescribed and taken, allergies, results from laboratory tests, and immunizations. Moreover, some of the portals can allow patients to make payments, download and fill forms, read education materials, update useful information, check benefits, schedule appointments, and communicate with health care teams through emails (Ronald, 2013). Implementing a portal enables an organization to improve patient and provider communication, support care, empower patients, and improve health outcomes of patients.

Various types of patient portals currently exist in the market because of the large number of healthcare IT vendors that provide many software options. However, the most common systems are EHR-based because of incentives. Integrating an EHR with patient portal increases efficiency. It also reduces costs and bridges the systems. In this case, each organization adopts a portal system that suites its needs best. The integrated patient portal software is one of such portals. This software ensures that all the services are in one system. In this segment, Athenahealth is among the major providers of such software suite. The other major players in this market are eClinicalWorks and Allscripts. The next category consists of the standalone patient portals, which have more features. The market leader in this category is Solutionreach while the other key players are Updox and Allscripts.

h. Web Planning

McKesson recognizes that some of the current patient portals have various weaknesses. It is based on those weaknesses from other companies that McKesson intends to use to capture a significant portion of the growing market. For instance, Experian Information Solutions (2014) records that some of the current patient portals are amenable to security, privacy, as well as fraud risks. In fact, Experian explains that while a stolen credit card can be sold for one dollar, medical records can be sold for hundreds of dollars in the criminal market (Experian Information Solutions, 2014). Some of the data that fraudsters consider important include name, date of birth, credit cards, as well as prescriptions. Apparently, fraudsters use information of other individuals in getting services or purchasing devices. They also steal identities, as well as consumer credit. Unlike other patient portal system providers, McKesson intends to introduce patient portal accounts that will be almost similar to bank accounts.

It is notable that online bank accounts only show the last few digits of an account. This makes it difficult for fraudsters to guess the other digits that are concealed. Therefore, the project team that is working on the new portal has borrowed the same technology to ensure that patients’ information will be safe. In addition, while many healthcare organizations may assume that passwords still provide adequate protection, McKesson recognizes that in the last ten years, Keystroke-logging Trojans have been increasing steadily. It allows fraudsters to steal passwords. Even though Trojan attacks initially focused on people’s bank accounts, such attacks have now shifted to healthcare portals (Ronan, 2013). McKesson recognizes that Keystroke-logging Trojans often stay dormant on computers up to the time when it detects the target website.

Furthermore, McKesson recognizes a hard-to-notice engineering weakness that occurs when different portals seek patient enrollment. Most of the current providers offer incentives to attract patients who are willing to enroll. What they do is to invite patients through emails. Unfortunately, cybercriminals take advantage of such emails without the companies knowing (Strauss, 2015). They brand the emails and give them identical looks to mislead the patients who may think that the emails are credible. Consequently, McKesson may not rely so much on emails as a way of attracting patients, but if it uses emails, then the company may utilize tamperproof brands. Most importantly, the company will prioritize password authentication and assess the level of patient exposure that should the passwords be compromised.

i. The Company’s Legal Strategy

The company intends to put intellectual property right on this solution. On this regard, Fehder, Murray & Stern (2012) note that scientific discoveries that potentially have commercial applicability must have intellectual property protection, such as patents. Therefore, the invention will be registered to secure it from unauthorized usage or infringement. Patenting will allow the company to control access to knowledge or disclosure of information regarding its patient portal. However, the company also recognizes that useful scientific knowledge that makes fundamental contribution to the general knowledge may require that authors disclose their findings. The findings can be disclosed through a journal platform or patent or to a relevant regulatory body. However, the private property right grants that knowledge can only be exchanged based on the rules of the platform (Fehder, Murray & Stern, 2012). Therefore, the company will put in place adequate measures so that only relevant information is availed. The patent system obliges innovators to reveal their knowledge to enjoy property rights, and bar others from using that knowledge as described in the patent. It ensures that right holders have the discretion to prohibit or restrict access to that knowledge work (Fehder, Murray & Stern, 2012).

Chapter 2: Market Segmentation

a. Market Analysis Summary

The healthcare information technology sector is witnessing various revolutionary innovations that are transforming it in several aspects. It is estimated that the sector will grow at 7.4% annually between 2012 and 2017 to reach $31.3 billion from $21.9 billion. The demand will occur due to increasing demand for clinical information technology, as well as administrative solutions. The transformations will be as a result of healthcare reform and the challenges that the economy continues to present. It is believed that health care information technology will transform the current paper-based healthcare to a digitized platform (Amatayakul, 2009). Besides, the Healthcare IT will enhance compliance and help reduce costs while improving patient care.

