7. Business Models in eHealth2

8/14/2019 7. Business Models in eHealth2

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Business Models in eHealth

Dr Justin M Whatling

Chief Clinical Officer, BT HealthDirector of Strategy, Global Healthcare

Visiting Professor UCL,

Centre for Health Informatics andMultiprofessional Education


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Agenda

The changing healthcare environment

Current business models and challenges

Where we could get to


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Current healthcare models are not fit for purpose

Reimbursement based business model forbiomedical model of healthcare is not fit for purpose

Sustainability of the healthcare system has becomecritically dependent on the success of prevention

models

NHS does not have the money or the experience at

driving this, and we collectively need to quickly gothrough the discovery, innovation and deployment

processes for the future healthcare delivery business

models Maintaining health and productivity is crucial to long-

term economic stability


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Supply Demand mismatch

Victim of our own success

Health ICT has a critical role to play

Increasingconsumerexpectation

Increasing cost ofhealth innovations

Demand of anageing chronically

ill population

Lack of healthcareprofessionals

Constrained budgets


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Role of Health ICT

Health ICT is key as it can transform the economics ofinteractions in the web of services and providers

ICTs inherent flexibility can catalyse the service innovations

required to sustain an increasingly complex web of care But it is difficult to predict technology and serviceconfiguration sets that are likely to succeed and

Current technologies and modes of operation limit reuse andadaptability of solutions

Progress has been further limited by risk averse behaviour

Whole system business models for prevention and LongTerm Condition programmes are most likely to besustainable, but require high up-front investment

consequently Pilotitis is endemic The consumer healthcare industry is emergent, fragmented,

investment-driven no strong lead customer to provide theimpetus for adoption

Health 2.0 market activity has weak business models


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Approach to date

like the healthcare system we have built health ICTaround the needs of organisations and staff

Payer/Provider

Market

ConsumerHealthMarket

Socialcare

Market


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Redressing ownership of health and wellbeing

Health services

Social services

Wellness services

Consumerinfluence

HealthcareInstitutioninfluence

Employer servicesFitness notes

Behavioural programmes

Gyms

Personalised budgets

Telemedicine

Telecare

Consumer power and extent of choice is increasing but highindustry fragmentation is resulting in disconnectedengagement


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Where Healthcare needs to get to

Payer/ProviderMarket


Social CareMarket

convergence of health and wellness markets

Drivers

Public Health

Prevention

Wellbeing

Consumer

expectation

Consumerresponsibility

Empowerment

Focus onoutcomes

Drivers

Public Health

Prevention

Wellbeing

Consumer

expectation

Consumerresponsibility

Empowerment

Focus onoutcomes


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Something starting to happen

Payer/ProviderMarket


convergence of health and wellness markets will drivenew business models

Co-creation of content Secure email collaboration Service advertising

Patient monitoring Medication compliance Shared decision making Semantic fingerprinting Effects of computers on consultations

Second opinion services Reimbursement of new consultation

methods

Means testing Personal budgets Private sector / SME provision 3rd sector engagement

Outcomes management

Telecare Behaviour change programmes

Shared care assessment

Pooled budgets Joint commissioning

Social CareMarket


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Currency of healthcare must change

Evidence based management Outcomesmanagement

Activity reimbursement

Outcomes basedpurchasing

Disease centric Patient centric

Care episode based Care cycle based

Care pathways Integrated care pathways

Data Information Knowledge centricity

This transformational change will fundamentally

change the business models operating in healthcareand in health ICT


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Current business models and challenges


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Business/ Service delivery models

Four players

Patients/customers

Healthcare payers

Healthcare providers

ICT suppliers

Four key flow relationships: Care services

IT product/ services

Funds Evidence of delivery

Adapted from Empirica materials


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Business/ Service Delivery Models

customers

payers

suppliers

providers(health, social) care service

payment

evide

nce

reimb

ursem

ent

premium

product/serviceser

vice

Suppliers participatein service delivery

but invisibe forcustomers

customers

payers

suppliers


evide

nce

reimb

ursem

ent

premium

Suppliers andproviders join

customers

payers

suppliers


payment

premium

product/serviceser

vice

Providers and payersjoin: Managed Care

customers

suppliers


evidence

payment

Customers payout of pocket



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Integration of ICT services into existing deliverychannels

Healthcare organisations view ICT services as a logicalextension of their portfolio

Cash flow follows well established paths

No disruption of present delivery structures

customers

payers

suppliers


payment

evide

nce

reimb

ursem

ent

premium

product/servicese

rvice

Suppliers participatein service delivery

but invisibe for

customers



15/45


Combining medical service provision and IT support

ICT services are not delivered in the context ofconventional healthcare structures

established healthcare providers view such offerings as athreat

customers

payers

suppliers


evide

nce

reimb

ursemen

tpre

mium

Suppliers andproviders join



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Managed Care approach

Legal constraints and opposition by health care providers

Disease management concepts (public sickness funds)are now widely discussed

Has become an interesting option

customers

payers

suppliers


payment

premium

product/serviceser

vice

Providers and payersjoin: Managed Care



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Private market approach - direct payment by patients

