Mobile Health Atk

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Who Pays?

MOBILE HEALTH


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About A.T. Kearney

A.T. Kearney is a global management consulting

rm that uses strategic insight, tailored solutions

and a collaborative working style to help clientsachieve sustainable results. Since 1926, we have

been trusted advisors on CEO-agenda issues to

the worlds leading corporations across all major

industries. A.T. Kearneys oces are located in

major business centres in 36 countries.

For further information, please contact

Jonathan Anscombe

Partner, A.T. [email protected]

Aleix Bacardit

Manager, A.T. Kearney

[email protected]

www.atkearney.com

About the GSMA

The GSMA represents the interests o the world-

wide mobile communications industry. Spanning

219 countries, the GSMA unites nearly 800 o the

worlds mobile operators, as well as more than

200 companies in the broader mobile ecosystem,

including handset makers, sotware companies,

equipment providers, Internet companies, and

media and entertainment organizations. TheGSMA is ocused on innovating, incubating, and

creating new opportunities or its membership,

all with the end goal o driving the growth o the

mobile communications industry.

For further information, please contact

Jeanine Vos

Executive Director o Mobile Health, GSMA

[email protected]

www.gsma.com


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Contents

Introduction ..............................................................................................................................................................................1

Executive summary ................................................................................................................................................................1

1. The challenges o healthcare .......................................................................................................................................3

2. The mobile health promise .........................................................................................................................................6

3. Who pays or what? ...................................................................................................................................................... 10

4. Getting reimbursement or mobile health solutions ..................................................................................... 15

5. Who else buys mobile health solutions? ............................................................................................................. 21

6. Building a scale mobile health business .............................................................................................................. 25

7. Inuencing the policy environment ...................................................................................................................... 33

8. Conclusions ..................................................................................................................................................................... 34


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MOBILE HEALTH, WHO PAYS? | page 1

Mobile health is big news in the telecoms industry. Although there is little consensus on the size, or even

scope, o the global market or mobile health, several sources predict a market in the United States on the

order o $4.5 billion within the next two to three years, and this has been extrapolated to a global market in

excess o $30 billion. Other estimates are even higher1. However, while mobile health has huge potential to

both improve healthcare delivery and provide revenue or service providers, achieving broad uptake and

monetizing this potential has proved dicult to achieve.

This report, commissioned by the GSMA and delivered by global management consultancy A.T. Kearney,

seeks to shed light on this critical issue and to dene the steps that operators need to take to build a sustain-

able mobile health business. The report has been developed through a comprehensive search o available

literature and interviews with a range o operators rom Europe, the United States and Asia.

The report starts by describing the challenges aced by both established healthcare systems and lesswell-developed countries, and how mobile health can help address them. It describes the practical dicul-

ties o gaining reimbursement or mobile health solutions and discusses alternative customers and value

propositions. The paper discusses potential roles or mobile operators and commercial models, and outlines

key success actors or building a scale mobile health business. Finally, the paper summarises the trends the

industry should be seeking to encourage to inuence the creation o a avourable environment or mobile

health solutions.

Delivering afordable healthcare is one o the most intractable challenges aced by any government.

In countries with well-developed health systems, the challenge is to meet the rising expectations o citizens

while controlling costs to a manageable level. In the developing world, the challenge is to build a health

inrastructure that is able to deliver an acceptable quality o healthcare to the mass population.

Mobile health has enormous potential to lower the cost o health interactions all along the patient pathway,

especially or chronic conditions. Mobile health applications that are able to address conditions such as diabetes,

respiratory, and cardiac disease, and the risk actors that cause them, are likely to be most popular. Open systemplatorms that can connect multiple remote monitoring devices to address the needs o patients with multiple

conditions will be especially valuable. However, healthcare is an extremely conservative industry, and the pace

o uptake o new technologies is very slow when compared to the mobile industry.

The vast majority o global health spend is incurred in the established health systems o the developed

world and is reimbursed by healthcare payers, either governments or insurers. I mobile health is to reach its

ull potential it will have to move into this environment, as it is unlikely that consumers in established markets

will be major buyers beyond low-cost mobile health services. Reimbursement systems are very complicated

and not always compatible with mobile health solutions, and operators will need to understand in detail how

reimbursement systems work in each country and to identiy the most appropriate customers and value propo-

sitions. At least in the medium term, the greatest opportunities are likely to be in selling to healthcare providers

Introduction

Executive summary

1 Parks Research, CSMG, McKinsey.


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page 2 | MOBILE HEALTH, WHO PAYS?

rather than payers directly. Social care is another substantial market, and in this case customers include both

government agencies and carers.

Outside o the major established health systems, the situation varies widely rom the poorest countries

with only rudimentary health inrastructures to rapidly developing markets which do not yet have mature

health systems.

For the poorest countries, the challenge is to provide the general population with access to basic health

services. Customers o mobile health services are oten non-governmental organisations (NGOs). While reve-

nues are likely to be small in the short term, in the long term mobile health is more likely to emerge as a main-

stream consumer health proposition.

For wealthier countries seeking to build a modern health system, the opportunity is to position mobile

health as an alternative to investment in more conventional health inrastructure. In these developing systems

there is higher reliance on sel-pay, and the proessionally recommended consumer segment may emerge as

an important market.

To gain signicant revenues, operators will need to move beyond connectivity to providing value-addedservices which might range rom traditional telecom services o security and data management right through

to clinical services. Solutions will need to be scalable, addressing multiple applications across global markets,

though these solutions will need to be developed step-by-step as the value o each application is proved.

Operators will need to understand and manage the regulatory and clinical risks inherent in providing these

services. Partnering will be absolutely essential to success, and this is likely to take the orm o strategic partner-

ships at a global level with companies like medical device manuacturers, and local relationships with insurers,

healthcare companies and pharmacies or clinical services and distribution.

To communicate the benets o mobile health, operators should show how solutions can address pressing

health needs. Benets need to be expressed in currencies that will resonate with healthcare payers and health

providers. Robust proo o ecacy consistent with medical standards will be required.

There are several paths that operators can ollow to build a substantial healthcare business. Successul

mobile health businesses will require a dedicated organisation with global product development and local

commercial exploitation. New capabilities will be required to understand how diseases are treated and how

each specic healthcare system works. New channels and distribution models will be required, and uptake o

new technologies will not happen without substantial investment in active marketing and sales, and in local

proo o ecacy.

To achieve real growth in this market, it is important that mobile and healthcare industries work toward

interoperable solutions that enable global scale. Healthcare systems are wary o proprietary platorms and

expect technology solutions to have a long lie, and the emergence o an open platorm will acceleratewidespread adoption.

There is also a role or policy makers to stimulate innovation and uptake in this area through adoption

o international healthcare coding standards and common approaches to management o clinical data

Reimbursement regimes are currently not designed with mobile health solutions in mind, and should be

adapted to encourage remote interactions between patients and carers.