Roughly 9% of medical practices utilized patient portals as of 2010 (Baird, Furukawa & Raghu, 2012). The amount of medical practices using patient portals in the United States is only expected to increase with the adoption of incentive programs to encourage the use of the electronic medical records (Centers for Medicare & Medicaid Services, 2014). Patients and those providing services care will have the opportunity of accessing health information faster than it would be possible without the portal. As of 2013, some type of portal for the patients was utilized in 50% of the U.S. hospitals and 40% of the U.S. physicians practicing in ambulatory services (Centers for Medicare & Medicaid Services, 2014). There are three predictions for portals meant for patients:

1. 2014 sees the beginning of Patient Portal 2.0. This is where healthcare providers look for solutions with patient engagement platforms that incorporate financial and clinical data.

2. More and more hospitals, integrated data networks (IDNs), and Accountable Care Organizations (ACOs) will adopt stand-alone patient portal platforms.

3. The Office of the National Coordinator for Health Information Technology’s efforts for consumer engagement and the Blue Button Plus initiative will substantially push patient demand for the ways to easily access their medical records (US patient market for hospitals and Physicians, 2013).

The adoption and use of the patient portal in the United States are accelerating spectacularly because of the Stage 2 Meaningful Use (2MU) requirements that were implemented for hospitals in 2013 as well as for physicians in 2014. The 2MU stipulates that providers must not only adopt, but also use technology that enables patients to view, download, and convey electronically the copies of their health records. It is no doubt that the patient portals will be an important technology that providers will apply to meet the requirements. Moreover, as patients continue to demand the solutions that are more convenient, they will prefer providers who implement patient portals in their operations. Therefore, with the proposed system that McKesson intends to introduce to the market, it is likely that more prospective clients will opt for it because of its unique features and cost.

The U.S. patient portal market for physicians and that of hospitals produced 279.8 million dollars in terms of revenue in 2012. Projections show that the revenue will rise to $898.4 million in 2017, which is a 221% rise. It results from the rise in demand for a more accountable and integrated care, the need of meeting Stage 2 Meaningful Use requirements, as well as the rising demand for health-related information technology for consumers. In 2013, the government paid incentives worth over $19 billion for the health records stored electronically (Kass et al., 2015). Providers will be required to give at least 50% of their patients’ online access to information (Centers for Medicare & Medicaid Services, 2014).

b. Market Segmentation

The patient portal market is segmented based on the type of the portal to be used, mode of delivering the service, as well as end-user. The key end-users include hospitals, healthcare payers, physicians, pharmacies, as well as different health information exchange organizations. In addition, the market is put into segments based on whether the system is EHR-based or third party taken by individuals. However, those providing healthcare services, such as hospitals, as well as individual physician’s practices are the two major segments that use patient portals. Numerous factors are already given for the growing utilization of information-related technology in health care provision. Some of these factors include government initiatives, such as Accountable Care Organization Programs, and increased demand for the integrated systems. The patient portal market, as already noted, is fragmented with small and major companies. Some of them are Allscripts Healthcare Solutions, Inc, eClinicalWorks, Athenahealth, Cerner Corporation, and Greenway/Vitera Healthcare Solutions. Others are NextGen Healthcare Information System LLC, and McKesson together with small players that operate regionally or locally.

Healthcare providers, such as physicians as well as hospitals practices, are the two major segments that use patient portals. In a survey of 104 health care systems, it was found that 50% had a patient Web portal and the vast majority of the remaining health care systems would plan to adopt one. It is worth noting that avoiding a penalty requires one to ensure that a minimum of 50% of patients have online access to their health records (Centers for Medicare & Medicaid Services, 2014).

It will be interesting to segment customers based on the electronic gadgets that they use to access their health portal accounts. Previously, the patients who use the portals had to rely on laptops to communicate with their physicians or read their messages. However, with passing time, other devices that are simpler and easier to use have been introduced. Devices, such as smart phones and iPad, can be configured to become compatible with the systems. In this regard, McKesson will introduce a system that is compatible with smart phones. The company recognizes that while the current companies that offer the service do not pay much attention to this technology, it (the technology) could become an important driver of this business.

