Perspective

Ramez Shehadi Dr. Walid Tohme Jad Bitar Sindhu Kutty

Anatomy of an E-Health Ecosystem

Contact Information Beirut Ramez Shehadi Partner +961-1-985-655 ramez.shehadi@booz.com Jad Bitar Principal +961-1-985-655 jad.bitar@booz.com Walid Tohme Principal +961-1-985-655 walid.tohme@booz.com Canberra Andrew Robson Principal +61-2-6279-1241 andrew.robson@booz.com Chicago Mike Connolly Partner +1-312-578-4580 mike.connolly@booz.com Delhi Suvojoy Sengupta Partner +44-20-7393-3314 suvojoy.sengupta@booz.com Dubai Sindhu Kutty Associate +971-4-390-0260 sindhu.kutty@booz.com Dsseldorf Michael Ruhl Partner +49-211-3890-183 michael.ruhl@booz.com Frankfurt Dr. Rainer Bernnat Partner +49-69-97167-0 rainer.bernnat@booz.com Hong Kong Ting Zhao Principal +86-21-2327-9800 ting.zhao@booz.com London Hugo Trpant Partner +44-20-7393-3230 hugo.trepant@booz.com Milan Pietro Candela Partner +390 2-72-50-91 pietro.candela@booz.com New York Gil Irwin Senior Partner +1-212-551-6548 gil.irwin@booz.com Jack Topdjian Partner +1-212-551-6601 jack.topdjian@booz.com San Francisco Dr. Sanjay Saxena Principal +1-415-263-3729 sanjay.saxena@booz.com So Paulo Ivan De Souza Senior Partner +55-11-5501-6368 ivan.desouza@booz.com Sydney Vanessa Wallace Senior Partner +61-2-9321-1906 vanessa.wallace@booz.com Chris Bartlett Senior Associate +61-2-9321-2839 chris.bartlett@booz.com Tokyo Paul Duerloo Partner +81-3-6757-8615 paul.duerloo@booz.com

Booz & Company

EXECUTIVE SUMMARY

Faced with new challenges such as rising costs, more-complex services, and growing populations, the healthcare industry is increasingly turning to e-health initiatives to create efficiencies and share information more effectively. To date, however, many of those initiatives have failed to deliver their expected benefits. A key reason for these failures is a widespread misconception about what an e-health program requires for long-term success: All too often, e-health systems are launched without a thorough approach that takes into account all the essential elements for a viable program. It is important to envision e-health initiatives as the outcome of a multifaceted e-health ecosystem that considers five key elements: Governance policies and regulations Financing model Technology infrastructure Services Stakeholders

Creating e-health programs in the context of their larger e-health ecosystem will ensure lasting viability for these initiatives. Finally, customization is crucial: Each e-health initiative will reflect its local conditions.

Booz & Company

Key HIGHLIGHTS E-health can improve patient care by simplifying access to patient information and reduce costs by introducing efficiencies. To succeed, e-health initiatives must be considered as ecosystems with many interconnected parts, rather than just technology infrastructures. The best e-health ecosystems are based on an adaptable, flexible framework that is equally applicable to countries just launching initiatives and those that are expanding existing programs.

THE PROMISE OF E-HEALTH

Around the world, the healthcare industry is facing a number of challenges. Rising rates of chronic diseases require more-complex healthcare services. Aging populations need longer periods of care. And the growing use of ever-more-sophisticated medical technologies generates increased operating costs. Worldwide, healthcare systems must offer more-complex care to more-demanding and betterinformed patients at ever-increasing quality levels while also trying to control costs. To manage these challenges, many countries are turning to e-health initiatives, as both public officials and healthcare industry leaders seek to improve the delivery of health services and contain rising costs.