Overall, mobile health is an emerging technology and the next ew years are likely to be dominated

by experiments and pilots. Over time specic applications will become established into mainstream health-

care delivery. In the longer term, it is likely that a number o signicant players will emerge to provide mobile

health platorms, and these companies will need to make long-term commitments to this market. However,

the eventual prize could be substantial or the winners.


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Delivering afordable healthcare is one o the most

intractable challenges aced by any government.

Worldwide, total healthcare spending exceeds

$4.2 trillion, consuming an average o 10% o GDP

in OECD countries and increasing at an average o

5% every year. However, this spend is highly skewed.

The top 20 healthcare consuming countries contain

16% o population, yet spend nearly 90% o every

one o those $4.2 trillion. The US alone, with 5% o

the population, spends over 45%. The have-nots, onthe other hand the remaining 84% o the people

on the planet share 11% o health spending, but

sufer rom nearly 95% o the diseases while devoting

around 5% o GDP to health.

This wide disparity in spend means that chal-

lenges aced by health systems are somewhat

diferent in the developing and developed world.

developed world cHallenges

In countries with well-established health systems,

the overwhelming challenge is to meet the rising

expectations o citizens while controlling costs to a

manageable level. This situation is made more chal-

lenging by chronic conditions such as diabetes and

heart disease, which are increasing in prevalence due

to an aging population, changes in behaviour, eating

habits and liestyle (fgure 1).

Aging populations pose some specic chal-

lenges to health systems. While an older population

does not increase medical expenditure directly2, it

does inuence the ratio o people who are paying

into the system against those who are consuminghealthcare, so limits afordability o the overall system.

It also inuences the type o health challenges. While

medical science has been extremely efective at

prolonging lie, it has been ar less efective in main-

taining mental health into old age. A recent report

in the UK concluded that the true costs o dementia

total over 23 billion3, equivalent to nearly a quarter

o the costs o the health system. The rise in the

number o old, rail and conused individuals, and the

ailure o past generations to build a su cient nan-

cial cushion to look ater them, is a problem whose

dimensions are only now becoming evident.

1. The challenges o healthcare

Sources: Health Policy Reform (2005), OECD Health Data, A.T. Kearney analysis

Developed Countries

HEALTHCARE

SYSTEMS

Expectations demography

Rising expectations That advanced treatments will be available to all

Rising costs Increasing usage Technical innovation

Barriers to reform Citizen objection to rationalisation Entrenched interests

Access and choice Consumer expectations Need to reduce waiting lists

Professional power Protection of interests Skills shortage & recruitment

Rising costs Historical low levels

Dierential access Private care for wealthy Limited public provision

Barriers to reform Urban elites protect interests Logistics of rural areas

Unaordable drugs World market prices

Professional power Low wages Poaching by high income countries

Objectives

Equity/SolidarityCost/Eciency

Quality/Patient SafetyCitizen Satisfaction

Change in scope

Epidemiological transitionfrom communicable diseases

to diseases of lifestyleand age and mental health

Developing CountriesCommunicable disease

Maternal and child mortality

Figure 1: Challenges o healthcare systems in the developed and developing world

2 Longevity and Health Care Expenditures: The Real Reasons Older People Spend More, Zhou Yang et al. , Journal of Gerontology: SOCIAL SCIENCES 2003, Vol. 58B, No. 1, S2S10


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Across the developed world there are also still huge

issues o inequality o access to healthcare, as it is the

least well educated and poor who are least able to

aford healthcare and least engaged with the system

who most need it. This is causing a widening gap

in lie expectancy between rich and poor.

Much o the increase in health expenditure

has come rom changes in medical practice and

increases in benets and technology4,5. It seems

strange that in virtually every other industry, tech-

nology has reduced costs, yet in health it has had

the opposite efect. However, traditional laws o

supply and demand dont work in healthcare. Most

healthcare is paid through some orm o insurance,and the poor are cross-subsidised by the wealthy, so

consumers have little incentive to limit consumption.

New technologies are usually more expensive than

old ones are and oten add to existing treatments.

As a result, most health payers put in place

mechanisms to control consumption. Mobile health

will need to ensure that it is seen as a cost-efective

approach which is worthy o unding in preerence

or in addition to more traditional health services,

rather than yet another technology or beleaguered

health payers to try to aford.

cHallenges of less well-establisHed markets

Outside o the established healthcare systems o the

developed world, circumstances vary widely. However,

a common theme is enormous disparities o health

provision, and a ar greater role o consumer payment.

In the poorest countries, the challenge is to

build health inrastructure that is able to deliver an

acceptable quality o healthcare to the mass popu-

lation whilst meeting the growing aspirations o the

emerging middle class. While the rich generally have

access to world-class healthcare through sel-pay or

private insurance, the poor have little or no access

to services that would be considered a basic human

right in most developed countries. Against the OECDaverage o 10% o GDP, the bottom third spending

countries invest an average o 5.6% GDP in health

and sufer rom poor inrastructures, poorly inormed

populations and lack o health proessionals, made

worse by poaching by richer countries (fgure 2).

For countries with large rural poor populations,

mobile phones have an important role to play in

providing access to basic healthcare, including inor-

mation about avoidance and treatment o contagious

diseases. Examples here include remote dermatology

diagnosis, avoidance o inant mortality, reminders

1

Figure 2: Comparison health spending and resources selected countries (WHO, Espicom)

3 Dementia 2010. The economic burden of dementia and associated research funding in the United Kingdom; Health Economics Research Centre, University of Oxford for the Alzheimers Research Trust;Ramon Luengo-Fernandez, Jose Leal, Alastair Gray

4 Why Have Health Expenditures as a Share of GDP Risen So Much? Charles I. Jon es, Department of Economics, U.C. Berkeley and NBER; 20045 Whos Going Broke? Comparing Healthcare Costs in 10 OECD Countries, Christian Hagist, Laurence J. Kotlikoff, NBER; 2005

Source: World Health Organisation, Espicom

Health Expenditure (% GDP) Health Expenditure (per capita US$)

Nurses (per 000 population) Doctors (per 000 population)

UK

0.11.1 1.1 1.3

7.9 8.0 8.19.3

11.4

Bangladesh Chi na Ke nya India France US Japan Germany UK

0.1 0.30.6

1.62.2 2.3

3.03.5

6.8

Ke nya B angla de sh India China Japan US France Ge rmany

3.5% 3.9%4.6% 4.9%

9.0% 9.9%11.0% 11.4%

16.9%

Bangladesh India China Kenya Japan UK Germany France US

$19.50 $44.10 $44.50 $164.50

$3,445.90 $3,590.80$4,524.10

$4,973.10

$7,830.10

Bangladesh Kenya India China UK Japan Germany France US


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or tuberculosis therapies, and warnings o the

emergence o diseases such as cholera as a result o

natural disasters.

