4th Annual Investor Conference

May 16, 2001

BUSINESS TRANSFORMATION AND INNOVATION SERVICES

Gary Velasquez

President

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Business Transformation and Innovation Services was formed to:

Expand capabilities to ensure business goals are met

Reduce operating costs

Manage operating/technology risks

Ensure disciplined use of capital for technology projects

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EAI

Network

KBASE

Call Center Applications

IRMA

ExternalInternal

JD Edwards

Macess Imagine

MC400

FARE

QCare

Filenet Macess

ABS

Call Center Applications

EnterprisePortal

Packaged

Applications

Provider Connectivity

New

Existing Environment

CSC MH Power

Infrastructure a year ago was complex adding non-value added costs

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BTIS Short-term Goals

Reduce operating costs

Extend PPO Infrastructure to meet current production goals

Develop and implement product enhancements to drive top-line growth

Create a common technology architecture

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BTIS Long-term Goals

Continue to reduce operating costs

Install common technology architecture

Expand capability to support broader product portfolio

Develop solutions that support seamless interaction among consumer, provider, employer and health plans

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Network

External

Internal

Call Center Applications

EAI

Customer InterfaceProvider Connectivity

Digital Transaction Engine

DataWarehouse

Consumer

Self Service

Consumer

Analytics

Product

Configurator

Sales Force

Automation

Medical

Management

Health Net is moving to enterprise standards

...building in flexibility & speed to market

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To meet goals, focus on the five core competencies...

Product Development

Customer Services

Distribution

Care Management

Administrative Services

which drives annual SG&A expenditures of $1.4Bor 14% of Revenue

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Targeted savings will reduce SG&A expenditures by 100 bps

Fully Operational Annual SG&A Savings Targets

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Total 100 bps

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Current SpendClaims

Enrollment& Billing

TargetSpend

Information Technology

CustomerService

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MedicalMgmt

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20

1500

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Other

“Reductions are not driven by revenue volume”

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Project Portfolio

Health Net Competencies

DistributionProduct

DevelopmentCustomer

ServiceCare

ManagementAdministration

Services

- Siebel Latino Care MedicalManagement

System

Online enrollment& billing

- Sales Portal PPO EMSO

Claims processing

Questium

MedUnite

NaviMedix

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Partner for Solutions, not Build

Partners bring:

Proven, market-tested solutions and services

Highly technical and skilled labor force

R&D environment

Leverage non-Health Net capital base

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Small scale, live environment test (10-20K lives) Pilot

Demonstrate the flexibility and capability of the systemPrototype

Fully test the model office hypotheses in a non-live environment on real business

Create tailored implementation plan

Solution Lab

Maximum benefits will be realized from engineering business processes. Most efficient/effective processes with companion metrics will be developed

Model Office

Specific Outcomes for each phase Phase

Deployment Deploy to the full book of business

5-phased Approach to Deployment

Execution requires a disciplined approach

…to achieve results and mitigate risks

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Moderated Panel

Product Development and Customer Service

Distribution

Care Management

Administrative Services

Steve Sell

Kathleen Richard

Jonathan Scheff, MD

Paul Gilbertson

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Product Development/Customer Service Competencies

Steve Sell

Questium

Business Transformation and Innovation Services

Health Net, Inc.

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Consumer Timetable - May 15, 2000

Consumer Website Development Well Along

Functions Include: Registration, Changes, History, E-mail, Reminders, Actionable Content

Introduce for Health Net California for 2000 Open Enrollment

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Questium Health and Wellness

Challenges/Opportunity: Continue to lead in health plan customer service

Health Net Response: Create a range of online self-service model with web-enabled content/information, service delivery andtransactions

Partnerships: Pharmacy Benefits Manager Development

Expected Outcome: Increased retention and new sales SG&A reductions over three years Pave the road for defined contribution

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Questium Personal and Professional Life

Challenges/Opportunity: Broaden and redefine EAP product Leverage the MHN client base and the

consolidation of employer benefits

Health Net Response: Create an online self-service product, with web-enabled assessments, self-help interventions, self-referrals and “Ask-the-Expert”

Partnerships: Work/Life Services Assessments and interventions

Expected Outcome: Existing client upsale opportunities Increased new sales

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Distribution Competency

Kathleen Richard

Senior Vice President

Business Transformation and Innovation Services

Health Net, Inc.