For instance, many people currently have smart phones. This makes it easier for them to log into their accounts and communicate with their physicians. Specifically, individuals found within the age group of 18-35 years are known to prefer new technology. Importantly, this group forms a significant proportion of the American population. Therefore, introducing a system that targets what the group prefers to associate with will be a sure way of capturing this significant component of the market. In addition, iPad is another device that could target the working group who prefers not to carry laptops to the office. Thus, as the company introduces the portal solution, this class of people will be critical. It is apparent that McKesson is shifting from the conventional methods that the current companies use to a system that is simple and user-friendly. The step will set the company above its competitors.

c. Target Market Segment Strategy

The focus on the use of patient portals is a quick return on investment. Not only will the health care provider gain incentive payments with the use of patient portals, patient satisfaction will improve as well. As anyone in the health care industry will attest, patient satisfaction is one of the most important variables in maintaining and growing practices. More than one-third of respondents to a national survey stated that they would be more likely to choose a doctor who has electronic communication choices than a doctor who does not. If in the rare case of a provider not wanting to grow the practice and does not need the incentive money to remain profitable, saving money will surely be of interest to the provider. Having a patient portal in place helps minimize the time required by the staff in the provision of information.

Patient safety and improved quality of care should be other motivating factors to health care providers. Upon admission for services, nurses have to copy information across a multitude of forms. With every additional form to copy information to, there is an increased chance of an error. If a patient or caregiver can enter this information at home, it will not only save the nurses’ valuable time, but also cut down on errors. This is especially important when it comes to medication errors. If patients can enter their prescribed medications from home where their medications are indicated, errors will be much less likely. Then the nurse only needs to review this information with the patients upon arrival for their procedure. Not only is this a valuable patient safety tool, it also saves valuable staff’s time and money.

McKesson will adopt the method suggested by Ancker and colleagues (2011) to segment its market. In a large retrospective study conducted by Ancker and colleagues, electronic patient portal access and use can be categorized based on race, language, ethnicity, health status, as well as insurance type. The researchers found that ethnic and racial minorities, individuals without health insurance, and non-English speakers were not likely to activate and use patient portal accounts. It could be that non-English speakers were reluctant to activate and use patient portals because they could not communicate effectively with the physicians. It means that if communication barriers could be removed, then there would be an opportunity to attract this disadvantaged group. McKesson will work to ensure that its portal, unlike the current one, has simple steps to follow or the portal’s could come with different languages, particularly the most common ones to cater for those who cannot speak English.

Individuals without health insurance may not opt for patient portals because of fear of high costs that they cannot meet through their meager resources. However, McKesson intends to have a system where patients will choose what they want and pay for. Therefore, if a patient seeks a physician’s medical advice without prescription of medicine, then he/she should pay for that only. In addition, the market segment will be based on gender. Ancker et al. (2011) found that men were not likely to receive portal access codes as women do. However, there was no significance difference in gender variation. The company will consider whether its advertisements will focus more on the female gender who seems to be more receptive to this type of system. Among the racial groups, Hispanics and African Americans were less likely to activate and use portal accounts.

Physicians will be an important segment of the market. Physicians are important because of high disposable income, ability to react favorably to the product concept, increasing trends towards e-medical records, the need to reduce medical costs, as well as decreased insurance reimbursements. Certainly, these factors make physicians a very critical component that the company will have to consider.

The market will also be segmented according to geographic locations. The target market is dispersed throughout the whole nation of America. It is notable that the market can be found both in the metropolitan and rural areas because of internet connectivity. For instance, in the research conducted by Ancker and colleagues (2011), it was reported that clinicians in places, such as Bronx, were enthusiastic about patient portals. Consequently, many of them were determined to provide the codes or activate accounts.

The other important segment of the market is the millennial. The group has individuals who are likely to record the highest preference for access to their online health records. The category has individuals who use smart phones to access their information. Surprisingly, this group has individuals who are very interested in checking their medical records online than on any other platform. Therefore, the company’s proposed patient portal will be one that is compatible with smart phones. Unlike most of the current solutions that require individuals to have laptops, McKesson’s patient portal will be user-friendly so that even Smartphone holders can use.

Baby boomers are also critical for the company’s successful implementation plans. Boomers who do not have patient portal argue that if they had the portals, then they could be more engaged. The declaration is a clear manifestation that the current solutions or companies that offer such solutions do not consider people who are aged 50 years and above. Boomers account for the majority of Americans who say that they have already owned the communication and those who would be willing to communicate with their physicians through the online portals.

d. Industry Analysis and Competition

There are 312 hospitals in Florida alone. Extrapolating this data to the entire country puts the number of hospitals nationwide close to 15,000. However, there are only 23 certified software vendors in the country that supply patient portals (What is a patient portal? 2014). As stated earlier, the revenue for this product is expected to increase by 221% in 2017 to bring the revenue to $898.4 million for that year. Adding McKesson to this venture would bring the number of certified vendors to 24, still a very small number when looking at the number of hospitals nationwide. With 24 vendors competing for 15,000 hospitals, it is safe to estimate that each vendor will be able to add revenues of $37.4 million in the year of 2017. It is a conservative estimate because patient portals are going to be a requirement and never a choice.

