Professor Jacques Marescaux and his team of surgeons in New York created history when they performed a laparoscopic gall bladder removal. Routine in every way except for one fact – the patient was 7,000 kilometres away in France. Operation Lindbergh, as this feat came to be known was the world’s first transatlantic tele-surgery, and represented a technological leap for mobile networks and a paradigm shift for medicine. With patient location no longer hindering access to healthcare this opened up a wide gamut of opportunities to change how healthcare gets delivered today.
Tele-surgery fits under the broad gamut of what is called mHealth today. mHealth is a platform which leverages information and communication technology to deliver a range of healthcare services to end users (patients, physicians, healthcare administrators). mHealth at the basic level leverages technology platforms to provide information and learning to the patient. As you integrate technology deeper into the care segment, mHealth could provide a platform of communication between healthcare provider and patient, support decision making through an analytics platform and support remote diagnostics and even treatment as we saw in Operation Lindbergh. With potential applications which could enhance the value proposition for all players in the ecosystem i.e. from improving productivity in hospitals, creating opportunities for pharma companies to differentiate and adding functionality to medical technology offerings, mHealth could be a potential game changer.
By 2020, even by the most conservative estimates, we believe the Indian mHealth market will be worth over a billion dollars (see EXHIBIT 1). The next decade will witness the development of ideal conditions for this massive rollout of mHealth. Smart phone and Internet penetration will expand rapidly (Internet penetration will increase from the current level of 13 per cent to over 50 per cent), and so will consumer and institutional spending on healthcare. Additionally, mHealth addresses several fundamental supply side constraints placed on healthcare access and quality faced by the traditional delivery model.
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As we know, with a doctor to population ratio of less than 1:1500 healthcare delivery is severely resource constrained across both urban and rural segments. The current delivery model is also burdened by transaction costs i.e. travel time, significant waiting time which impacts both the cost of access to healthcare but also the opportunity cost of the visit. e.g. a full day and the income for that day could be lost in travel to and from the nearest doctor and waiting time. Add to that the complexity that the doctor might not be available and you can see that for even minor ailments, transaction costs (transportation costs, time spent) could be as high as multiples of the consultation fees.
mHealth tackles these resource constraints by boosting the productivity of healthcare personnel, and by, giving patients direct access to healthcare information (see EXHIBIT 2).
mHealth’s role in shifting this supply curve comes from three areas i.e. improved access, enhanced productivity and better healthcare outcomes through increased engagement of the patient.
Access improves as mHealth disaggregates elements of the healthcare supply chain, allowing healthcare personnel to extend their reach beyond the physical catchment area of their facilities. Services such as virtual doctor (patients diagnosed by doctors over video conferencing facilities) and eICU (remote monitoring of ICUs in resource constrained hospitals) demonstrate these advantages. This implies greater capacity utilisation translating to lower costs, lower transaction costs for the patient greatly improving the supply curve.
Enhanced productivity through mHealth could be achieved by leveraging decision support systems to help doctors diagnose and treat better. At present, despite a growing body of clinical trial data and patient records, medical science remains as much an art as a science. Existing applications such as Clinical Decision Support (CDS) distils the contents of medical databases and patient records to present relevant information to physicians at the point of care and have tremendous value in enhancing the efficiency of providers.
Finally, by empowering patients, mHealth reduces demand on the traditional healthcare setup through applications such as self-monitoring, particularly for conditions requiring chronic care. By engaging the patient in the management of the disease mHealth strives to achieve greater compliance and therefore greater outcomes and efficiency in the care process.
Radical change across the ecosystem
The emergence of mHealth will alter market dynamics in the healthcare space. Participants should invest the time in thinking through how mHelath could add value to their business model. Using mHealth to better the value proposition of improved access, enhanced productivity and better outcomes could convert this into a significant opportunity.
Pharmaceutical companies in India compete in a highly crowded market dominated by generics. and relatively undifferentiated space. By offering disease specific value added services along with their basic drug products, pharmaceutical companies can alter the choice spectrum for prescribers. This will help providers deliver better services and drive enhanced outcomes for their patients. For the companies, this is an opportunity to build differentiation and get closer to the end-customer. Several categories of services such as diet and lifestyle advice for patients of chronic diseases, information portals and reminder services (ex: ovulation reminders) offered through mobile applications and call centres hold the potential to improve patient outcomes. While these services could be offered as free add-ons, Indian customers have even shown a willingness to pay. For example, a study conducted by the Institute of Reproductive Health in Delhi and Lucknow revealed that women were willing to spend Rs 25 and 50 per month for ovulation reminder SMS’s.
Medical technology companies will experience a shift in market dynamics due to mHealth. Software platforms added to devices such as Clinical Decision Support can significantly enhance a doctor’s productivity. These applications add significant functionality to various devices and medical technology run the risk that value could shift away from their products and towards these services. This situation has parallels with the evolution of the computer industry, where market power shifted from the hardware makers to software companies as customers gained familiarity with the interface abstracting themselves away from the hardware. On the bright side, there is much to be gained if medical technology players extend their offerings into the mHealth space. Besides the cross selling synergies of bundling products and services, companies can build significant switching costs for doctors and hospitals by training personnel on their integrated mHealth systems.
Hospitals have been a space with high capital expenditure and long gestation periods. mHealth offers attractive alternatives for new entrants. It allows for the centralization of physical infrastructure with scale benefits on capital expenditure and utilization of both equipment and personnel. As a result, new entrants could leverage better capital efficiency and productivity to expand faster than traditional chains. Traditional chains might face competition not just in their catchment area, but from players who are in other cities. The onus then lies on established players to bolster their mHealth capabilities as a flanking defense to ward off these potential competitors. Utilising their established network, these hospitals could use a hub and spoke model to expand their network using mHealth as a platform. This also has the added benefit of expanding the primary care network for the hospital.
Time to take action
Healthcare systems around the world are in dire need for structural reform, and mHealth has the potential to deliver. India in particular, with strong demand drivers and fundamental supply constraints is primed to leverage this opportunity. Additionally, the nascent nature of the healthcare ecosystem is the ideal market to test new mHealth models.
To tap into this opportunity, companies should ask themselves which of their segments are currently underserved in their business and how a disruptive offering leveraging technology could change the game. A caution, underserved need not be low income segments e.g. non compliant diabetic and hypertensive patients are as equally underserved today as rural farmers.
Further, to incumbents mHealth could substantially disrupt the current business model. Its important players closely examine their core value proposition and the barriers to entry in their business. Asking ask how mHealth could change these dynamics should help companies turn this trend to their advantage.
mHealth today is a small part of the healthcare landscape, but its future is bright. It remains to be seen in the next few years which companies recognise the tremendous potential technology and connectivity has to offer in the healthcare delivery space. Acting on this agenda not only makes business sense, but also moves the needle significantly in improving and scaling up our nation’s healthcare infrastructure.
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