The concept of e-healthi.e., the application of the latest information and communication technologies to care deliveryhas been around for about 20 years. As early as the 1990s, there were regional efforts in the United States to create health information exchanges (HIEs) that allowed electronic sharing of health information across disparate systems. Today, there is a wide range of e-health programs, from the simple use of mobile phone text alerts to scattered populations about potential health threats, to the very sophisticated, all-encompassing national health systems in places like Denmark and Singapore. The attraction of any e-health initiative lies in its potentially massive benefits for all parties in the health sector. Applying the latest technologies to care delivery frees doctors, nurses, and other caregivers from administrative tasks, allowing them to devote more attention to patient care. They also have better access to patients information and a more holistic view

Booz & Company

of their medical history. Human errors are reduced. Preventative health programs, disease outbreak surveillance, and other public health programs can be planned and executed more effectively. Equally important, e-health programs reduce costs because of the efficiencies they create in healthcare systems. Duplication of lab tests and x-rays, for example, can be avoided, thus saving millions of dollars. A Booz & Company study recently quantified some of the projected benefits from a proposed e-health initiative in Australia: By 2020, the program could potentially eliminate as many as 10,000 deaths caused by medication mistakes, and avoid up to 310,000 unnecessary hospital admissions, 2 million unnecessary outpatient visits, and 7 million lab tests. The patients who need these procedures would still get them, of course, but the proposed e-health program would help avoid unnecessary or redundant procedures. Similarly, Singapore has found that its e-health program could potentially

save it S$190 million (US$150.6 million) a year associated with the aftereffects of adverse drug reactions just by making more information easily accessible to caregivers. Yet for all their promise, most e-health initiatives have yet to fully deliver on their potential benefits. The reality is that few can claim to have reached their projected goal of highly efficient, fully accessible, high-quality healthcare at reasonable costs. All too often, e-health programs have been implemented hastily, without long-term road maps for success, and as a result many have fizzled before attaining their full potential. Most e-health programs are massive, encompassing a number of interested partiespatients, hospitals, doctors, pharmaceutical companies, insurers, government agenciesthat often have competing demands and must see for themselves the benefits of participating in a proposed e-health program if it is to be viable in the long term. For example, the

regional HIEs created in the United States in the 1990s (primarily to exchange clinical and administrative information) grew rapidly as long as their initial funding lasted. But they became increasingly difficult to sustain when key stakeholders were not given clear incentives to continue cooperating with the programs. The choice, deployment, and integration of technology can also quickly become an impediment to the success of e-health programs. The larger the number of healthcare vendors, the more numerous the systems with which an application needs to exchange data. As a result, the integration complexity also increases, especially in the absence of national standards. However, the fundamental problem lies in an ill-defined conception of what constitutes an e-health program, along with the absence of a structured approach for developing a long-term strategy to ensure the programs lasting success.

All too often, e-health programs have been implemented hastily, without long-term road maps for success.

Booz & Company

THE FIVE ELEMENTS OF AN E-HEALTH ECOSYSTEM

At their core, e-health initiatives are a technology infrastructure comprising a secure network connection, a series of data centers, a call center, and a variety of service applications that might include e-medical identification cards, e-claims, e-prescriptions, e-health portals, national electronic health records, national quality databases, telemedicine, and disease outbreak surveillance. However, it is a mistake to conceive of an e-health initiative as merely a technology infrastructure. Instead, it is more properly envisioned as an ecosystem with a variety of essential, interlinked elements: governance policies and regulations, financing model, technology infrastructure, services, and stakeholders. An implementation strategy that takes into account these five aspects of a successful e-health ecosystem will lead to not only improved quality of care, but also financial savings.

Governance National governments have found the greatest efficiencies when they have legislated policies and regulations to oversee, regulate, and manage e-health programs. This legislation must address strong concerns over privacy, and any oversight regime should include security and confidentiality measures that assure all stakeholders that personal information will be protected and shared judiciouslyand that they will have legal recourse in cases where it is not. In creating a supportive legal environment for their e-health programs, governments should have an eye on the four As of sustainability: authority (the power to effect change), ambition (the desire for or intent to create improvement), ability (the financial and human capital required for long-term success), and agility (the willingness to obtain feedback, observe opportunities, and adapt).

