INTRODUCTION: THE NEW LANDSCAPE OF HEALTH

"Revolution" is an overused word but, when applied to the effect of the Internet on the nation’s businesses, it is entirely accurate. E-commerce – the use of Internet technologies to integrate all aspects of business-to-business and business-to-consumer activities, processes and communications – has transformed banking and financial services, retailing, publishing, manufacturing and entertainment. Both the available evidence and the logic of the industry indicate that healthcare, inevitably, will be next. E-health – the application of e-commerce to healthcare and pharmaceuticals – is coming.

E-health opens up entirely new paths of communication and transactions in healthcare and fosters radically new business patterns and organizational configurations. It also requires new procedures, performance monitoring, change control, approvals and content management capabilities, with close coordination between content, presentation, and related business or clinical processes. Therefore, it cannot simply be "assigned" to marketing or planning or a clinical group; it is fundamentally an initiative of the whole organization and must be guided by the organization’s top executive group – with a substantial leavening of creativity and, where necessary, specialized outside assistance.

While the prospect of an oncoming wave of radical change is daunting, there is a lot of good news. E-health offers clear potential benefits:

• Enabling patients/members and staff to do more with less support
• Streamlining managed care contract administration, EDI and claims processing
• Building relationships and brand equity with patients, physicians and affiliated providers
• Improving access to vital patient information at the point of care to reduce cost and improve care delivery
• Transforming the organization, building market image and position, improving employee productivity and morale
• Facilitating pharmaceutical research, clinical trials and regulatory submission, promoting direct contact with consumers

As the wave of Internet technology sweeps towards healthcare, the challenge to executives in these industries is clear. They can understand the potential of the Internet in the health industries and can control and direct its power to the benefit of their customers, health plan members and patients. Or they can allow the new technology to roll uncontrolled through and around their organizations. If they choose the latter, they will effectively hand over their markets to faster-moving, better-focused competitors -- some of whom do not even exist yet.

STRATEGIC POSSIBILITIES IN E-HEALTH

By collapsing the traditional gap between business strategy and information strategy, e-commerce opens up strategic options in health industries that are limited only by imagination and the ability to execute. Some examples, current and potential:

• On-line "communities" linked to a provider or health plan website, and open to a broad range of marketing messages. The difference in cost between reaching 100 people on the Internet and reaching 100,000? Near zero.
• Patient self-management programs that allow patients to assume more responsibility for and control over their own care. The provider website provides patient education, monitoring, clinician intervention and e-mail. The benefit: more efficient use of provider resources, improved patient relations.
• Radically re-engineered delivery networks built around end-to-end information flow rather than disjointed processes patched together by computer systems.
• Web-based telemedicine/finance enterprises (actually, "virtual aggregators" of other businesses) that offer primary care groups "one-stop desktop shopping" for specialist services, pharmacies, claims status inquiries, referrals, and clinical information. Such enterprises could also offer physicians specialized financial and investment advice, malpractice insurance and similar services.
• "Virtual" HMOs that provide individual enrollments and coverage to employees insured through employer healthcare "voucher" systems. Such enterprises would function in a manner similar to on-line banks and brokerages.

Each of these applications of the Internet is technically feasible. Some are in existence today. Healtheon/WebMD, for example, has created a robust healthcare portal and business-to-business "pipeline" offering a wide array of transactions and consumer services. Each represents an opportunity – and a potential competitive threat to second movers, who risk being trumped by nimbler adversaries. The E-business community has coined a rule for such a competitive crossroads: aggregate or be aggregated.

DEVELOPING AN E-HEALTH STRATEGY

Among all these opportunities, how does an organization craft an e-health strategy? There are several considerations that will influence the choices. First, the healthcare industry is extraordinarily complex and turbulent, with rapidly changing business models. Second, the healthcare industry is starting from far back: compared to other major industries such as banking, healthcare has made relatively little investment and has gained relatively little experience with the use of advanced information technology as a basic business tool. Third, the ability of the industry to achieve large-scale efficiencies is restrained by legal and regulatory barriers and a deeply conservative medical culture. Fourth, most healthcare services must be delivered in person.

