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Health Care: A Long-Term ROI Commitment

Denise Culver
Heavy Lifting Analyst Notes
Denise Culver, Online Research Director
2/25/2011

To understand the impact that service providers can have on the health-care industry, it is helpful to examine the costs and effects of one of the most widespread diseases in the U.S.: diabetes.

Currently, more than 26 million people in the U.S. have been diagnosed with diabetes, representing more than 8 percent of the country's population. Another 7 million people are undiagnosed, and 79 million others are considered "pre-diabetic." In 2010 alone, there were more than 2 million new cases of diabetes in people older than 20.

The costs to combat diabetes are astronomical. Monetarily, diabetes costs about $180 billion a year in terms of medical costs, loss of work and disability, accounting for about 20 percent of all health-care expenditures in the U.S. Furthermore, the disease creates costly and serious residual issues – heart disease, stroke, blindness, kidney disease, loss of income and more.

These staggering statistics – as well as those for obesity, heart disease and other chronic conditions – are the primary drivers of solutions that provide better, cheaper access to the health-care ecosystem. At no other time have service providers, technology vendors and members of the health-care ecosystem (doctors, hospitals, insurance providers, etc.) had a better opportunity to create and develop networks and solutions that address the health-care industry.

Such solutions and opportunities for service providers are the focus of the newest Heavy Reading IP Services Insider, "Healthcare Sector Requires TLC From Network Operators." This report examines the opportunities for service providers in the health-care vertical, including areas with the most growth and potential for the next 24 months. It includes an analysis of potential customers and provides examples of current solutions and case studies. It also examines the geographic landscape of the market for service providers, challenges the industry presents, and trends expected in the health-care vertical.

Companies analyzed in this report include: ANT+; Avaya Inc. ; Cisco Systems Inc. (Nasdaq: CSCO); Cox Communications Inc. ; Diversinet Corp. ; Ericsson AB (Nasdaq: ERIC); Juniper Networks Inc. (NYSE: JNPR); Motorola Inc. (NYSE: MOT); Oracle Corp. (Nasdaq: ORCL); and Sprint Corp. (NYSE: S).

As the report shows, service providers have a tremendous opportunity in the health-care vertical, especially in terms of creating bandwidth and networks, as well as in developing new applications and services, including medication and appointment reminders, access to physicians, hospital and insurance administration and much more.

Taking advantage of these opportunities, however, requires a new revenue paradigm for service providers. They must be willing to invest in these technologies today, with the knowledge that return on investment (ROI) will likely not be for years. Most service providers are eager to take on verticals that will provide the quickest financial reward, often foregoing the long-term viability of those verticals and technologies. But the service providers that are willing to invest in health care today – despite elongated ROI – will be those that reap the rewards for decades to come.

— Denise Culver, Research Analyst, Heavy Reading IP Services Insider




The report, Healthcare Sector Requires TLC From Network Operators, is available as part of an annual subscription (6 bimonthly issues) to Heavy Reading IP Services Insider, priced at $1,595. Individual reports are available for $900. For more information, or to subscribe, please visit: www.heavyreading.com/entvoip.

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jobin.thomas
jobin.thomas
12/5/2012 | 5:11:39 PM
re: Health Care: A Long-Term ROI Commitment


 


It is way too early for telcos to do much meaningful allocation for healthcare as a sectoral opportunity, especially so for mobile network and service providers. This 'long term ROI' is a projection fraught with dangers.


Many a times, the emergining markets are cited as the promising theaters for these initiatives. It is easy to see the temptation to do so - billions of people uderserved or unserved by healthcare players, but already covered by the mobile telephony providers. However, the most crucial factor affecting healthcare coverage is something that the telcos can do nothing directly about - ACUTE SHORTAGE of QUALIFIED HEALTHCARE PROFESSIONALS. This maybe more pronounced in emerging markets, but true even in advanced markets. With guaranteed absence of short and medium term ROI, no one except the governments are in a position to offer incentives to lure and train professionals to address this gap. And, even if someone starts effetive steps in that direction, a good decade and beyond is needed to see results.


Obviously, healthcare would enjoy collateral benefits of communication advances, but a targeted advantage realization and associated investment decisions from telcos could be many years ahead.


-Jobin

deniseculver
deniseculver
12/5/2012 | 5:11:37 PM
re: Health Care: A Long-Term ROI Commitment


Hi Jobin:


Thank you for your comments.


While I agree there is a shortage of healthcare providers, especially in emerging markets, the vendors and service providers to which I've spoken with indicate that creating applications and services like those described in the report will actually enable existing healthcare providers to make much better use of their time. With these apps and services, healthcare providers are able to reduce time spent on paperwork and insurance issues. Because the technology bridges geographic limitations, healthcare professionals can "see" many more patients than currently possible, and they can obtain input from healthcare professionals around the world. Furthermore, they are able to help patients -- especially those with chronic conditions -- easily monitor and track their conditions and be proactive instead of reactive.


As for government's role in healthcare, there certainly is an opportunity for the government to create applications and services that address its unique populations (i.e., military, veterans, etc.). But looking to the government to fund healthcare is shortsighted, as is evidenced by the public's response to Obama's healthcare legislation. Furthermore, the government does not specialize in creating, developing and deploying telecom services and applications -- a job that is best handled by the service providers and vendors that have the knowledge and ability to do so.


Denise Culver

jobin.thomas
jobin.thomas
12/5/2012 | 5:11:36 PM
re: Health Care: A Long-Term ROI Commitment


Hello Denise,


 


Thanks for the rejoinder. I appreciate the enthusiasm and drive that propels these initiatives, and the aspects that you are illuminating certainly have their own merits.


When i said governments are the only agencies who could afford to go ahead with the efforts to bridge the personnel gap, i was referring to the efforts to increase the supply of qualified medical professionals by creating the right incentives for medical education. As you rightly mention, creating telecom apps etc is not in the ambit of government speciality, and I am in full agreement on it.


Assuming that the number of doctors [and other specialists in the domain] remains roughly the same, it is hoped that they would be able to 'see' more patients with the help of telcos and application specialists. I am sceptical about this assumption. This would be so if the medical professionals had enough spare time after their current engagements. It may very well be the case with a minority, but most of the really qualified experts are finding it difficult to manage the queue of patients in their current modes of engagement. And, the current arrangement is lucrative enough for the professionals. If one has to wean these professionals to 'see' or 'advise' a remote patient with the help of the telco tools, they need to see the money, at least equal to the sums they are making by treating patients in person. From a doctor perspective, a remote patient is going to take up more time than the one who sits across his table. From the patient perspective, it would be of a certain value, but definitely not as much value and reassurance of a direct visit. This leaves the question - who will foot the bill that the doctors would demand as their opportunity cost?


 


A related thought: In markets where PC and internet penetration have been reasonably high, how has been the commercial success of e-health initiatives? The small devices that make up the user end of the mobile ecosystem have a lot more challenges in providing facilities for a decent diagnostic experience [compared to the PC].


 


My attempt is not to belittle the amazing efforts channelled at solving many of these aspects, but to point out that the economics is positioned very differently. Telcos could only punt so much on it in such a predicament.


 


Regards,


Jobin

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