Booz & Company

Financing Those planning an e-health program must ensure that appropriate funding is in place for its design, development, implementation, and ongoing operation. Financing can come from different sources, such as governments or publicprivate partnerships (PPPs). This will require governments to consider what type of reimbursement model they want to follow, as well what incentives to provide stakeholders in exchange for their participation. For example, a payper-service reimbursement model can be a serious impediment to preventive medicine and wellness programs, if this is a priority for a proposed e-health program.

Technology The selection, deployment, and integration of technology is another important element that, if not carefully calibrated, can quickly become an impediment to the success of e-health programs. The choice of a specific technological platform has wide-ranging ramifications, as it determines the applications, data, and infrastructure needed to support specific services and reap the full benefits of an e-health initiative. More important, defining shared standards (e.g., technology and data) is crucial to making this platform ubiquitous. Some programs, such as Canada Health Infoway and Denmarks national e-health portal sundhed.dk,

have succeeded by implementing systems across their entire e-initiatives for shared infrastructure that helps existing technology platforms talk to each other. There is often a temptation to throw money at building a technology infrastructure for an e-health initiative and then rest on ones laurels. This is shortsighted because getting the right technology infrastructure in place is only one dimension of a successful e-health program. And although there may be resistance to spending so prodigiously on technology infrastructure in the early stages, it is vital to make all stakeholders aware that its benefits will be realized in the long term.

Booz & Company

Services E-health services, which vary widely, should be tailored to local demands and to the available or planned technology infrastructure in order to ensure they meet customers needs. Services may be as sophisticated as national electronic health records, or as simple as text-message alerts from public health entities and NGOs to educate and inform patients on specific conditions such as diabetes monitoring or HIV prevention. Because stakeholders will likely be wary early on, it is crucial to establish some early wins by choosing services that are relatively easy to implement and endorsed by all parties. Some recent examples of e-health services are:

National electronic health records that can manage patient data records and offer alerts on personal drug allergies and drug side effects Disease management systems that gather, store, transmit, and analyze information on chronic diseases such as diabetes Ambient Assisted Living (AAL) services, such as monitoring the vital signs of homebound elderly people and communicating adverse events to care providers Integrated disease surveillance platforms for public health agencies to detect unhealthy syndromes and coordinate responses

Solutions in self-care, health-risk prevention, and adherence to prescribed treatments, such as educational text messages for pregnancy and infant care Products that monitor a patients medication regimen, such as pill containers with computer chips that automatically provide reminders to patients and inform physicians of results Stakeholders It is critical to have a human-centric approach and to involve key stakeholders from both the public and private sectors when designing an e-health program. Stakeholders include governments, providers (both public and

It is crucial to establish some early wins by choosing services that are relatively easy to implement.

Booz & Company

private hospitals and clinics), payors (like insurance companies), and patient advocacy groups (including not-forprofit associations that help patients with research, education, and services, such as the American Cancer Society, the American Diabetes Association, and the American Health Information Management Association). Other stakeholders would include medical professionals associations (such as the American Medical Association or the International Council of Nurses) and medical industry associations (such as the Radiological Society of North America or the Healthcare Information and Management Systems Society).

Each stakeholder has different objectives and motivations for participating in e-health programs. For example: Governments and providers feel the pressures of rising healthcare costs Medical professionals try to cope with increasing patient demands and large volumes of health information Payors want to reduce their financial burden and turnaround time for processing claims and medical information Patients seek accessible, more informed, high-quality healthcare

Without the early support of all of these players and an alignment of their needs and objectives, any program is likely to flounder. Incentives for each group of stakeholders will have to be considered. For example, what incentiveother than the intangible one of saving timemight convince a physician to communicate with his patients by e-mail, which he would do for free, rather than through a visit to his office, for which he can charge a fee?

