Post of the Day
February 17, 1998
From our AOL
America Online Board
Subject: It Could Happen
America Online Press Conference ( AP, UPI, Reuters, Disney )
AOL President Steve Case announced the adoption of a new philosophy at the nation's largest online provider, based on the managed healthcare industry.
"It's all in response to rising costs,." Case told the assembled media. "Over the past three years, our cost per customer has tripled-- to just over $2.29 a month. You can't expect to run a business on a margin of less than 1000%."
Just last week, AOL announced a price increase of $2 in its monthly flat rate, causing its share price to jump $9. "That will help, but it's not enough," Case warned. "Like healthcare, we need a system where almost everyone pays for the service, but hardly anyone actually gets to use it."
Case introduced Monica Robensauter, former Director of Cost Containment at Blue Cross of New York, who will take a similar post with AOL. Robensauter and Case told reporters that beginning March 1, AOL will adopt the following managed cost strategies.
Preauthorization --- Users will be required to notify AOL 24 hours in advance of logging on. "What's the big deal?" Case asked. "You have to do it to get in a hospital."
Authorized use periods --- Users receive permission for an uninterrupted initial half hour period. After that, the user's privileges are reviewed every 15 minutes. "It's no hassle," Case insisted. "A form appears on the your screen, asking basic information about why you're still using the service, how come you didn't get your work done faster, and ten or twenty simple questions to assist us in market research. Your completed questionnaire goes to a Review Officer and you should be approved for continued use of AOL within a few minutes. I would recommend you don't leave any of the market research questions blank," Case warned.
Prevention programs --- Like HMOs, the new AOL will focus on prevention. "We'll try to ward off unnecessary use," Case said. "We'll offer pamphlets that remind people of alternatives like reading and watching The Ricki Lake Show."
Preferred Computers --- Under the new plan, AOL will limit access to approved computers. "Our goal is to have an approved access terminal within thirty minutes drive from your home or business ," Robensauter explained. "We're going to lease the approved computers to small businesses, like convenience stores. They'll be next to the lottery machines."
Co-pays --- From now on, AOL users will have to pay $1.75 each time they log on. The purpose, says Robensauter, is "like having to pay something for a doctor's visit --- it prevents abuse of the service." Otherwise," Case added, "it'll be like those old-style health insurance plans, where you could see your own doc, any time you needed to --- and none of us wants to go back to that hell."
Retrospective denials --- Every user's file will be reviewed by a panel of AOL staffers every 90 days. If the panel determines that the user has logged on to the service without sufficient justification, the user may be billed an additional $40 as a penalty for "irresponsible logon."
Approved forums --- New or experimental forums won't be available through AOL. "They haven't demonstrated their effectiveness," Case pointed out. "It would be irresponsible of us to offer them until they have."
Case closed the conference with an explanation of AOL's business strategy. "We want to dominate the online market and crush or absorb all our competitors," he explained. "Then we'll sue Microsoft for restraint of trade."