Healthcare-at-Horne has been touted as the next big thing for decades. But with western healthcare budgets now straining to breaking point, is this a market niche whose time has finally come?
Taking healthcare home
Ever before the current global economic crisis hit, policy makers across the Western world were a facing Titanic situation with regard to health care expenditure. Between 2003 and 2004, Data monitor estimates that the health expenditure as a percentage of GDP in the US increased from 15.2 per cent to 17.5 per cent, with similar percentage increases in France, Germany, Italy, Spain and the UK. In short, healthcare spending was rising faster than GDP growth, presenting real challenges to the sustainability of current systems.
Now, with the twin icebergs of halting GDP and an aging population, a potential crisis is looming. The population over 65 in the US is expected to increase from approximately 37 million in 2006 to 40 million in 2010.Likewise, in the UK, Spain, Italy, Germany and France, the elderly population will increase by 2 million people.
According to market analysts Frost and Sullivan, half the hospital beds in Europe are already occupied by patients suffering from chronic illnesses, many of whom require continuous monitoring. Meanwhile, Data monitor estimates that type I and 2 diabetes patients in the US are expected to increase from 19 million in 2006 to almost 22 million in 2015.And the projected growth in chronic heart failure (CHF) is even more drastic. In the US alone, the number of CHF patients will nearly double over the next ten years, increasing from almost 12 million in 2006to over 21 million in 2015.
Faced with escalating costs and increasing demands to improve the quality of care, health care -at-home approaches such as remote healthcare monitoring and the broad range of technologies that come under the banner of 'telemedicine' or 'ehealth' seem obvious tools to close the gap between the supply of care givers and the demand for health services. The types of products already on the market include safety technologies designed to detect or prevent falls, as well as devices that monitor vital signs such as glucose and blood pressure levels and that transfer these readings to a healthcare provider.
Locating Tender Opportunities
However, suppliers needn't expect the market to burst with demand any time soon. The message from both Data monitor's and Frost and Sullivan's research is one that could be described as somewhere between cautious optimism and a watch -this-space attitude. The rare opportunities for companies in the software and healthcare space - either supplying to healthcare providers or teaming up with equipment vendors - and the need for such solutions is not going to go away anytime soon. But for the moment, adoption is patchy and you will have scout around for tender opportunities.
In the UK, for example, a framework agreement (a nationally agreed procurement 'vehicle') has been set up by the NHS procurement body (Purchasing and Supply Agency (PASA)) specifically for telecare services. (See www.pasa.nhs .uk/eat/telecare.stm)The majority of telecare services are currently purchased through this mechanism. The framework will be in place until May 2010. Third parties can work with one of the 13 suppliers on this framework, as sub-contractors, but the opportunity for doing this is limited to once per year (usually around January). No company on the framework will promote any third party product until it has been proven.
Significantly, one of largest current 'healthcare-at-Horne' projects is taking place on our doorstep. The European Centre for Connected Health in Belfast was launched by Northern Ireland's Ministers for Health and Enterprise in January 2008. The new centre, funded to the tune of £46 million over the next three years, aims to use telehealth technologies for improving the quality of life for people with chronic conditions. Its goal is to provide at least 5,000 people in Northern Ireland access to a remote monitoring service for conditions such as diabetes or respiratory disease by 2011.
Meanwhile, in an initiative that kicked off in April this year, three areas in England have launched e health programs. Kent, New ham and Cornwall aim to cover more than a million people between them and have installed telecare devices in around 7,000 homes to assess the impact of assistive technology both on people's lives and on the cost of providing care and support.
Most activity in England over the last two years has been through the provision of £80m in grants from the Department of Health. These grants come to an end this year (2008). Additional open tenders have been appearing occasionally, but it is unclear how often and how many tenders there will be in the next few years.
Advice From Those Already In The Market
Charles Lowe, currently Product Director at Telehealth Solutions, and who previously ran a telehealth project for the London Borough of New ham, believes that there are business opportunities in this growing field; there is lots of room for improvement in medication management, for example, and there are also opportunities for those who can create better software.