Booz & Company

CUSTOMIZING THE SOLUTION

The e-health ecosystem discussed here is an adaptable, flexible framework that can be used no matter where a country or private entity is on its e-health journey. It is equally applicable to those that are just starting down this road and those that may have taken the first steps towards an e-health program but want to expand it. The framework is also useful in different settings. Because of the variety of ways that healthcare is delivered in different countries, e-health initiatives vary widely. For instance, the United States has a fragmented system, whereas the Scandinavian and Gulf countries, where governments have long been the prime deliverer of health care, have more unified systems. The key is to approach any new e-health initiative in a systematic manner using all five dimensions of the framework. Some of the five dimensions will take precedence over others depending on where a country or private entity is in its e-health journey. In other words, planners can customize their e-health programs to their unique needs and circumstances. One theme binds all five elements of the e-health ecosystem framework: sustainability. This is important not only because the start-up costs of any e-health system are significant, but also because the promised benefits of most e-health initiatives usually

emerge only over a period of several years. Governments in particular must be attuned to the long-term sustainability of their e-health initiatives because this improves their ability to meet the needs of the stakeholders as well as attain the efficiencies that were the reasons for creating the e-health programs in the first place. Governments and private entities contemplating the introduction of e-health initiatives are at different stages of development in their healthcare sectors and will therefore face different challenges. While Gulf Cooperation Council countries are just beginning to investigate the concept of e-health, for example, other nations have already developed full-blown e-health ecosystems. At every stage of development, it is essential to keep in mind the critical necessity of first assessing local conditions in order to design a customized solution for the envisaged e-health initiative. Copy and paste is not an option in these multidimensional undertakings. The five key areas to be investigated are: What is the current legislative support, if any, for an e-health program? Do existing laws and regulations cover the necessary privacy concerns, financial requirements, and ethical and professional standards? What legal constraints need to be addressed?

Booz & Company

 What technology infrastructure already exists and how will it have to be upgraded to meet the requirements of the envisaged e-health program? What services do we intend to offer, and what services will the public expect to receive from the e-health program? Who are the stakeholders in our planned e-health initiative, when do we start engaging them, and how do we secure their committed involvement in the e-health program once it is up and running? How will this program be financed, both initially and over the long

term? What type of payment system will be used and what are the possible investment options that need to be considered in order to sustain the e-health program? Once governments and other stakeholders begin to address these questions, it becomes evident that they are intimately entwined. Technology assets need to be in place before services can be offered, for example, and sustainable financing is not possible without appropriate regulatory practices. But local conditions, and the precise task at handwhether it is starting an e-health program from scratch, revising one already in place, reining

in costs, or selling a program to stakeholderswill determine which of the five elements need the full and immediate attention of policymakers and planners. The other elements will remain in the background, not forgotten but on hold, while attention is focused on the most pressing element or elements. The emphasis on different elements is illustrated in Exhibit 1. For example, countries with a welldeveloped legislative environment and technology infrastructure might focus on the elements of financing for long-term sustainability and selecting which services should be provided. A recent case in point is Singapore.

Exhibit 1 Countries at Various Stages in the E-Health Journey Will Have Different Priorities

e-MATURe COUNTRIeS

COUNTRIeS AT THe BeGINNING OF THe e-JOURNey

Governance 5 4 3 2 Services 1 0 Finance Services

Governance 5 4 3 2 1 0 Finance

Stakeholders

Technology

Stakeholders

Technology

Focus areas

Note: The five stages of an e-health ecosystem element are: 5 = very advanced; 4 = advanced; 3 = basic; 2 = some progress to date; 1 = significant progress needed; 0 = no progress. Source: Booz & Company

