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Virtual Health Services April 2013
VirtualHealthServices
Innovation inHealthcareSteve MoyePresident, CHI VHS
VHS 3.0 Governance discussion
Virtual Health Services | Steve Moye, President
VirtualHealthServices
Innovation inHealthcare
Objectives:•Define a future-state governance model •Identify and prioritize revenue generating opportunities•Design a future-state business and operating model to pursue the new opportunities•Describe the steps necessary to operationalize the new model through an implementation roadmap
Engagement Overview
Status and finding to-date per work stream:•Governance Framework: Identified key CHI and VHS governance issues. Drafted recommended solutions to be refined after revenue generating opportunities are finalized•Revenue Generating Opportunities: Identified and prioritized revenue generating opportunities based on evaluation criteria•Business and Operating Model: In process of drafting future-state business and operating model
Objectives Progress
Objectives for the project are to identify revenue generating opportunities, and then define and align the governance, and business and operating models to best position VHS to achieve its’ goals
Copyright © 2013 Accenture All Rights Reserved.
CHI and VHS Virtual Health Capabilities –related but unique
From a CHI enterprise perspective, three capabilities support virtual health programs across MBOs. While related, the competencies are different with unique resource and capabilities requirements.VHS’ strategy and resources are focused on achieving the third. The best path to address the first two is yet to be defined.
Industry trends monitoringü Primary and secondary research and analysis to remain abreast of new approaches that support
CHI’s mission and may be considered by MBOs (similar to Gartner or other industry analysis)
Consulting servicesü Advisory services to MBOs that help evaluate potential services or manage existing servicesü Technology advising and support specific to virtual health platforms
Operational entityü Creating and delivering virtual health services relevant to both MBOs and the market as a for-
profit, successful business venture
Copyright © 2013 Accenture All Rights Reserved.
CHI and VHS Virtual Health Capabilities –related but unique
From a CHI enterprise perspective, three capabilities support virtual health programs across MBOs. While related, the competencies are different with unique resource and capabilities requirements. VHS’ strategy and resources are focused on achieving the third. The best path to address the first two is yet to be defined.
Industry trends monitoringü Primary and secondary research and analysis to remain abreast of new
approaches that support CHI’s mission and may be considered by MBOs (similar to Gartner or other industry analysis)
Consulting servicesü Advisory services to MBOs that help evaluate potential services
or manage existing servicesü Technology advising and support specific to virtual health platforms
Operational entityü Creating and delivering virtual health services relevant to both MBOs and
the market as a for-profit, successful business venture
VHS Focus
(as a for-profit)
Copyright © 2013 Accenture All Rights Reserved.
✓Prioritize limited number of core offerings
✓Only take-on activities that are profitable
✓Focus and commit resources to for-profit activities
✓Avoid the trap of being all things to everyone
Focus on for-profit
opportunities
VHS’ Core Directive from the Board: Within five years, VHS is to be financially independent, able to obtain external funding and success in the market place
VHS Future State
How can VHS get there?
Copyright © 2013 Accenture All Rights Reserved.
✓Be driven by an innovative operating model that provides its portfolio offerings at scaleBe driven by an innovative business model that redesigns care delivery to unlock and reduce healthcare labor intensity
Be driven by Innovative
Models
VHS’ Core Directive from the Board: Within five years, VHS is to be financially independent, able to obtain external funding and success in the market place
VHS Future State
How can VHS get there?
Copyright © 2013 Accenture All Rights Reserved.
✓Achieve a unique market positionRetainearnings to fund future growthPosition for success with VC and other investorsBuild services that combine enabling technologies and services
VHS Future State
Position itself for success
VHS’ Core Directive from the Board: Within five years, VHS is to be financially independent, able to obtain external funding and success in the market place
How can VHS get there?
Copyright © 2013 Accenture All Rights Reserved.Copyright © 2013 Accenture All Rights Reserved.
High-level Timeline
What the next three years will look like as VHS establishes creditability, grows its customer base and takes the opportunities to the external market
Copyright © 2013 Accenture All Rights Reserved.