As wealth increases, disease prevalence (epide-

miology) changes rom diseases o poor sanita-

tion and education such as tuberculosis, HIV and

diarrhoea to diseases o the wealthy such as cancer

and diabetes (fgure 3). For example, in 2000, there

were estimated to be about 45 million diabetics in

developed countries, or about 4% o the total popula-

tion o those countries6. A recent UK study estimates

that by 2005, prevalence had increased to nearly

10%7. In India today, there are 35 million diabetics,

a number that will increase to 80 million by 2030.I India were able to nd a way to manage diabetics

or a tenth o the cost required in the US today, the

bill or treating diabetes in 2030 would still be equal

to the entire Indian healthcare budget or 2009.

The countries o the Middle East present a

particular challenge and opportunity. The countries

o the Gul Cooperation Council (GCC)8 are sufering

a dramatic rise in chronic disease, with over 40% o

those over 60 sufering rom diabetes and higher

rates o cardiovascular disease than Europe or the

United States. Health systems are developing rapidly

but have not yet matured. There are enormous

opportunities or investment in new technologies

and approaches that address these issues better

than conventional health system structures do.

For some less well-developed countries, the

impact o an aging population is even more severe

than it is in the developed world. For example,

China is aging rapidly, and by 2030 will have broadly

the same age distribution as most Western Euro-pean countries. Despite the act that the Chinese

save at over our times the rate o the United States,

with little in the way o any saety net, it is hard to

see how it will deal with the upcoming wave o rail

and elderly.

6 Global Prevalence of Diabetes Estimates for 2000 and Projections for 2030, Diabetes Care Wild et al., volume 27, number 5, May 20047 Trends in the Prevalence and Incidence of Diabetes in the United Kingdom 1995-2005, Gonzales et al., Journal of Epidemiology and Community Health (online February 2009)8 Saudi Arabia, Qatar, UAE, Oman, Bahrain and Kuwait

Source: World Health OrganizationAll income groupsHigh and medium only

Medium and low onlyLimited to one income group

High-income

countries

Deaths in

millions

Deaths in

millions

Middle-income

countries

Low-income

countries

Deaths in

millions

Coronary heart disease 1.34

Stroke and other 0.77cerebrovascular diseases

Trachea, bronchus 0.46and lung cancers

Lower respiratory 0.34infections

Chronic obstructive 0.30pulmonary disease

Colon and rectum 0.26

cancers

Alzheimers and 0.22other dementias

Diabetes mellitus 0.22

Breast cancer 0.15

Stomach cancer 0.14




Lower respiratory 0.69infection

HIV/AIDS 0.62

Perinatal conditions 0.60

Stomach cancer 0.58

Trachea, bronchus 0.57and lung cancers

Road trac accidents 0.55

Hypertensive heart disease 0.54


Lower respiratory 2.86infections

HIV/AIDS 2.14

Perinatal conditions 1.83


Diarrhoeal diseases 1.54

Malaria 1.24

Tuberculosis 1.10


Road trac accidents 0.53

Figure 3: Causes o death, by high- middle- low-income countries


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tHe advantage of mobile to a HealtH

system

Healthcare, unlike many other industries, is almost

entirely delivered by physical interaction between

patients and health proessionals. Furthermore, the

complexity and specialisation o healthcare means

that many diseases will require multiple proessionals

to be engaged in diagnosis, treatment and ollow-

up. This means that either patients have to periodi-

cally travel to areas where all the health proessionalspractice (hospitals and clinics) or proessionals have

to travel out to see patients. Both are expensive and

inconvenient or at least one party.

This need or co-location is manageable or

episodic healthcare interactions like surgical opera-

tions. However, or chronic diseases which require

constant monitoring, this is not only inconvenient but

also incredibly expensive in times o scarce proes-

sionals, which explains why it oten does not take

place. For example, in the US and UK, only two-thirds

o cardiac patients received adequate rehabilitation.

The promise o mobile health is to achieve co-loca-

tion through technology solutions, allowing patients

and health proessionals to interact without the need

to be in the same place. Even when a health proes-

sional is with the patient, he or she can interact with

other parts o the health system remotely, accessing

diagnostic tools, other health proessionals, images

and prescribing drugs without needing to be in

a hospital. This has enormous potential to lowerthe cost o health interactions all along the patient

pathway, and achieve interactions that would other-

wise be impractical (fgure 4).

O course, xed internet-based technologies

can also reach into the patients home, but mobile

health has several overwhelming advantages.

Firstly, mobile health is extremely convenient,

as it ofers a wide range o mechanisms by which

patients can transact with health proessionals, or

systems which act as a proxy or health proessionals,

2. The mobile health promise

Number of visits tothe Dr/touch pointswith the healthcaresystem

Early diagnosis

Number of appointments(or even unnecessarytests)

Early dischargefrom hospitalmeans bed-daysfreed

Reducedexacerbations meansfewer emergencyadmissions

Portable intercon-nected devices suchas heart monitor orcholesterol monitor

Disease and lifestyleawareness andeducation

Same portable deviceswith appropriatebackend solution mayallow earlier detectionand diagnosis

Following intervention(stent, diuretics) andmobile monitoringallows earlierdischarge of patientsfrom hospital

Remote monitoringsolution

Treatmentcompliance solutions

Prevention Diagnosis Treatment Monitoring

SOLUTION EXAMPLES

HEALTH VALUE CURRENCY

Figure 4: Potential applications o mobile health cardiac monitor along heart ailure pathway


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wherever they are. These interactions can be quite

sophisticated, remote sensors such as heart

monitors, smart pill dispensers, RFID tags which

can sense when a pill has been swallowed, or

smart pills that can monitor vital signs as they pass

through the body. They can also be very simple,

and include voice, video or text-based messages,

net-based inormation resources, or reminders

generated by expert systems.

Secondly, it allows continuous interaction with-

out restricting the movements o patients, so is a

powerul technology or conditions where such

persistence is important, either or diagnosis or

post-treatment maintenance, such as diabetes,respiratory, and cardiac disease. In these areas, the

opportunity to ask patients to input data about

their condition or to connect to remote sensors is

particularly important.

Finally, mobile platorms are increasingly ubiqui-

tous. In the UK there are more mobile phones than

people. However, this advantage is even greater in

the developing world, where lack o conventional

internet technology and health inrastructure

makes mobile connectivity the only realistic mech-

anism or citizens to access many services. The

power o mobile technology to bring new services

to citizens in the developing world is well illustrated

by the example o mobile banking in Kenya, where

the use o bank accounts has tracked the availability

o mobile phones and achieved ar higher levels o

penetration than in any Western market(fgure 5).

wHat are tHe winning applications of

mobile HealtH?

For established healthcare systems, the biggest

opportunities are likely to be in the management ochronic conditions such as diabetes, heart disease,

respiratory disease and dementia. For all o these,

the ability to monitor vital signs, visually inspect,

locate the patient, promote efective administra-

tion o medicines, and provide remote advice are

the key interventions that will reduce system costs.

