So you think digital health is your future?Personal · Nov 30, 2020
As a communication services provider (CSP), it is getting harder to grow our business as traditional lines become commoditized and higher margin competitive services run over the top of your network providing value to many of our customers in the different verticals we touch.
We are all looking for the next wave of growth that will have significant impact on our overall revenue. Given a variety of forces at work, many of us look at digital health as an attractive market vertical. Two forces in particular are frequently cited as making health a target for digitization: demographic shifts to the +65 category, and the rising costs of caring for them.
“But the health business is complicated – particularly the provider side of healthcare. It is highly political. It comes with significant risk and appears to require serious commitment.”
Yes. Yes. Yes and…Yes.
But let’s talk about these statements. While these factors may mean that only the serious should apply, it is a 9T $US global business, and history has shown that once you have a modicum of success, it is very sticky revenue….low churn and a long tail of recurring revenue. So while a digital health business is not a short term endeavor— once established it can be very resilient to economic challenges.
“Why is it so complicated?”
Most who work in the provision of healthcare could tell you that one, if not the most significant cause, of the complexity has to do with how fragmented our systems are – they really are not systems at all. I am talking about the fragmentation of a health system into silos of treatment and the fragmentation of good information into silos of data, and the fragmentation between providers of care … nurses, general practitioners, specialists etc. Accordingly, we do not always get the right information, to the right people, at the right time. This is for many – THE healthcare aspiration – simple to say, but very hard to achieve.
This systemic “fragmentation’ is probably the largest barrier to moving data around. This was evident and exemplified in our global response to COVID-19 where we witnessed the challenges of getting good information from raw data, and getting this information to the right people, at the right time for decision making. The good news is that the healthcare industry has figured this out and are slowly … addressing this systemic fragmentation under the banner of “interoperability”.
“Given the prevalence of publically funded healthcare, local government and politics adds risk – what value do CSP’s have for governments?”
Most healthcare is local in nature, thus making trust a challenge for the global purveyors of digital technology. As the pace of technological advancement continues to outstrip the pace of policy development by local government, (and this will continue), the gap between policy on privacy, policy on the definition of first life, and end of life, and policy on access to data, consent…. Keeps widening. If the government creates policy, it is counterintuitive to think they can keep pace with implementing technology. In this aspect it would appear that CSP’s in the private sector are better positioned to address the technological innovation and then apply it to local health issues. One can surmise that in most countries, this would be in partnership, within a government regulated environment.
“CSP’s have a role to play – but can they step up or will the platform players go over the top?”
The bad news is that fragmentation in our health systems is challenging enough and rarely contemplates the fact that most healthcare happens outside our formal provider systems, in our homes, by ourselves… in the consumer side of the healthcare market. It would appear that global consumer platform players are acquiring and investing more closely in digital health because they think it is a very attractive market – witness the recent acquisitions and investments of Google, Apple, Amazon, Microsoft, Alibaba, Ping An.
But, CSP’s have built a business bridging time and distance, using the best of technology to build the best telecommunications network to connect citizens. And isn’t that what local healthcare needs? –Connecting local citizens with local providers of care. What are TELCOs, if not vehicles for the secure movement of information across multiple platforms and devices? Who can truly operate a platform business in healthcare, connecting providers and citizens? Who can exert sufficient political influence to build a REAL healthcare system, and capture the synergy of a sustainable digital health, wellness and betterment ecosystem of digital applications. Who?
Well these operators must in our opinion possess some degree the following five characteristics:
Operational ability – the capability to operate, extend and support a complex technology platform.
Trust – Status as a trusted organization is essential to work in a regulated industry (where the majority of market opportunity exists).
Reach – Ability to bridge consumers and providers of health services using the platform business model.
Business model – An existing model that enables an operator to scale regionally.
Investment appetite – Willingness to make a strategic investment in developing a digital health business.
Operational ability. Reach. Business Model, Investment Appetite. Operators without these characteristics will compromise the success and quality of the healthcare ecosystem they build and the overall strength of a partnership ecosystem which we believe is essential.
These characteristics are not the global consumer platform players. The world has something like +5 billion mobile phones, yet 50% of the population lack access to essential health services. That seems like an opportunity for a competitive advantage if CSP’s can overcome their apparent risk aversion and their short term focus. The alternative is that these players will go over the top of your network.
The most important lesson learned from years in health, is that technology is often only a part of the solution. While we often know what to do… We often lack the willingness to do it. Again, the pandemic provides a helpful illustration – virtual care & telehealth technology have been around for almost ten years. It took the pandemic to change our will to really use it. You must make a strategic commitment to digital health as it is not simply technology. You need to gain and convey trust. You need to be there for not just today, but also tomorrow, and the next day. Given its complexity healthcare moves relatively slowly and they need solutions and partners they can depend on. CSP’s understand strategic commitment – they understand this for network builds and their traditional business. Can they apply this to a new business line?
Along with this important lesson, we have learned that successful growth of a digital health business depends on learning how best to deploy technology to create the momentum for change… how best to minimise technology risks… to lower the barriers to new technology and change and ultimately to maximise the willingness of stakeholders to digitize health. Most often, this venture cannot be done alone. Partnering is essential to success. You must find and build strong partnerships that complement your own assets, which match your own position of trust, your own strategic commitment, and add to your knowledge with health technology or clinical understanding of health.
The stakes could not be higher. Evidence suggests that policy makers, providers, investors… all believe that the pandemic has created greater pressure to invest in digital health now, and as communication service providers we have a role to play.