Cruzsalud:

Cruzsalud was a medium-sized company founded in November 2004 to provide pre-paid healthcare solutions to subscribers – largely low income, Eastern Caracas residents. Cruzsalud’s medical plans ranged from Ven$ 9 to Ven$ 40,000 (US$ 4 to US$ 18.6) a month.

Once Cruzsalud started operating, the company was challenged by issues concerning expected sales and timely fee collections. When Venezuela’s new Workplace Prevention, Conditions and Environment Law (locally known as o LOPCYMAT) was enacted in July 2005, companies of all sizes, now required to provide safety and health services to their workers, drove the demand of medical assistance services. In this scenario, Cruzsalud faced a dilemma, as its management team wanted to continue servicing low-income sectors (LIS), while its shareholders were eager to tap into the corporate market, spotting an opportunity for a short-term increase of their investment returns.

This case has been designed to help students:

• Analyze the challenges involved in formulating and consolidating a business model to profitably address the needs of LIS.
• Gain a better understanding of the economic rationale underpinning business models that involve LIS.
• Discuss the role of the company beyond maximizing shareholders’ returns, creating social value without jeopardizing its profitability.