Rare exception in countries with developed nationalhealth systems

But private out-of-pocket payments are expected toincrease

customers

suppliers


evidence

payment

Customers payout of pocket



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Challenge areas

Personal health records

Foundational

Patients more interested in utility services that PHRs

US Regional Health Information Organisations

Many failures, some successes

No business model for sharing information

Health 2.0 initiatives

Standalone VC-backed startups

dot com but in healthcare

Telecare

Who pays is not necessarily who benefits Care Management/ Self-care in CDM

Pilotitis

Consumer health knowledge services


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Lack of sustainable business models for CDM

High Risk

Low Risk

Prevention

Supported

Self Care

Case

Management Very HighRisk

Disease

Management

Health-care

market

focus

consumerhealth

marketfocus

NHS pay

Consumer pay

Lack of sustainablebusiness models


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Regression to the mean


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Business model trade offs

Report on telehealth workshop published, e-Health Europe, 29 December 2008

There is a lack of appropriate business models:

Buying or leasing hardware offers a more flexible localservice and may be the best option for long-termmonitoring, but has a high initial cost, need forreplacement and staff training

Buying services has a low initial cost, may include staffand offers better back-up, but has a high recurring cost,less flexible local service and an incentive to terminate

Is there a hybrid model?


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Changing global economic outlook affect on ITspending in healthcare worldwide through to 2010

The current outlook for global economic growth in2009 has been lowered to 2.8%

The most-recent published 2008 IMS IT spendingforecast worldwide (July 2008) contains a CAGR of

5.3% for healthcare from 2007 through 2012. Thisgrowth rate is no longer feasible for business-

planning purposes for 2009 and 2010. Early indications for worldwide healthcare provider IT

spending growth in 2009 and 2010 show growth to bebetween 3.6% and 4.1%, and 3.3 and 4.4%,respectively.

Gartner, Nov 08


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Recommendations for Health ICT suppliers

Build sales and marketing material demonstratingpredictability of costs and outcomes

Forestall launching new initiatives or products that donot have quick "time to value

Target the "hidden IT buying centers" in healthcare

Eschew "knee jerk" cost reduction outsourcing

initiatives

Retain healthcare talent despite short-term pressuresto trim staff

Rebuild ROI and time-to-value-related marketingmaterial

Propose global delivery options to established clients

Gartner, Nov 08


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More recently

Have you heard about the upturn?, SmartHealthcare, 28 October 2009

Kable predicts that spending on ICT in healthcare willincrease by a third in the next five years. It reckons

that the market will expand by about 8% by the nextfinancial year, despite the recession and criticism

from the Conservatives. Victor Almeida commentsthat large sums of money will continue to be spent onthe NPfIT until its benefits have been fully realised.

HAVE YOU HEARD ABOUT THE UPTURN? -SMART HEALTHCARE (ONLINE) - 28/10/2009

THE ONLY HEALTHY FUTURE - SMARTHEALTHCARE (ONLINE) - 28/10/2009


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Refocusing on technologies that enable cost reductions

outcome

cost

USA

need to refocus on cost decreasing technologies

This is not the focus of research establishments, who willcompound this problem if they do not refocus on translational

research that addresses this looming crisis


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Literature on return on investment

Information technologies are so intermingled withpeople and processes that the identification ofspecific IT benefit remains questionable (Meyer R,

2008)

eHealth Impact study demonstrated average of 4year net benefit and 5 year cumulative net benefit,

EPR 7-8 years (eHealth Impact, 2006) Widespread implementation of health IT has been

limited by a lack of generalisable knowledge aboutwhat types of health IT and implementation methods

will improve care and manage costs for specifichealth organisations (US Agency for HealthcareResearch and Quality, 2006)


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Future EC work

Business Models for eHealth Tender (15/05/2008) The study will analyse successful business models for innovative

eHealth applications, focusing on financing, longer term sustainability,incentives of all the stakeholders and on the role of procurers.

Particular attention should be given to ICT applications for chronic

diseases management, with reference to the research carried out inthis field that the European Commission has funded (FP6, FP7).

The study will focus on business models for eHealth. The specific goalsof the study are: To review the state of the art evaluation methodologies and

approaches focusing on efficiency, sustainability and economicbenefits of eHealth systems;

To consider the current demand for eHealth systems and tools in thefour defined market areas with a view to evaluating the existing andpotential eHealth market size;

To identify eHealth business models within the four market areas

outlined above that represent best practices in a range of MemberStates, analyse and present the findings. To describe a vision of sustainable eHealth systems for each of the

four market areas. This will include proposed business modelspresuming that some seed funding was available to roll out a serviceon a wide scale.