Booz & Company

This island states 5 million citizens enjoy one of worlds best healthcare systems, which is recognized by the World Health Organization as a leader in its field. It achieves excellent health outcomes with high cost-efficiency, spending only 3 to 4 percent of its GDP on healthcare while comparable countries spend upwards of 9 percent. Nevertheless, in 2005 Singapore recognized that it had a problem: Its health expenditures had begun rising at the rate of over 8 percent annually, which was faster than its GDP growth. To deal with this, the governments 10-year master plan in 2005 included the goal of accelerating its healthcare transformation by establishing a National Electronic Health Record (NEHR) in order to achieve higher quality of care and reduced costs. Singapore already had in place a sophisticated legislative regime with well-defined guidelines for ensuring efficient rollout and implementation of e-health initiatives. It also

had a state-of-the-art technology infrastructure and acceptable roster of health services. Clearly, these elements of the framework did not need immediate attention. Instead, the task at hand was to proceed directly to developing a financial model that would give a clear picture of the potential benefits and costs of the NEHR program. Once preliminary costs and benefits were quantified, it was necessary to engage stakeholderssenior officials from Singapores Ministry of Health Holdings (MOHH), as well as CEOs of public and private hospitals, clinics, and long-term care facilitiesto obtain their input on a proposed financial model. For instance, because it would be expensive for general practitioners to acquire the technology necessary for a NEHR, the MOHH realized it would need an incentive plan to help these physicians defray costs. With the information collected from stakeholders, it was possible to develop a cost-benefit model

to quantify the NEHR programs projected benefits. From this model, a 10-year investment strategy was developed in order to successfully implement, operate, and sustain the NEHR. This strategy allowed the MOHH to secure the necessary longterm funding for the NEHR program. Implementation of that program is now well under way and on track to be fully operational by 2015. Singapores methodical, thorough approach to launching this e-health venture is a prime example of how to do it right. Other countries are beginning their e-health journeys from a different starting point and thus face different challenges, requiring different approaches. In Italys Lombardy region, for instance, the 9.5 million residents have access to 200,000 healthcare operators, including pharmacies, general practitioners, hospital departments, and community clinics. Like Singapore, Lombardys healthcare system faced the challenge of rising costs. But it also had

10

Booz & Company

another pressing problem: Citizen dissatisfaction with long wait times for procedures because of inefficient, paper-based administrative processes. In 1999, Lombardys regional government decided to investigate the benefits of setting up an e-health services management system. Because the region had an established company in place to plan and manage regional governance, as well as create technology infrastructure for information exchanges and access to government services, these two areas were not top priorities. Financing, services, and stakeholders were the initial elements of focus of the e-health program. Financing required immediate attention. Lombardy developed a state-of-the-art cost-benefit model to quantify the impacts and assess the viability of PPPs. This approach involved getting private partners to provide the initial investment in an e-health services company owned and operated by the regional government.

The region would obtain annual fees from citizens for identification cards and buy back the private partners stake in the company at a nominal value after seven years. Next, it was necessary to decide what services were to be provided by the regional e-health system. It was determined that Lombardys e-health program would require electronic health records (EHRs) to provide a unified vision of patients medical history across the 200,000 healthcare players. Other services to be provided included electronic medical IDs, online appointment booking and selection of general practitioners by consumers, e-prescriptions by providers, digitization of administrative functions for provider administrators, and disease management programs for the regions public health officials. The government used a variety of measures, accounting for one-third of the overall budget, to market the e-health program to its proposed

stakeholders, including citizens and healthcare operators. Citizens were reached through doctors offices, pharmacies, and the Internet. Operators were given incentives to join, and offered training and support. Lombardys e-health program was launched in phases starting in December 2001. It is now fully operational and has resulted in an estimated annual savings of 1 billion thanks to streamlined procedures, less bureaucracy, and reduced fraud. The PPP financing approach has enjoyed tremendous success, resulting in a 10-year relationship between the regional government, private service providers, and an IT vendor. Furthermore, 9.5 million patients now have smart card IDs, and over 90 percent of general practitioners, pharmacies, public hospitals, and clinics have joined the integrated network. The program is considered an example of best practices in the e-health sector.

Lombardys e-health program required electronic health records to provide a unified vision of patients medical history.

