December 8, 1999
"What's B2B eDM?" you ask. It stands
for business-to-business Internet disease management.
The Internet is receiving great
attention for its potential to improve disease management processes.
However, almost all the attention has been paid to
business-to-consumer (B2C) applications, rather than
business-to-business (B2B) applications.
This parallels the attention that all
B2C Internet companies have received over the past several years.
The explosive potential of the B2B Internet market is just emerging!
This article highlights some of the
strategic opportunities relating to B2B eDM. In particular we offer
a unique angle for existing disease management outsourcing
companies, which are being challenged to reinvent themselves as
Internet health companies.
BACKGROUND (NOT SPECIFIC TO HEALTH CARE)
Here are a few highlights about the
overall B2B Internet market:
The B2B market is forecast to be
more than 12 TIMES LARGER than the more well-known
business-to-consumer market (Forrester Research).
The first wave of Internet
companies has been consumer-based, but it seems clear that the
next wave will be business based (Bear Stearns).
Why now? Goldman Sachs lists Five
B2B Catalysts: 1)Increasing experience with web technologies, 2)
Consolidation of industry standards, 3) Simplification of
application technologies 4) Increasing stickiness in B2B
solutions, 5) Cost savings and new revenue opportunities.
And...as you might expect these days,
there's a web site specifically dedicated to B2B issues. You can
find EXTENSIVE analyses of B2B topics at
Net Market Makers
(if you only have time for one, take a look at the presentation by
Morgan Stanley Dean Witter).
B2C eDM --
SIGNIFICANT, INCREMENTAL BENEFITS
B2C Internet disease management
opportunities revolve around getting information to and from
patients using the Internet (often referred to as FRONT END
applications). B2C disease management applications include web sites
at which patients can receive information and/or participate in
managing their chronic conditions, devices using Internet
technologies to assist patients in monitoring and relaying clinical
information, direct-to-consumer advertising by pharmaceutical
companies, and the like.
While B2C eDM applications are exciting and significant, most
improvements here will be INCREMENTAL.
In B2C eDM applications, the Internet
is competing with other existing approaches and technologies to
become a point of contact with the patient. For example, DM
companies are already using combinations of face-to-face contact
with nurses, case managers and others. They also use telephone, fax,
pagers, and customized information appliances.
Another limiting factor is that
Internet adoption is inversely correlated with age. The patients who
could benefit most from Internet technologies are the ones least
likely to be comfortable with them (for now).
For most patients, Internet
applications offer a way to make EXISTING contacts with patients
better or cheaper. Bottom line: the Internet offers significant
INCREMENTAL benefits in the B2C arena.
(One exception here is companies
developing easy-to-use Internet information appliances that use the
Internet, e.g., HealthHero).
B2B eDM --
We believe B2B Internet applications
for disease management offer REVOLUTIONARY benefits to improve
quality, reduce costs, and advance patients' experiences of the
B2B Internet disease management
opportunities relate primarily to BACK END applications in the
health care delivery system:
1) CONNECTIVITY -- using the Internet
to connect the multitude of players in the health delivery system --
doctors, health plans, hospitals, DM companies, case managers,
medical call centers, etc. The primary goals here are to providing
accurate, real time information about patients and to automate work
flows among these players.
What's the revolutionary potential
here? B2B eDM has great potential both to take advantage of and to
drive NETWORK EFFECTS created when these players become connected in
a local health care delivery system through the Internet. The value
of a network increases EXPONENTIALLY based on the number of users in
To understand network effects,
consider the evolution of fax machine technology. When 5% of
business users had fax machines, there was no network effect. At
some point the market reaches a critical mass (around 30-50% of the
market). At that point, those without fax machines are pressured to
join the herd and adopt the technology, or be left behind.
This is a crucial difference between the potential of B2C eDM and
2) KNOWLEDGE -- connecting the
information gathered by various players to develop a more complete
profile of patients (data warehousing and data mining).
What's the revolutionary potential
here? It's the chance to find TOTALLY NEW PATTERNS for improving
patient care and/or reducing costs.