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Where we could get to


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Service Fragmentation, to

Increasing complexityand unpredictabilityof serviceconfiguration

Complex ecosystem

with extensiverelationshipsbetweenorganisations andservices

Organisationsincreasinglypurchasing servicesfrom each other

Core healthcapabilities changes

little Current limited reuseand adaptability

Application B

Service Provider B

Service Provider C

Service Provider D

Service Provider A

Application A

Service Provider E

Application D

Application C


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Service Orchestration

IdentityManagement Application B

Service Provider B

Service Provider C

Service Provider D

Service Provider A

Application A

Service Provider E

Application D

Application C

Payments &billings

SemanticBroker

ePrescribing

Service

DataWarehouse

ePHR

EHR

Decision

Support

Reuse

Adaptability

Faster time tomarket

Lower totalcost of

ownership


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An Example: UK Consumer health market

NHS Direct

NHS Choices

Healthspace

NHS 'Life Check' Health MoT New trends and initiatives

Fitness notes?

Pharmacy engagement

Healthcare at Home

Health Tourism

But:

Fragmented, little reuse

Limited innovation Silo care settings

NHS brand in healthcare

Partial ecosystem

Consumers want:

Utility Oyster

Access services NHS

Trusted information BMJ

Communication BT

Convenience Tesco

Personalisation Google

Fun and interactive Virgin


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Consumer health market existed for some time

Health &Beauty

Consumer

HealthInforma-

tion

Self

Monitor-ing

Diets /Nutrition

Comple-mentary

Therapy

SupportGroups


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Explosion through new & better channels

Health &Beauty

Consumer

HealthInforma-

tion

Self

Monitor-ing

Diets /Nutrition

Comple-mentary

Therapy

SupportGroups


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Opportunity to improve the consumer health experienceby creating an integrated ecosystem wrapper

Health &Beauty

Consumer

HealthInforma-

tion

Self

Monitor-ing

Diets /Nutrition

Comple-mentary

Therapy

SupportGroups


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Ecosystem

NHS services

Age

Concern

Community

SAGA

Community

VirginHealth

Community

Consumer services


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QoF to be 'crucialin obesity plans

Weight mgmt. consumerinformation

Consumerpurchase weight

mgmt service

Discount voucher

Link to

NHS carerecord

Patient health record access

QMAS for QoF

NHS consumer obesity information

Patientreferral

toservice Reimbursement

Publicity & MediaCampaigns

GP

SESAME: SEnsingfor Sport AndManaged Exercise

Data

synch

Patientprogress

Behaviour change

London

2012

ff


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Network effect

the value of a network increasesexponentially with the number of

users (nodes) on the network

Some products only havestandalone value bread,

icecream Some products provide value as

stand-alones and also exhibit anetwork effect, e.g. PC


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T ti l b i d l


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Transactional business models

N b i d l l i


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New business models evolving

Information Arbitrage

Information arbitrages are instances where the spread betweenthe cost of accessing a piece of information and your ability toresell it is sufficient to be able to make a profit

Infomediary

maximizes the value of the information by being helpful to thecustomer in locating products and services that are mostrelevant to the customer based on who they are and what their

preferences are

businesses that can advise consumers about their complicatedtreatment and provider options

Metamediary services

Metamediaries are companies with robust Internet sites thatfurnish customers with multiproduct, multivendor andmultiservice marketspace in return for commissions on sales

Not just confined to the consumer health market


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Not just confined to the consumer health market

Philips sell PACS on a pay per image stored basis inN America and Europe

Emergis sell pharmacy solutions in Canada on a fee

for transaction basis

Infermed can sell global decision support service ona pay per patient per year basis

US Chronic Disease Management services on a feeper patient per month basis, or even a fee perpopulation per month basis

US Payers 100% reimbursing for remote monitoringservices


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Developing new business models


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Developing new business models

What is required is an environment where participants canexplore why they should participate in the ecosystem by playingaround in a virtual environment with simulated services andbusiness models

They could potentially simulate the physiological, psychologicaland sociological impact of future health ICT services inenvironments like Second Health(http://secondhealth.wordpress.com/)

Assess the whole system economic impact throughcollaborative modelling environments which don't exist yet, butare likely to be brought into being by a 5m initiative funded bythe TSB

Work on a smaller scale to achieve an economic modelling

environment has been initiated by the East of England SHA, orby the Whole Systems Partnership(http://www.thewholesystem.co.uk/). This is a space to bewatched.

For example


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For example

Subscription charges (5/month) (red)

Transaction charges (5p / trans) (blue)


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Thank You

[email protected]

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