But it's not a market you can simply walk into. Lowe warns: "Things are tough because there is a lot of competition. You need to have a good UK base and increasingly you need to have a good UK track record." That puts the idea of partnerships and collaboration firmly on the table and Lowe is keen to point out that there is not, at least to his knowledge, a single organization that can deliver a full service.
"It's not for the faint hearted," agrees Valentia's Peter Nelson. Having guided Valentia through the development of very successful solutions in ambulance control, emergency care and dispatch and healthcare in the community, Nelson knows what is required to succeed: "Products can't be superficially sophisticated. There needs to be substance,''' he stresses.
As Nelson points out, healthcare is a highly specialised sector which can itself be split into - on his estimates - as many as fifty or sixty sub-groups. Accompany would be well-advised not to spread itself too thinly. Valentia has deep domain knowledge, says Nelson, and while he wouldn't want to say it's a prerequisite, it's certainly very important. The flip side of the complexity though, is that there are lots of opportunities in a plurality of niches. And these are niches, Nelson points out, in a very big market, since the demographic trends driving it are not going to disappear in a hurry.
Nelson puts particular emphasis on the point that any product designed for the telehealth market has to be rigorously tested and demonstrably robust. His parting advice is thus to pace yourself; "You'll not survive by rushing," he cautions.
Another Irish company making headway in this market is S3 (Silicon and Software Systems). S3 has the benefit of 22 years experience in business and a global customer base. Consequently, the company has a firm understanding of the challenges as well as the opportunities that the healthcare market brings. "It's about identifying global technology but applying it in a local way," says Jim O'Donoghue, VP Strategic Business Development.
O'Donoghue reflects that everyone in the business recognises the telehealth market has the potential to offer huge benefits to companies who are successful in it. But that doesn't mean that success will be easy. Change happens more slowly in this market due the range and different needs of the various stakeholders. "You have changing clinical practices, changing business processes and changing technology; getting those all lined up takes a lot of effort," he says.
Because of their need to be transparent and 'do the right thing,' public sector organisations can't move as fast as buyers in the private sector, so procurement processes do take longer; but like others in telehealth, O'Donoghu e has no problem with that; it's simply a reality of the market.
In this sort of environment, companies have to do a lot more listening. "What's technically possible isn't necessarily the best or right thing to do. You're mind has to be focused on the patient," observes O'Donoghue.
Another requirement, he says, is a strong understanding of the country, the culture and the organization where a telehealth system will be deployed. In the UK, for example, the unhelpful truth for businesses is that health authorities can vary far more than one might expect. "What they're looking for is access to a solution, but tailored and customised for delivery within their specific environment." So whatever the technology process, says O'Donoghue, you need to understand the user's perspective and get into their mindset if you are going to be successful.
Market Prospects
Ironically, worldwide, it seems telehealth technology is a victim of its own success. Specifically, lack of reimbursement to healthcare providers is cited as the single biggest challenge facing the market. For instance, Frost and Sullivan found that as remote patient monitoring significantly reduces the number of visit to the GP's office, it can result in general practitioners who are, focused on revenue generation, not prescribing such solutions.
Similarly, Data monitor concluded that a shift toward pay-for performance (P4P), paying providers based on the quality of care given to a patient rather than per visit or per procedure would be required to truly unleash demand.
The lead group lobbying in this area is the Continua Health Alliance, which was formed in June 2006 with eleven members and the aim of bringing interoperability and technical standards to the broad telehealth area. The alliance now has a membership of over 100 companies, notably including big industry names like GEHealth, Cisco, IBM, Roche, Nokia, Norvartis and Siemens. These companies clearly see a substantial long-term market. In the meantime, there will be niche opportunities for those who are prepared to look for them.
This report was compiled by Gavin Mcwhirter, David Abbott and Mary Sweetman. For further information about UK telehealth markets, talk to Gavin Mcwhirter in EI London.