An Overlooked Industry Opportunity Offers a UniquePosition for VHS
Situation Opportunity§ Industry strategies for healthcare cost reduction
are focused on utilization management and quality strategies
§ Of the $2.6 trillion spent in 2010 on health care in the United States, 56% consisted of wages for health care workers
§ Bending the cost curve hinges on reducing the cost of labor per unit of service
§ Yet unlike virtually all other sectors of the U.S. economy, health care has experienced no gains in labor productivity over the past 20 years
§ At the same time, health care labor is becoming more expensive more quickly than other types of labor
§ Labor cost innovation approaches are a whitespace opportunity in the U.S. health sector
§ Virtual healthcare delivery models provide significant advantages for labor cost savings over traditional in-person care models
§ With a focus on labor cost innovation VHS’ value to CHI will complement existing initiatives to reduce costs through population health management and best quality practices
§ Developing a portfolio focused on labor cost innovation services VHS will be attractive to both external investors and have a compelling value proposition for external customers
Copyright © 2013 Accenture All Rights Reserved.
Source: Kocher R, Sahni N. Rethinking Health Care Labor. N Engl J Med 2011; 365:1370-1372. October 13, 2011. DOI:10.1056/NEJMp1109649
An Overlooked Industry Opportunity Offers a UniquePosition for VHS
Rethinking Health Care Labor
Copyright © 2013 Accenture All Rights Reserved.
BioPharma as a customer
BioPharma’s are becoming more interested in whole person / patient treatment. Virtual health solutions can help them more fully understand the complete patient lifecycle and the value chain of their product
Copyright © 2013 Accenture All Rights Reserved.
How the Labor Intensity Organizing Principle relates to Growth Opportunities
Telepharmacy 2.0b combines Telepharmacy 1.0 with medication management services. These services would focus on management, compliance and adherence, and would include: patient coaching, medication adherence, and patient support.
Remote consultation, assessment or intervention by a specialist in which provisions of mental/behavioral health services are provided to patients.
Provide remote monitoring of patients with chronic conditions (e.g. asthma, COPD, CHF, hypertension, diabetes, obesity) and care management services. Additional support services can be on-line social networks and behavioral change tools.
Identify and design optimal workflows for each virtual health service, combining both administrative and clinical processes for end-to-end optimization. Co-develop software and analytics platforms that support Business Process Management (BPM) optimization. Create and brand virtual care delivery training programs for clinicians.
Telepharmacy 2.0b
Telemental Health
Chronic DiseaseManagement
Intellectual Property (IP) Portfolio
Description Labor Intensity Levers
Increases physician productivity by allowing pharmacists to focus on treatment of patients, automates processes around medication management and allows adherence of treatments to be self managed by patients or lower cost clinical resources (e.g., technicians, call support staff)
Increases physician productivity by allowing clinicians to virtually consult with patients across multiple geographies, maximizes staff by leveraging clinical social workers, counselors, retired therapists, and enables self-driven programs
Increases physician productivity by allowing clinicians to focus on treatment of patients, increases capacity by enabling group visits, automates processes around management of chronic diseases and allows adherence of treatments to be self managed by patients or lower cost clinical resources
Increases physician productivity by optimizing administrative and clinical workflows
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Rules of Engagement
Defining a comprehensive and transparent process for how virtual health opportunities are communicated, evaluated, and pursued is key for VHS to meet its objectives
Innovation strategies need to be supported by the appropriate, coherent innovation governance model ...
Innovative governance models and pros and cons (1 of 3)
• A mature business generates value by running business as usual. To drive innovation, these companies can establish distinct units that work independently using their own resources, processes and KPIs
• These units can be either complete business units where the complete process from idea generation to market penetration is developed or Ventures within an established business unit (e.g. a business unit that has R&D department plus venture unit)
• To plan and manage innovation, a governing body with internal and external members is formed
• Members come from different business units within the company (usually senior management) and are external advisors with market and industry knowledge
• The Venture Board defines the overall innovation strategy, manages the innovation portfolio and overlooks the “innovation performance”
Venture Board
Growth Incubator
New Venture
Drive innovation within a mature business
Drive innovation based on strategic leadership
Ambidextrous Organizations
Venture Boards
• Autonomous structure makes innovation is less influenced by standard organizational KPIs and performance metrics
• Idea generation takes place only in the respective business unit
• Know-how transfer and communication between BU is limited
• Mgmt and coordination of innovation happens from a global perspective across all BU
• Ideas of external advisors can be integrated
Pros (+) and Cons (-)
• A bottom-up approach does not exist
• Innovation is imposed from a senior mgmt board
• Know-how transfer and communication between BU is limited
... which should foresee a specific positioning at organizational level ...