Booz & Company

11

CONCLUSION

In this digital age, e-health initiatives that hold out the promise of quality care at reasonable costs are becoming increasingly attractive to governments and health-sector policymakers. But launching such initiatives is a multidimensional endeavor that requires careful examination of a broad panorama of inputs that goes far beyond the creation of an electronic platform for delivering healthcare services.

Additionally, creating sustainable e-health programs requires a recognition that a one-size-fitsall approach will not work. Customization is key. It is not an easy undertaking but the benefits of an intelligent e-health program, implemented with a longterm strategy in mind, will justify the effort.

12

Booz & Company

Resources
Daniel Castro, Explaining International IT Application Leadership: Health IT, The Information Technology and Innovation Foundation, September 2009 European Commission Information Society and Media, Interoperable eHealth Is Worth It: Securing Benefits from Electronic Health Records and ePrescribing, Study Report 2010 (http://ec.europa.eu/information_society/activities/health/docs/ publications/201002ehrimpact_study-final.pdf) Infocomm Development Authority of Singapore, Realising the iN2015 VisionSingapore: An Intelligent Nation, a Global City, Powered by Infocomm, 2010 (http://www.ida.gov.sg/images/ content/About%20us/About_Us_level1/_iN2015/pdf/realisingthevisionin2015.pdf) United Nations ESCAP , e-Health in Asia and the Pacific: Challenges and Opportunities, 2007 (http://www.unescap.org/esid/ hds/lastestadd/eHealthReport.pdf)

About the Authors Ramez Shehadi is a partner with Booz & Company in Beirut. He leads the information technology practice in the Middle East. He specializes in e-government, e-business, and IT-enabled transformation, helping corporations and government organizations maximize leverage of IT, achieve operational efficiencies, and improve governance of IT services. Jad Bitar is a principal with Booz & Company in Beirut. He focuses on healthcare providers and public health organization, specializing in strategic planning, transformation, operational excellence, and e-business. Dr. Walid Tohme is a principal with Booz & Company in Beirut. He specializes in helping healthcare organizations in the management and strategic use of technology to enable transformation via IT as well as e-health strategies, organizational restructuring, outsourcing solutions, and operational improvements. Sindhu Kutty is an associate with Booz & Company in Dubai. She focuses on the strategic use of technology and technology-enabled transformations for healthcare providers and regulators.

Booz & Company

13

The most recent list of our offices and affiliates, with addresses and telephone numbers, can be found on our website, booz.com.

Worldwide Offices Asia Beijing Delhi Hong Kong Mumbai Seoul Shanghai Taipei Tokyo Australia, New Zealand & Southeast Asia Auckland Bangkok Middle east Abu Dhabi Beirut Cairo Doha Dubai Riyadh North America Atlanta Boston Chicago Cleveland Dallas DC

Brisbane Canberra Jakarta Kuala Lumpur Melbourne Sydney europe Amsterdam Berlin Copenhagen Dublin Dsseldorf Frankfurt

Helsinki Istanbul London Madrid Milan Moscow Munich Paris Rome Stockholm Stuttgart Vienna Warsaw Zurich

Detroit Florham Park Houston Los Angeles Mexico City New York City Parsippany San Francisco South America Buenos Aires Rio de Janeiro Santiago So Paulo

Booz & Company is a leading global management consulting firm, helping the worlds top businesses, governments, and organizations. Our founder, Edwin Booz, defined the profession when he established the first management consulting firm in 1914. Today, with more than 3,300 people in 60 offices around the world, we bring foresight and knowledge, deep functional expertise, and a practical approach to building capabilities and delivering real impact. We work closely with our clients to create and deliver essential advantage. The independent White Space report ranked Booz & Company #1 among consulting firms for the best thought leadership in 2011. For our management magazine strategy+business, visit strategy-business.com. Visit booz.com and booz.com/me to learn more about Booz & Company.

2011 Booz & Company Inc.