All o these diseases tend to have the same risk

actors smoking, diet, exercise so any appli-

2

Figure 5: Growth o mobile banking and bank accounts selected countries

Sources: Wireless Intelligence; Number of depositors (IMF); A.T. Kearney analysis

Cumulative year-on-year growth (indexed scale)

2004 2005 2006 2007 2008 2009

India mobile

Kenya bank

Spain bank

0

100

1,100

200

300

400

500

600

700

Spain mobile

Kenya mobile

India bank


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cation which is proven to address these is likely to

be popular. Another emerging area to watch is the

use o cognitive therapies to prevent dementia, and

again devices that are proven to help in this area are

likely to generate interest rom both health systems

and consumers. Furthermore, by the age o 70 over

30% o people in countries like the UK will sufer rom

multiple chronic diseases, so solutions that are able

to provide remote monitoring and management

o multiple co-morbidities are likely to achieve the

highest use and uptake. All o these applications will

be directly or indirectly reimbursable.

Ultimately it is likely that a relatively ew plat-

orms will emerge which, like the iPhone, willestablish their position not through a killer app

but through the range o applications available.

Such platorms will allow secure connection o

multiple devices to data management and storage

systems which can be interrogated remotely

by health proessionals or expert systems. To be

successul, connectivity will be critical, both at the

ront end to multiple devices and the back end

to clinical systems. There is also a strong move in

healthcare toward open systems, so it is likely that

these platorms will be built around emergent

international standards.

In poorer countries, platorms that provide

access to primary healthcare and advice stand a

chance o becoming the predominant mode o

access to healthcare rom remote locations in the

same way that mobile nance has largely replaced

the need or physical banks in Kenya. However,

the need or exibility to address multiple condi-

tions rom inectious disease through to advice on

contraception and reducing inant mortality will be

key to establishing widespread scale.

tHe conservatism of HealtHcare

However, while mobile health undoubtedly has

huge potential, healthcare is a conservative industry.

The rate o uptake o innovation is extremely slow

and very diferent rom that o the mobile industry.

For example, the average development cycle o a

new mobile phone is measured in months, while

the average development time or a new drug is

around 10-15 years.

Figure 6: Development cycle o statins compared to mobile telephony

Bell Labsmakesrst call onmobile phone

NTTlaunches rstcommercialnetwork

IBM shows rstSmartphonedemonstrator

NokiaCommunicatorSmartphone

First 3G Networklaunched by NTT

First BlackberrySmartphone

First GSMnetworklaunchedin Finland

iPhone

Study provinglink betweencholesterol andheart disease,but not widelyaccepted

Research oncholesterollowering drugsstarts in Japan

Merck launchesZocor (simvastatin)

Merck launchesMevacor (lovastatin)

Zocor goeso patent

Global salesof statinsexceed $25bn

Key Dates:

Mobile Telephony

Key Dates:

Statin Development

1973 1979 1984 1987 1991 1992 1994 1996 2000 2002 2006 2007 2009 2012

Simvastatin proved toreduce heart attacks by 42%

Lipitor(atorvastatin)o patent


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2The history o statins, one o the great successstories o post-war medicine, illustrates this devel-

opment cycle well. Statins are a type o drug

that control the level o cholesterol in the blood,

resulting in a dramatic reduction in the incidence o

heart disease. In the United States alone, 40 million

patients regularly take statins, and in 2009 total

global sales topped $25 billion.

While this is a great success story, despite there

being overwhelming evidence o efectiveness since

1994 and ater two decades and billions o dollars

spent on marketing and sales, only hal o patients

who would benet rom statins in the United States

take the drugs.In act, the history o statins goes back to 1973,

which is the same year as the rst mobile phone

was demonstrated in Bell Labs (fgure 6). So a tech-

nology which is both cheap and efective and is as

old as the entire mobile industry has still not yet

been ully adopted.

O the many reasons or this slow uptake o

technology, an important one is that new technol-

ogies are literally a matter o lie and death. So the

burden o proo that something works and is sae

is very high a burden o proo which has shaped

the mindset o the industry.

This conservatism can be rustrating. The prin-

ciple o build and they will come generally does

not work, and achieving uptake takes a lot o efort.

In the rest o this paper, we will explore how opera-

tors can best navigate the barriers to uptake o

innovation, in particular the problems o reimburse-ment and commercial viability. We will start with a

discussion about how nancial ows work in health

systems, then examine diferent ways in which

operators can access the market.


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developed world HealtH e cosystems

Healthcare ecosystems vary widely between coun-

tries and are extremely complex, with a wide variety

o stakeholders and players (fgure 7). While health-

care systems are all diferent, they all into relatively

ew archetypes characterised by the way unds are

distributed by health payers, and their relationship

to the health providers hospitals, clinics, doctors,

nurses and therapists.

Free Market: All healthcare is delivered by pri-vate health insurance companies contracting

with private or not-or-prot health providers or

delivery o services. Premiums are paid by citi-

zens or employers, and in most cases, the state

subsidises at least some o the poor, old and dis-

advantaged populations. This system is largely

conned to the United States as it has proven to

be di cult to control costs, it is very expensive

to administer and it results in a high level o ine-

quality o access, while not delivering particularly

good health outcomes at a system level9. Many

developing countries have ree market systems

or the rich, but this is generally unafordable or

the poor.

National Insurance: Multiple, highly regulatedinsurers compete with each other to provide

standardised coverage, adjusted so that risk is

equalised across the population. Premiums are

paid by employers or citizens and oten subsidised

through general taxation. Participation by citizensis generally compulsory. Both insurers and health

providers might be not-or-prots or private. The

rst system o this type was developed in Ger-

many in the 1890s, so these are oten reerred to

as Bismarck systems. They are more e cient and

equitable than ree market systems, but still in-

cur a signicant cost in administration. Many de-

veloping countries have national insurance-type

systems or groups o citizens such as civil serv-

ants and armed orces.

3. Who pays or what?

Figure 7: Players in the health ecosystem

9 Mirror Mirror o n the Wall; An international update on the comparative performance of American Health Care Commonwealth Health Fund, 2007

Gover n

ment

agenci e

s

Employe

rs

Insura

nce

comp

anies

Publicpayers

Professional

bodies,

research,etc.

Patie

nt/

consumer/

carers

Primary

care

Social

serv

ices

Pharmacy

Secondarycare

Med

ical

supp

liers

HEALTH

ECOSYSTEM

INFR

ASTRUCTURE

INFRASTRUCT

URE


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National Health Systems (NHS): A singlehealth payer system that provides healthcare

to all its citizens, unded through either general

taxation or a nominal national insurance pay-

ment, with the government efectively acting

as a monopoly insurer. The rst example o this

system emerged post-war in the UK, so these

are oten known as Beveridge systems, named

or the economist who proposed the system.

Health providers are oten a mixed economy

o state, not-or-prot and private ownership,

though the trend is to encourage private sector

participation. They are the most cost-e cient

o all systems as total expenditure can easily becontrolled through xed budgets, and with no

claims to process, administration costs are lower.

However, they are not as popular with citizens as

insurance systems as they can be unresponsive

to customer needs10. Many developing countries

use a simple NHS type system to deliver basic

care to the poor, while the rich pay privately.