Innovative governance models and pros and cons (2 of 3)
• The Innovation Council consist of a small senior management group, that manages innovation or awards budget across several business units and facilitates decisions across functions, businesses and geographiesThe council prioritizes projects and aligns resourcesIn contrast to a Venture Board, the Innovation Council is more operational while the Venture Board is more focused on the overall innovation strategy
• CoP are interest groups of key actors from inside and outside the company that interact on a regular basis to share implicit knowledge for a certain areaCoPs work without formal meetings and project management tools and provide an environment to share knowledge freelyEstablishing CoP shapes the organizational culture and helps to leverage internal knowledge
Pros (+) and Cons (-)
Innovation Council
CoP
CoP
CoP CoP
CoP
à Coordinate innovation between business units
à Create a collaborative environment and leverage innovation best practices
Innovation Council (Advisory Committee)
Communities of Practice (CoP)
• A more operative team can allocate resources and support innovation
• Management collaborates across business units
• New ideas are less likely to be generated in this organizational board
• CoP is an effective method to transfer knowledge and best practices
• Codification and storage of knowledge is difficult
• Knowledge transfer does not necessarily lead to generation of new ideas and innovation
... and the right level of participation in the innovation process
Innovative governance models and pros and cons (3 of 3)
• R&D is no longer a closed entity within the business, it is open to ideas from outside the companyExternal parties like universities, research institutes or the government can improve the R&D process by generating new ideas and expertiseThe invention does not necessarily need to come from inside the company to profit from it
• Employees engaged with innovative topics should enter company external networks to avoid being stuck with only ideas grown within the company and missing out new white spaces, external knowledge and insights are requiredPotential network candidates can come from academia, industry consultants or even customers etc.Furthermore, these sources are connected to own networks which further facilitate the generation of new ideas
Pros (+) and Cons (-)
Company
Consumers / CustomersManufacturers
/ Suppliers ...
Consultants
Academia (Universities and Research
Institutes)
Regulatory Authorities
Financial Institutes
Industry Organizations
Other organizations
Company
Customers
Universities
à Access external networks to capture ideas
à Structurally exploit external networks for innovationOpen Innovation Network
Thought Leader Resource Networks • Firm gets access of external
knowledge• Firm gets advices for the
generation of new ideas
• There must be mechanism in place to capture and manage knowledge to be successfully used for innovation
• Internal knowledge gets disclosed to a certain degree
• Networks ease access to new ideas and expertise
• Revenue of marketed innovation might need to be shared
• Internal knowledge gets disclosed to a certain degree
• Limited development of internal innovation practices
Site Meetings Conducted
Region
Type of Site CO FHS Iowa KY NE The Division Total
National Office 1 1 2
Health System Offices 1 1 1 1 2 6
Subsidiaries / Partners 2 1 3
TeleHealth Programs 1 1 1 1 4
Hospitals / Clinics 5 5 10
Total 1 9 2 3 8 2 25
Note: VHS has also given updates to the CHI Strategy Executive Group, Mercy Health Network CEOs and are planning to attend the North Dakota Minnesota Division CEO meeting in June.
Business Development
VHS has actively engaged CHI and non CHI partners to collaborate and provide current services across various geographies.
VirtualHealthServices
Current VHS TelePharmacy Sites
In Operation
13 CHI SitesLisbon Area Hospital – Lisbon, ND
St. Joseph’s Hospital – Dickinson, ND
Mercy Hospital of Devil’s Lake – Devil’s Lake, ND
Carrington Health Center - Carrington, ND
Mercy Medical Center – Williston, ND
Oakes Community Hospital – Oakes, ND
Mercy Hospital of Valley City – Valley City, ND
LakeWood Health Center – Baudette, MN
St. Francis Medical Center – Breckenridge, MN
Unity Family Healthcare – Little Falls, MN
Albany Area Hospital – Albany, MN
St. Joseph’s Health Services – Park Rapids, MN
St. Catherine Hospital – Garden City, KS
7 Non CHI SitesLutheran/Jamestown Regional – Jamestown, ND
LifeCare Medical Center – Roseau, MN
St. Mary’s Innovis Health Center – Detroit Lakes, MN
Madison County Memorial – Winterset, IA
Davis County Hospital – Bloomfield, IA
Manning Regional Healthcare – Manning, IA
Van Diest Medical Center – Webster City, IA
VirtualHealthServices
VHS Business Model & Status
Acute Care Bundle
Customer:•Acute Care Facilities
Customer Value:•Access, Relationships, Cost, Quality
Services:•telePharmacy, eED, teleHospitalist, teleConsultations, teleDiagnostics
Risk Factors:•Adoption, Low Margin•Limited Market
VirtualHealthServices