Hospitals will steer toward the vendors that have patient portals as part of their integrated suites and will bypass those vendors without patient portals. In addition to not gaining $37.4 million in revenue in 2017 by not having a patient portal program, McKesson will likely lose sales of other software items, such as McKesson Radiology Solutions. Imaging service departments of hospitals are expanding and are expected to continue to grow. These departments are the ones using McKesson Radiology Solutions and the loss of these accounts would have an enormous negative impact on McKesson’s revenue.

Chapter 3: Marketing Strategy

McKesson will use the following areas for its marketing:

I. Website Marketing

It will be the number one area of focus to promote the software it uses in its patient portal. Website marketing as a form of e-business tool has gained a lot of importance these days. However, before the company implements this marketing tool, there are important questions that the management team in charge of the project will have to answer (Furrer & Sudharshan, 2001). First, will the marketing tool adequately reach the target group? Second, will the website marketing tool be exhaustive enough to provide relevant information for the attraction of more clients to the proposed program?

Website marketing has been chosen as the number one marketing tool because it has been used to give a positive corporate image and to provide access to previously inaccessible or unknown buying influences. It can also be used to foster consumer involvement with the projected service, as well as to deal with customer queries, suggestions, and complaints. In fact, web marketing provides a simple communication channel. Furthermore, this marketing tool will not only create product awareness, but also allow interactivity, self-selectiveness and integration of marketing capabilities that target specific individuals, in this case, those groups that will be willing to use the patient portal platform to be implemented by the company (Gangeshwer, 2013).

In web marketing, there is the use of symbols, which could be meaningful and unique objects that are specific to a given group or culture. Different symbols trigger different plans depending on their backgrounds. Website marketing will be prioritized because website designers create standardized materials that enable the localization of communication (Gangeshwer, 2013).

The search engine will enhance web marketing. Apparently, people surf the internet to search for different information because of its design that allows simple user interface. Anyone who intends to use it merely fills in various fields, and then the system decides where and how to find that information. It lowers the level of search (Gangeshwer, 2013).

II. Press Releases

Press releases from Modern Healthcare to Harvard Business Review will regularly be sent to the CEOs of every major hospital and physician practice group. Press releases are a form of direct communication with consumers. They will be important in distributing content on the proposed patient portal because they can be syndicated to create excellent platforms for attracting more links. To ensure that the press releases maximize the visibility, individuals responsible for their release will ensure that important aspects come first. It is noted that boring news will not get the required results even if it is well optimized. In that regard, the releases will focus on a given topic only at any given time. Besides, the releases will be brief because too much information as well as the focus on several keywords will weaken the message.

Press releases must give the reader the reason to click through and read them. Therefore, the releases will offer not just announcements of news; instead, they will provide an opportunity to take action. Notable materials that will be used include podcasts, reports, email newsletters, webinars, or consultations. To ensure that press release visitors are converted to prospects, landing pages will be created. Apparently, the links in the releases will be embedded to relevant resources. It is usually important to link only where it would make contextual sense of benefitting the reader. It will be inappropriate to link the press releases if the team believes that such an action could affect or hinder the effectiveness of the information. Worse still, if the links with the press release fail to work, the company will be portrayed on a bad light. Therefore, the links will have to be tested beforehand to ensure that they work or can direct prospects to the particular press articles that they want.

The releases will be posted to the company’s blog enabled media room. The company’s blog site can archive press releases in order and by category, has a search function, as well as contain important photos, videos, and audios for any interested party. Social bookmark sites will be clipped and linked so that the releases can be crawled in the online media or search engines.

Press releases will also be posted on such sites as Yahoo Finance and CNN.com that are non-paid sites. However, there will be the links to the original pickup. It is critical because Google always has a way of ranking the press releases that appear the highest. Therefore, just as many other companies use the tactic to emphasize the fact that their press releases have been featured on the strategic sites, McKesson also seeks to derive such benefits.