In short, CONNECTIVITY and KNOWLEDGE describe the B2B eDM
THE CHALLENGE AND
THE OPPORTUNITY FOR DISEASE MANAGEMENT COMPANIES -- BECOME AN eDM
COMPANY OR BECOME EXTINCT
Companies that are viewed by
investors and/or analysts as "health services" companies are at
danger of becoming extinct. While a few years ago the category of
health services was a hot area for venture capitalists and other
investors, today it is COLD.
Today, most DM companies look a lot
more like health services companies than anything else. The
Disease Management Purchasing
Consortium tracks over 160 companies that provide DM outsourcing
and related services. Most of these companies were formed as
specialists in particular diseases, e.g., asthma, diabetes, etc.
Many have migrated to caring for multiple diseases and some have
developed significant information systems capabilities.
Very few DM companies have embraced
the power of the Internet in their operating models. (For an
exception to this generalization, see our profile of
Health, a company that has made significant investments in
DM companies are being challenged to
reinvent themselves as Internet health companies. As they
contemplate the next generation of innovation, be aware there's a
major fork in the road: B2C or B2B.
We suggest that DM companies consider
taking the B2B fork in the road. B2B opportunities:
are huge and just starting to
offer revolutionary improvements
offer fertile, uncultivated
prospects (the B2C eDM space is already crowded and there is less
chance for first mover advantages).
We wish you safe travels, and please
call BHT if you need a roadmap to B2B opportunities.
TECHNOLOGY AND STANDARDS UPDATE
A "Telehealth Update"
report discusses the future of telehealth technology and standards.
It was issued by The Office of Advancement for Telehealth of The
Department of Health and Human Services.
The report cites several trends that
will influence the near future of the telehealth industry and
dictate the need for technical standards:
Next generation Internet
The digitization of information
The migration toward wireless
The globalization of services
One interesting paper referenced
within the Telehealth Update deserves its own listing. The "Report
Workshop on Home Care Technologies for the 21st Century".
WRIST WATCH CELL
PHONES AND OTHER COOL TECHNOLOGIES AROUND THE CORNER!
The November 29 issue of the "Rapidly Changing
Face of Computing" features short articles and photos from this
year's Comdex technology show held in Las Vegas. How might you apply
these innovations to provide better and less expensive care for
A QUICK UPDATE ON
HEALTH CARE APPLICATION SERVICE PROVIDERS (ASPs)
A previous edition of
News described the huge benefits of ASP applications for
physician offices. In early October, one health care ASP, the
Trizetto Group, went public.
The shares were issued at $9 and were trading around $27 on December
8. Not bad! Further insights about this company and the ASP market
can be found at
Wit Capital and
1.6% OF TIME ON DISEASE MANAGEMENT ACTIVITIES
That's the surprising findings of a
November 1999 study entitled "Pharmacy Activity
Cost and Productivity Study" by consultants Arthur Andersen.
The study describes how pharmacy
personnel spend their time on each of nine main pharmacy processes:
Present the Prescription 12.0%
Process the Prescription 24.3%
Prepare the Order 21.2%
Deliver / Dispense the Order 16.3%
Pharmacy Administration and Regulatory 5.3%
Manage Inventory 9.0%
Disease Management 1.6%
Other Health-Related Activities 0.1%
Miscellaneous Activities 10.2%
The results are surprising because
pharmacy personnel are shown to be spending only a small percentage
of time on DM. As a profession, pharmacists have embraced disease
management and have made efforts to become active participants.
Pharmacists articulate their perspective something like "We see
patients routinely and frequently. Patients trust their pharmacist.
We can answer their questions. We can inform patients not just about
their medicines, but also about other aspects related to their
chronic conditions." Any thoughts from our pharmacist readers in the
E-CareManagement News is an
e-newsletter that tracks a major change in health care and managed
care—the paradigm shift from “managing cost” to “managing care”.
This e-newsletter is brought to you by Better Health Technologies,
LLC (http://www.bhtinfo.com). BHT provides consulting and
business development services relating to disease management, demand
management, and patient health information technologies.
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Copyright © 1999, Better Health Technologies, LLC. All rights