Within these three basic types o systems there

are a bewildering number o hybrids and variants.

Furthermore, as health systems seek to control costs

and drive up quality, they tend to borrow mecha-

nisms rom each other, and, over time, converge in

terms o how they operate11.

For mobile health solution providers, the archi-

tecture o the system is important as it inuences

who might buy solutions and what health payers

value (fgure 8). In many but not all insurance-

based systems, patients pay or healthcare and

then reclaim rom the insurer, so they are more

active participants in their choice o healthcare. The

ocus o health payers is on managing down the

cost o claims and establishing competitive advan-

tage against other insurers. As citizens are generally

ree to change insurers at any time, insurers havelimited incentive to invest in prevention o disease

or public health.

In NHS systems, healthcare is usually provided

ree o charge, so mobile health solutions must be

sold to health payers or health providers. Patients

are oten unaware o costs, and may or may not

be ofered choices o treatment. Payers tend to be

more ocused on managing system costs, improving

access and public health.

The boundaries o health systems are oten

unclear, in particular with social care. Social care is a

Figure 8: Healthcare systems by archetype (Source: chartsbin.com, various sources)

Universal Healthcare

Single-payer universal healthcareSome form of universal healthcareUniversal healthcare in transitionNo universal healthcare or no data

10 Bismarck or Beveridge: A beauty contest between dinosaurs Jouke van der Zee and Madelon W. Kroneman11 Healthcare Out of Balance how global forces will reshape the health of nations, A.T. Kearney 2008.


16/40


substantial and growing area o expenditure, usually

unded separately rom health, oten through

regional agencies. O particular interest or mobile

health is elderly care, where a basic saety net is

supplemented by unding rom amilies or individual

savings. The growth in dementia in particular is

causing a rapid medicalisation o long-term elderly

care, which most systems are singularly ill-equipped

to deal with. While social care is unded separately,

it is closely linked to health services, as ailures in

social care inevitably end up with the individuals

being returned to the care o the health system. This

distinction between health and social care unding

is critical when considering mobile health applica-tions such as location services or older people.

There are similar overlaps with education in the

area o learning disabilities, and with criminal justice

in areas o mental health and addiction. Under-

standing exactly which agency pays or what in any

particular country is critical or gaining reimburse-

ment or any new technology.

In looking at where the money gets spent, the

vast majority o health spend goes to treatment in

hospitals and clinics, with a signicant expenditure

on elderly care in residential homes (fgure 9). A

major cost lever or health payers is to keep patients

out o these expensive institutions, which means

that number o admissions and length o stay are

important currencies in which benets o a health

solution need to be expressed.

How HealtHcare is paid for by tHe system

Whatever the system, the most important eatures

o mobile health are the way that payments work

between the citizen, the health payer and the health

provider, and the reimbursement model.

Payers, through collection o premiums or taxes

on citizens, have a risk pool o money rom which

health and social services need to be paid. However,

there is an inequality in power between healthpayers and health providers, as health providers

have ar greater expertise to judge what services

should be provided to a particular patient. Reim-

bursement systems are oten based on activity,

meaning that health providers have ew nancial

incentives to prevent the need or treatment, or

to limit how much care is actually delivered. As a

consequence, in the United States, where there are

ew incentives or health providers to be conserva-

tive in treatment, there are double the number o

MRI and CT scans compared to the average across

OECD countries, double the number o revasculari-

Hospitals

Ambulatory

care

Retail sale,other providers

Public healthadministration, provision

Nursing/residential

General healthadministration, insurance

Other

HEALTH

AND

SOCIAL CARE

SYSTEMS

Figure 9: Spend breakdown in health and social care systems (Germany, 2007. Source: WHO)


17/40


sations and 55% more knee replacements12, many

o which are interventions o dubious clinical value.

Payers adopt a range o approaches to address

the problem. Payers can incentivise citizens to

use health resources careully by asking them to

contribute to their care through co-payments. I well

designed, these can encourage patients to use cost-

efective technologies, look ater themselves better

and take medicines properly13. However, they can

also result in patients putting of treatment, which

can increase costs in the long term14. Payers can also

encourage competition and choice between health

providers, and speciy how care should be delivered.

However, the main tool to control costs isthe reimbursement system, which unds specic

treatments or not depending on whether they

are deemed to be cost-efective, and incentivises

health providers to control costs and use the most

efective treatment by transerring at least some o

the nancial risk to them. There is also a trend to

align nancial incentives with health outcomes,

though this proves di cult to achieve in practice.

Social care systems are usually unded sepa-

rately and vary widely in their scope and generosity.

They tend to provide a range o reimbursable serv-

ices, and vary in the degree to which they are reac-

tive to need or proactive in preventing problems.

Social care includes the most mature o all mobile

health applications in the orm o social alarms or

the elderly. Uptake varies between countries, withSpain and the UK having the highest penetration in

Europe at 15% o eligible population, but with ar

12 Mark Pearson, Health Division, OECD; Why does the US spend so much more than other countries?13 For example: Evidence That Value-Based Insurance Can Be Effective; Michael E. Chernew et al; Health Affairs February 201014 Increased ambulatory care co-payments and hospitalizations amongst the elderly A.N Trivedi et. al New England Journal of Medicine, 2010

Figure 10:Growth o sel-pay in the developing world

(1) No separate social security category for Brazils public health expendituresSource: World Health Organization

In China, health spend is increasinglynanced by private citizens

In India as well, the already large privatenancing burden has increased

In Russia, the states historically large health roleis shrinking while individuals nance the gap

Brazil is the exception, with government healthexpenditure as a share of total on the rise

3223

Out-of-Pocket

Out-of-Pocket

Out-of-Pocket

Out-of-Pocket

Government

Social Security

2006

54

19

1995

46

18

24 27

Other (Insurance)

Other (Insurance)

Government

Social Security

2006

30

7

36

1995

13

16

46

Other (Insurance)

Government

Social Security

2006

5

76

19

1995

6

67

25

1 1

Other (Insurance)

Government

2006

19

33

48

1995

18

39

43(1)

3 4


18/40


lower levels o 3% or less in other countries such as

Germany and France. Most are provided by social

care or housing services, and unding routes vary

rom public unds in Germany and Denmark, to

public nancing with user co-payment across the

rest o Europe and Japan, and private payment in

the United States15.

Any health technology which is to be paid or

by the health system needs to be compatible with

this reimbursement system. A technology can be

directly reimbursed by health payers, or indirectly

reimbursed by being bought by health providers,

who are themselves reimbursed by health payers.

In the next chapter we will look in detail at how thisworks and its implications or mobile health solu-

tion providers.

HealtHcare funding in less well-

establisHed markets

Outside o the major established health systems,

there are a wide range o circumstances, rom the

poorest countries with very little in the way o

health inrastructure to rapidly developing markets

which have not yet created mature health systems

(fgure 10).

Within the poorest countries, healthcare un--

ding comes rom individuals, the state and non-

governmental organisations, and ocuses on basic

healthcare. For example, in Kenya unding is split

evenly between households (36%), state (29%) and

donors (31%).