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Sales Automation System

Challenges/Opportunities: • Streamlined, effective processes and tools to drive new sales and retention

Target Market: • Health Net California Mid Market

Capabilities: • Contact/communication management• Lead/prospect management• Reporting• 150+ Users

Partner: • Seibel Systems

Expected Outcomes: • 8% Increased Sales Force Capacity• 8% Improved Close Rate• 8% Improved Sales to Existing Customers• 8% Improved Retention• Full Benefits Realized in 2003

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Sales Web Portal

Challenges/Opportunities: • Provide customers with access to online quotes • Automate and streamline current processes

Target Market: • Health Net California Individual and Small Group

Capabilities: • Online Quoting • Interactive Product Comparisons • Proposal Generation • Collateral Ordering/Downloads • Full Broker Sales Functionality • “Smart” Applications & e-Signature

Expected Outcomes: • 15-25% Improved Sales Force Productivity • 95% “Clean” Application; 30% With No

Underwriting • Improved Account Management, Lead Management and Broker Service

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Care Management Competency

Jonathan Scheff, MD

Chief Medical Officer

Health Net Federal Services

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Medical Management Capability

Competencies: Care Management in TRICARE

Challenges: Changing business rules Parallel Delivery Systems Manual workflows

Health Net Response: Channels patients to Military Treatment Facilities Case Management/Disease Management Health Care Analysis Population Health

Technology Solutions: Internet based Medical Management System Scalable from Federal Services to Health Net Enterprise

Partnerships: In process

Expected Outcome: Automate business process Standardize business functionality Improve ability to coordinate care

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Administrative Services Competencies

Paul Gilbertson

Senior Vice President

Business Transformation and Innovation Services

Health Net, Inc.

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Enrollment and Billing

Competencies: Administrative Services

Challenges: Highly manual processes with multiple systems Impacts multiple functions and business processes

Health Net Response: Eliminate fragmentation within value chain Create standardized solutions Introduce and push self-service capabilities

Technology Solutions: Internet based applications with “smart” user interfaces

Partnerships: TRICARE Commercial

Expected Outcome: 50% TRICARE member adoption by 2003 At least 10% commercial member adoption by 2003

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Provider Initiative - May 15, 2000

Single Website for Provider Interaction with Plans

Focus on Eligibility, Claims Referral and Formulary Compliance First

Claims Adjudication and Payment Further Out

Easy to Use, Single Site with Links to Plans and Other Services

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Provider Connectivity

Competencies: Administrative Services

Challenges: Highly manual processes with multiple systems Impacts multiple functions and business processes

Health Net Response: Eliminate fragmentation within value chain Create standardized solutions Introduce and push self-service at the physician office desk

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Partnerships: MedUnite NaviMedix

Expected Outcome: 40K physician users by 2003 25 to 35 million transactions by 2003

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Business Transformation and Innovation Services was formed to:

Utilize partnerships that have technical capability and financial resources

Develop an enterprise technical architecture which leverages existing investments

Implement a portfolio of business/technology linked initiatives that drive results across business units

Continue use of existing capital approval process; ensure all major initiatives are driven through “Solution Lab” methodology

Expand capabilities to ensure business goals are met

Reduce operating costs

Manage operating/technology risks

Ensure disciplined use of capital for technology projects

Goals Actions

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Demonstration Booths

Questium - Personal and Professional Life

Questium - Health and Wellness

Online Enrollment & Billing

MedUnite

Enterprise Portal

Questium - Personal and Professional Life

Questium - Health and Wellness

Online Enrollment & Billing

MedUnite

Enterprise Portal