III. Live Demonstrations

Beginning with the providers who will utilize our proposed portal solution, live demonstrations will be done showing the improvements with the newest software version. An effective demonstration will instill the sense of ownership of the proposed patient portal. It will help prospective buyers to connect with the product and own it, which is important in persuasive selling. Equally, demonstrations are important because they are accompanied with visual support that enhances the quality of sales presentations. In some case, prospective buyers who rely more on visual aid or those who are hands-on may want to see how the system works or learn about its potential and value. Live demonstrations are important with products or services that have unique design features, such as the proposed patient portal. This will require demonstrations on key selling points. Undoubtedly, the ability to see and feel the proposed system will be generally appealing to prospective buyers than just listening to sales talks that are not accompanied by demonstrations.

Live demonstrations will entail video, pictures, brochures, as well as other tools that support demo, also known as proof devices. Such tools often provide tangible evidence that support what the demonstrator is saying. Whenever buyers see the tools, they will presume that the demonstrator will say good things about the product or service. Sometimes buyers do not trust sales people, therefore, being able to demonstrate what the product or service can do, or even allowing customers to experience it, will be an important step forward in providing the necessary proof.

The company recognizes that demonstrations help to deal with the product-related fears that buyers present. Prospective buyers always come with formed opinions or misinformation that they have heard from other people. Such fears will have to be dispelled in order to create a market niche for the proposed patient portal. If any of the prospective buyers pose key questions, claims, or doubts about the portal, as well as its performance, the company will have to provide a live demonstration to ease the concerns. Importantly, the team in charge of implementing the new patient portal will view the concerns as a way of providing more information, but not as a condemnation of the solution. It is no doubt that live demonstrations will play an important role in creating awareness of and demand for the proposed solution. Through live demonstrations, the company’s representatives will be able to create rapport with the clients who will pass the good news about the new solution to other people. Importantly, the company will organize field days when its representatives will have one-on-one meetings with customers to explain how the system works. They will also be able to discuss its benefits over the current systems and dispel fears that customers could have.

Chapter 4: Financial Analysis

a. Financial Forecast

Sales Forecast

2016

2017

2018

Revenue

$ 21 million

$ 37 million

$ 65 million

b. Income Statement, Three-Year Summary

Income Statement Summary

Year 1-2016

Year 2-2017

Year 3-2018

Sales

45, 456, 847

81, 123, 877

110, 003, 441

Other

Total sales

45, 456, 847

81, 123, 877

110, 003, 441

Less cost of goods sold

Materials

Labor

Overhead

Other

20, 009, 234

38, 181, 333

39, 000, 123

Total cost of sales

20, 009, 234

38, 181, 333

39, 000, 123

Gross profit

25, 447, 613

42, 942, 544

71, 003, 318

The company will commence its operations in the year 2015. It expects that by the end of the first financial year, its revenue will reach a total of $ 21 million. However, operating expenses will be slightly over $ 4 million. In the first year, the company will not be able to compete favorably with the established companies in this market, such as eClinicalWorks, Allscripts, Solutionreach, and Updox. It is because McKesson will be in the process of putting in place all the necessary structures. For instance, during the year, the company will spend a lot of money on marketing as it creates awareness of the new solution. However, the company expects its revenues to continue growing during the 2017 financial year because in the second year, all the structures will be put in place. For instance, if the company manages to implement its solution through smart phones, it will capture a large portion of the market consisting of the youths.

Revenue growth is expected to peak at $ 37.4 million in the second year of operation. Even if the company has not been at per with the major companies, the revenue collection will still be a clear indicator of how the business is bound to be profitable in the future. In the third year of business operation, revenue is expected to jump to $ 65 million. It is projected that revenue collection will almost double as the company ventures into new geographical locations and introduces many other user-friendly solutions. Net sales are expected to show a steady growth of $ 45, 456 847 in the first year to $ 81, 123, 877 in the second year, and finally $ 110, 003, 441 in the third year of operation. However, the cost of sales is expected to increase from $ 20 million in the first year to $ 38 million in the second year, and eventually $ 39 million in the third year. Some of the operating expenses that will reduce the company’s profit margin significantly are salaries that are expected to increase from approximately $ 2.5 million in the first year to $ 3.7 million in the third year of operation. The other operating expenses that are expected to require significant amounts of money are wages, employee benefits, marketing and advertising, and rent. For instance, rent will require more than $ 600, 000 for the three years. It should be noted that as the company will be striving to secure a larger segment of the market, advertising and marketing will be appropriate. Therefore, each year, the company will spend more than $ 200, 000 on advertising and marketing strategies. Significantly, the company’s cumulative spending on operating expenses will be more than $ 14.5 million for the three years. These core areas cannot be ignored because the company requires them for smooth operation. In fact, by the end of the third year, the company’s revenues will have surpassed the revenues of other competing firms. Moreover, with the continued strong growth, McKesson’s patient portal business will rule the market for many more years to come.

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