As countries become wealthier, they tend to

spend disproportionately more on health than on

other consumer items. However, state unding o

healthcare tends to lag overall consumption, so

healthcare in developing countries is much more

oriented toward sel-pay. For example, between

2000 and 2015, consumer spending on healthcare

services is orecast to increase 130% in India, nearly

80% in China, and over 70% in Thailand.

As state unding increases, developing coun-

tries start to put in place universal healthcare, either

modelled on NHS-type systems (such as in Brazil),

compulsory private insurance (as in the GCC) or low-

cost social insurance such as that ound in China. At

the same time, private insurance or wealthy citizens

unds investment in private hospitals which canoten be state o the art and totally unafordable to

the general population.

Providers o mobile health solutions in devel-

oping countries will need to decide which segment

o the population they are targeting. The rich will

have needs similar to those in the developed world.

For the poor, applications will need to use simple

technologies (e.g., SMS) to address basic health

problems, such as tuberculosis diagnosis and treat-

ment monitoring, or education on preventing

inant mortality. Many o these programs will be

paid or by NGOs.

The needs o the emerging middle class are

less clear, but perhaps the most exciting. The

way may be open to establish mobile health as

a viable alternative to traditional methods o health

delivery without any o the institutional reluctance

to adopt innovation ound in more established

health systems.

15 ICT and Aging, European Study on Users, Markets and Technologies, European Commission January 2010


19/40


4. Getting reimbursement or mobilehealth solutions

As we have described, the vast majority o global

health spend is ocused on reimbursed healthcare

within established systems. This chapter ocuses on

the specic challenges o accessing this market.

creating value witHin tHe HealtH system

To achieve widespread uptake within a reimbursed

system, a mobile health solution must deliver

healthcare more cost efectively than existing solu-

tions. It can do this by being a lower cost way odelivering a given health outcome, and in this case it

is critical to understand who will realise the nancial

gain. Alternatively, it can provide additional health

outcomes at an incremental cost, and in this case

it will need to demonstrate that it is good value in

health economics terms (fgure 11).

In practice a number o actors play into the

decision as to whether a particular technology will

be unded by payers:

Willingness to pay: Is this an area where thesystem is prepared to invest? While the theory o

health economics is that judgements are based

on rational trade-ofs, in practice every society

and organisation has belies about what should

be a priority. For example, air ambulances and

treatment o many rare diseases have a low eco-

nomic return, but are oten unded nevertheless.

Budget constraints: A technology may be costefective, but it will not be unded i there is no

additional money to pay or it, especially i some

up-ront payment is required or uture returns.

This is particularly an issue in budget driven NHS

type health systems. Pathway considerations: Whether the inter-

vention is preventative, curative, or designed or

maintenance will determine how important it is

seen to be, with investments in treatment typi-

cally taking priority.

Innovation value: While health systems are con-servative in uptake o technology, most recognize

the need or innovation and diferentially und

experimental technologies, in particular where

there is no existing proven solution. Some health

economics valuation methodologies include an

innovation premium, which can make a big di-

erence in the decision whether to und or not.

4

Figure 11:Type o value created by a mobile health application

Sources of value creationfrom a mobile health solution

Mobile health solution uptakedepends on who realises the benets

Life years

Morbidity

Experience

Resources

Costs

Activities

FINANCIAL OUTCOMES

Positive

Negative

Health Outcome Gain

FinancialSystem

Gain

Neutral Positive


20/40


Tangible value creation: Value that can bemeasured and realised such as costs or lives

saved will always have priority over less well

dened areas such as broader social value. The

more tangible and short term the measure and

greater the level o proo, the more likely a tech-

nology is to be unded.

Funding fows and reimbursement model:This will determine which party will nancially

benet rom any potential solution, and there-

ore who is likely to be interested in buying it.

O all o these, it is the last two which are both the

most important and the most complicated andwhich will be investigated in more detail in the

ollowing sections.

understanding wHo benefits financially

Reimbursement systems try to align incentives

between health payers and health providers to

provide the most appropriate care to patients in

the most cost efective way. The problem is that

each disease has a quite diferent dynamic in how

it is treated, and optimising payment systems or

every disease would make reimbursement systems

impossibly complicated, not least because patients

oten have more than one disease. A consequence

o compromises required to build practical reim-

bursement systems is that the actions o one agency

oten benet another agency, and sometimes an

agency will need to act against its own interest to

benet the patient and system overall.

For example, rheumatoid arthritis is a di -

cult disease to recognise, and typically less than

hal o people with the disease are diagnosed

correctly. However, both patients and the overall

system benet rom early intervention. One solu-

tion is or rheumatologists to train and remotely

support primary care physicians to recognise theearly stages o disease (an obvious area or mobile

health), and indeed when they did this in Spain,

diagnosis rates doubled. However, rheumatologists

generally practice in hospitals, and are only reim-

bursed when a patient is severely ill enough to be

reerred to hospital or treatment a positive disin-

centive or treatment in primary care.

At the other end o the disease pathway, mobile

health can help with early discharge o patients rom

hospital ater treatment. However, i the hospital

is paid a sum or each night a patient spends in

Figure 12: Sources o value

Numberof patients

Numberof visits

(per patient)

Number ofactivities(per visit)

Costper activity

SystemCost/Benet x x x=

Population Risk Pathway Efficiency

Delivery

Efficiency

Examples of mobile health solutions

Mobile health solution providespreventive advice which avoidshaving as many citizens goinginto doctors or hospitals

Mobile health solution allowsremote monitoring of patientsin a particular disease andsubsequently reduces the numberof outpatient appointments

Mobile health solution allowsinpatients being dischargedearlier from hospitals with aportable device connected to themobile phone

Mobile health solution improvestreatment compliance of patientswith a particular disease andtherefore reduces the chances ofhaving emergency admissions Mobile health solution provides

automatic data collection frompatient held devices and passesinformation to doctors, rather

than patients having toself-read and phone doctors


21/40


4hospital, the health payer and patient benets, butthe hospital loses revenue.

There are two key actors that determine who

potentially benets rom any novel technology;

how the value is created, and exactly how the reim-

bursement system distributes risk. Financial value

can be created by (fgure 12):

1. Preventing people rom getting illand so reducing the number o patients

2. Reducing the number o times peopleinteract with the system

3. Reducing the number o activitieswhich are carried out

4. Reducing the cost o delivery

Taking a cardiac disease patient as an example, a

mobile health application could help people avoid

disease by giving advice on healthy diet, automati-

cally log cholesterol levels so avoiding trips to the

doctor, allowing multiple readings to be carried

out at the same time (cholesterol, electrocardio-

gram, blood pressure, heart rate), or allowing early

discharge ater an operation. Who benets rom

each o these sources o value will depend on the

degree to which the reimbursement system asso-

ciated with that particular disease has passed risk

rom the health payer to the health provider.