It is beyond the scope of this paper to detail the process of creating an e-health strategy – i.e. of deciding where on the spectrum an organization should be and how it will get there. However, experience in other industries suggests certain precepts:

• Step outside the box. Try to look at the business as though everything could be recreated at will. Obviously it cannot – but looking at it this way will offer a glimpse at potential goals. BUT…
  
  
• Be realistic. The organization should not overreach its cultural and management limitations. Even if it outsources large portions of a modest e-health program, the organization should not underestimate the time, cost and – above all – the extent of change required. E-health for a large organization can take 2-4 years to develop and cost $5 million - $10 million annually to operate. Moreover, for the near future, healthcare organizations will have to juggle paper, electronic data interchange (EDI) and Internet technology simultaneously while complying with HIPAA.
  
  
• Lead from strengths. The organization should first seek to increase customer value and business performance. Organizations that have historically been weak marketers, for example, will not magically be made strong ones by the Internet.
  
  
• Don’t look for breakthroughs at first. The organization should begin by mastering simple functions – e.g., keeping fresh, accurate material on its website or gaining solid process improvements from an Intranet.
  
  
• Don’t try to "Web" everything. There is a risk of becoming "a mile wide and six inches deep." E-commerce is easier to get into than to maintain and support. The prudent organization will concentrate on doing a few things very well rather a lot of things marginally.
  
  
• Focus on core business objectives. These include enhanced public visibility and trust, reduced operating costs, expanded markets (or new markets), delivering exceptional value and supporting stakeholders through dedicated linkages.
  
  
• Put top operating executives in control. E-health puts the organization directly in front of its customers. Senior operational executives should be accountable for the results and should control the programs.
  
  
• Use outside expertise. The possibilities and technology of e-health are so new that industry understanding is still shallow. Good outside help is essential not optional. If the organization does not have a strong, up-to-the-minute IT department, it should consider outsourcing Website operations, e-health business strategy and "back end" functions while retaining its core clinical and business capabilities.
  
  
• Pay close attention to security. One compromised patient record is a lawsuit. A thousand compromised patient records are a calamity. The Internet not only increases security risk, it brings risk from new directions. (Federal government sites, for example, have recently had to be shut down when hackers posted fake graphics on them.) Firewalls, encryption and similar technologies are only effective if they are fully implemented and constantly updated.
  
  
• Look for internal payoffs. Not every organization will wish to go directly to the "value innovation" end of the spectrum. Substantial benefits can be gained by using Intranets to strengthen routine operations. For example, Kaiser Health Plan in Oakland, California, uses a sophisticated Intranet application to distribute human resources information and forms to its HR supervisors, saving time, confusion and money.
  
  
• Create and strengthen relationships, don’t just run transactions. For example, an integrated delivery system can provide an online physician portal for an its affiliated doctors, providing them laboratory results, surgical suite scheduling and shared patient financial data.
  
  
• Use the e-health initiative to re-examine the entire business. E-commerce planning prompts a business to see itself from a different point of view. Suddenly, factors that may not have been previously given much thought -- accessibility, transparency, fitness for time-based competition, core process throughput, untapped markets – become visible. The result can be a revamping of strategy quite apart from e-commerce initiatives.
  
  
• Don’t become fixated on the technology. Looking at e-health from the point of view of technology is like looking through the wrong end of a telescope. Decide on goals first; then evaluate technical feasibility.

SUMMARY

Internet technology has made possible a simultaneous conversation of almost everyone with almost everyone else. Enterprises and markets that have been locked in a straitjacket of rigid, intimidating technology are being transformed and business ventures unimaginable a decade ago are flourishing. Healthcare is sure to follow – indeed, the first ambitious e-health pioneers are already operational and are working aggressively to seize first mover advantage. And, while it is too soon to discern any but the most general shapes that e-health will take, it is clear that the changes will be momentous.

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