In the simplest systems, health providers are paid

retrospectively or the work they do so-called ee-

or-service provided they use reimbursable proce-

dures and technologies (fgure 13). This payment

system is simple to administer, but requires robust

mechanisms to prevent over-treatment, which

are oten very unpopular with both providers and

patients. However, its exibility means that complex

treatments are oten reimbursed on this basis.

At the opposite extreme, health payers can pass

virtually all the risk or treatment to the health

provider by using a prospective payment such ascapitated payments or global budgets. Payers give

health providers a xed ee or a group o citizens,

and the health providers are obliged to treat them

no matter what is wrong with them, using whatever

treatment they deem to be most suitable.

The risk here is one o under-treatment, so

control mechanisms ocus on measuring quality

o outcome and care standards, which are di cult

to measure. Some systems such as those in the UK,

Germany and France include incentive payments

or activities such as chronic disease management.

This type o system is oten used or primary care

services.

Figure 13:Transerring risk rom payers to providers

Where the burden of risk lies in the reimbursement systemPAYER PROVIDER

Globalbudget/capitation

Feefor

service

Risk at the payer side

Risk at the provider side

Simple, easy to administer

Excessive (uncontrolled)use of resources

Efficient use of resources

Potential for patient selection,under-treatment

A myriadof systemsin between


22/40


finding tHe rigHt customer

Determining whether the customer or a mobile

health solution is a health payer or health provider

will be driven by who bears the risk. Unortunately,

there are a wide range o diferent ways to distribute

risk between the extremes o ee-or-service and

capitation, and we have used three examples o

such intermediate arrangements to illustrate how

value shits (fgure 14):

Resource Based Tariff is a retrospective systemthat pays an agreed amount to deliver a particu-

lar type o treatment, described by Health Related

Groups (HRGs) as used in the UK or Disease Related

Groups (DRGs) as used in Australia and Germany.The ee is typically calculated on the average cost

o treating the disease, reset on an annual basis.

These work best where treatment packages can

be well dened, such as elective surgical proce-

dures.

Normative Tariff is a more sophisticated ap-proach which bases the payment on the cost o

a best practice treatment (typical top quartile)

and is limited to treatments where it is easible to

dene what best practice is.

Year o Care is a prospective system which isemerging as a payment mechanism or chronic

diseases. Providers take responsibility or all as-

pects o care or a group o patients with a par-

ticular disease or an annual ee per patient. It

encourages health providers to take a more ho-

listic approach to management o the patient, but

requires tight denition o outcomes and disease

states. This is being experimented with in several

European countries.

These two dimensions o source o value and

reimbursement mechanism will dene who will

benet rom a specic mobile health application.At either end o the reimbursement continuum it is

quite simple. Under ee-or-service, health providers

are paid or what they do, and will not necessarily

benet rom mobile health applications unless

specically identied as reimbursable services,

so the health payer is generally the customer. At

the other extreme, under capitation systems, risk is

transerred to the health provider, so they are the

ones that benet nancially rom any improvements

in e ciency and efectiveness. However, between

PopulationRisk

PathwayEfficiency

DeliveryEfficiency

For a particular reimbursement system, who realises the value

depends on the mobile health value proposition

Fee forservice

Globalbudget/

capitation

Numberof patients

Numberof visits

(per patient)

Costper activity

SystemCost/Benet

x

x

=

For a particularmobile health

value proposition,who realises the

value depends onthe reimburse-

ment system

Resourcebased tari

(activity-based)

Yearof care

(activity-based)

PAYER PROPOSITION PROVIDER PROPOSITION

Risk at the payer sideRisk at the provider side

Normativetari

(activity-based)

Figure 14: Financial beneciaries by type o reimbursement system and source o value


23/40


4these two extremes o risk transer, it becomes morenuanced with a shit toward a provider proposition

as risk is transerred.

To address the limitations o traditional ee or

service and tarif-based systems, health payers are

starting to introduce specic tarifs or electronic

interventions to encourage their uptake. The US is

taking a lead in this. For example, in May 2010, the

American Medical Association (AMA) House o Dele-

gates passed a resolution stating that insurers should

reimburse or email consultations. There are now 12

states in the United States that require insurers to

pay or telehealth consultations. It is likely that more

and more systems will introduce such tarifs, thoughthe speed o uptake will vary by country.

In general, the more comprehensive and ex-

ible the reimbursement system, the easier it will

be or novel technologies to achieve uptake. It is

quite noticeable that the largest truly integrated

health system in the United States, the Veterans

Administration, has probably the largest and most

integrated example o telehealth in the world

through its Care Coordination Telehealth, which

manages 30,000 citizens with chronic disease. As

chronic diseases are increasingly recognised as the

key drivers o health expenditure, reimbursement

systems are likely to shit more and more risk to

integrated groups o primary and secondary care

providers, meaning that in the longer term, mobile

health is likely to become an increasingly health

provider-ocused proposition.

measuring value of a mobile HealtH solution

Solutions which purport to improve health outcomes

must prove value or money against existing treat-

ment approaches. The robustness o this analysis and

the level o data required varies by country, the type

o acceptance being sought, and who the customer

is likely to be (fgure 15).

I the objective is to get a technology reim-

bursed directly by health payers, then some orm

o ormal health economic assessment is very likely.Countries such as the UK have been pioneers in the

science o Health Technology Assessment (HTA),

and the UKs National Institute or Clinical Excel-

lence (NICE) has robust and transparent processes

to both evaluate the quality o evidence o e cacy,

and to assess i a technology represents value or

money. The ultimate measure o efectiveness is

the cost o providing a Quality Adjusted Lie Year

(QALY) against existing treatments. Getting a new

technology through this process is time consuming

and complex, but results in an appropriate adjust-

ment o tarifs and treatment guidelines. Any solu-

tion going through such a process will almost

certainly be classied as a medical device, so will

Figure 15: Assessing health value

The level of evidence required varies per market, as it variesthe threshold at which solutions are considered worthwhile

Service evaluations,one-o case studies

and pilots

Expertopinions

Multi-centercohort and casecontrol studies

Not randomizedcontrolled trials

Randomizedcontrolled trials

Uncontrolledand multiple time

series trials

Effort required to produce evidenceLow High

Referenceability

Low

High

Dierent types of studies generatedierent types of evidence

Burdeno

fproof

e.g. France

e.g. Spain, Italy

e.g. Developing

markets

e.g. UK, Australia,

CanadaHealth Technology

Assessment

Clinical and economicoutcomes based negotiations

Not so standardizedevidence based negotiations

Negotiations


24/40


need to overcome all the regulatory hurdles this

entails. Also, most o the evaluative approaches

have been developed or pharmaceutical products,

and these may not be appropriate or non-chemical

interventions.

The approach to value evaluation varies by

country. Germany, through its IQWiG institute, has a

robust analysis process like the UK, Italys assessment

is strongly weighted on innovation, France uses

health economics as an input to a reimbursement

decision, while Spain is oten characterised by assess-

ments at both national and regional levels. In the

United States, HTA is still emergent, and the approach

taken varies by health plan. In developing countries,such evaluations are usually somewhat inormal.

However, i the objective is to persuade local

health payers or health providers to consider the

technology as part o their overall approach to

delivering care rather than to getting specic reim-

bursement, the burden o proo is lower. Pilots and

demonstrators can be valuable, but it is important

that the purpose o such pilots is not just to prove the

technology operates successully, but that the solu-

tion delivers health outcomes and nancial benets

in the real world. All such evaluations are best seen

as support or marketing o the solutions, and will not

by themselves result in widespread acceptance.

The burden o proo required to support wide-

spread uptake o a new technology should not be

underestimated, and moving rom a pilot to roll-out

oten proves to be quite challenging. Beore starting

pilots, it is worth investing time to understand the

needs o the authorities and customers who will

determine i a new technology is to be used. It is also

important to engage appropriate health economics

experts to ensure the data collection and analysis

is robust, as methodological weaknesses can easily

destroy the value o a trial.

wHetHer to seek reimbursement or not?

Gaining reimbursement directly rom health payers

is a complicated and time consuming exercise. It

needs to be addressed application by application

and market by market. However, the benets o

doing so are huge. Gaining ormal reimbursementstatus makes the technology widely available and

gaining reimbursement in one system makes it

much easier to achieve in the next.

However, mobile health solutions do not

necessarily need to be accepted by health payers

to achieve success in a reimbursed system.

Providers will purchase technologies regardless

o whether they are reimbursable provided they

make commercial sense. Reimbursement systems

that are exible and transer high levels o risk to

health providers are thereore generally benecial

to mobile health.

Ultimately, i mobile health is to realise its ull

potential, then it will need to be accepted by reim-

bursed health systems as a mainstream technology.

However, there are other potential customers, and

these will be discussed in the next chapter.


25/40


55. Who else buys mobile health solutions?

otHer customers in tHe developed world

While the majority o healthcare expenditure in

the developed world is reimbursed, signicant

sums are spent outside o the main health system

(fgure 16).

Consumers are becoming increasingly engaged

in taking responsibility or their own health, oten

encouraged by governments. Some 26% o the

65 plus population in the US look or health advice

online, with ~110 million North Americans classed ascyberchondriacs16. As a result, expenditure on well-

ness related products is growing rapidly (fgure 17).

When thinking about consumers it is important

to distinguish between solutions which are true

consumer services, and those which are proession-

ally recommended to consumers by health proes-

sionals; doctors, nurses, therapists, dentists or insur-

ance companies.

True consumer solutions in the developed world

tend to ocus on wellness. Though this seems an

attractive market or operators who are amiliar

with consumer marketing and sales, solutions must

compete or share o wallet against other wellness

categories, and pricing is increasingly conditioned by

the ready availability o cheap iPhone apps.

Probably o more interest is the proessionally

recommended segment, where solutions are paid

or by customers on the specic recommendationo health proessionals, oten ocused on people

who are on the cusp between well and ill. These

consumer health markets are increasingly being

targeted by consumer goods companies as growth

rates and margins are higher than traditional

consumer products. Opportunities are greatest in

systems where there are high co-pays, or where

the scope o services covered by reimbursement

USA

W. Europe

APAC

ROW

Sources: 1) Espicom; 2) World Economic Forum; 3) Natural Marketing Institute (NMI), 2002 Harris Poll; PLMA, Planet Retail 2007; 4) Credit Suisse

Directly attributableto healthcare

1)

Where isthe money?

Indirect spendand costs

$4,200bn

(Global)

2%ofworkforce

capital

47%

28%

14%

12%

~50% government funded

Mostly government funded

Mostly consumer funded

Workforceproductivity

2)

Wellness

Social care

Families/carers

Consumerproducts 3)

Careprovision

4)

$112bn(USA)

$12+bn

(USA)

Consumermarket

Consumermarket

Etc.

Etc.

Etc.

Employer/insurer market

Figure 16: Sources o health spending

16 Results of Harris Poll conducted in 2002


26/40


systems is limited. While at the moment in estab-

lished systems there is still an expectation that the

system will pay, as governments seek to control

costs there may be increasing areas where sel-pay

becomes more prevalent.

Employers are increasingly recognising the cost

o poor employee health, with an estimated 2% o

capital spent on the workorce lost on employee

disability17 and over 40% o lost work time being

accounted or by chronic disease and signicant

lost time and productivity due to stress. As a result,

around hal o all multinationals ofer some orm o

wellness program and are potentially prepared to

pay or mobile health services18

.In some recent work carried out by A.T. Kearney,

employers in ve European countries were surveyed

on their interest in buying a mobile wellness solution

or their employees, and over two thirds expressed a

willingness to pay or such a solution, with willing-

ness to pay increasing with the richness o the solu-

tion. Employers saw a range o potential benets

which included the ability to attract employees in a

competitive market place, as well as more tangible

impacts to change employee behaviour to reduce ill

health and absence (fgure 18).

There are two major benets o targeting employers.

Firstly, they are oten willing to pay or solutions

which signicantly reduce their business costs.

Secondly, they potentially allow access to a large

number o consumers with a single transaction.

Against this, complex mobile health solutions are

likely to be attractive primarily to larger companies,

and the range o solutions they are interested in is

likely to be quite specic and ocused on risk actors

which drive productivity and absence.

Accessing employers requires quite a distinct

channel strategy. Most health services are bought

through insurance companies or benets consul-

tancies and operators will need to access the HRexecutives who buy health services.

Pharmaceutical companies are very inter-

ested in solutions which increase the value o their

medicines, in particular by helping to diagnose

patients and by encouraging patients to take their

medicines. Solutions may be provided to patients

and healthcare proessionals ree o charge, or to be

added into service packages with the medicine. A

brie scan o iPhone applications provided by phar-

maceutical companies illustrates their interest in

this space (fgure 19).

Sales (US in $ billions, growth percentage)

Functional/Fortied foods/Beverages

Organic foods/Beverages

Vitamins, minerals, supplements

Natural foods/Beverages

Natural/Organic personal care

Natural/Organic general merchandise

5%

18%

7%

4%

7%

32%

0

20

40

60

80

100

120

2008

$112

2007 $50$40$30$20$10$0

Health and Wellness Industry

+9%

Figure 17: Growth in US expenditure on health and wellness consumer products19

17 Working towards Wellness, accelerating the prevention of Chronic Disease, World Economic Forum18 Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2006. USA Credit Suisse) A.T. Kearney analysis19 Source: Natural Marketing Institute (NMI), 2002 Harris Poll ; , PLMA, Planet Retail 2007, A.T. Kearney Analysis


27/40


5Partnering with pharmaceutical companies hasthe great advantage that they have access to key

medical opinions, health payers and doctors, and

have all the systems in place to ensure patient

saety. They are also global in reach and amiliar

with the processes o establishing proo o e cacy.

However, many pharmaceutical companies are

ocused on developing their specic therapies, so

may not be that interested in developing broader

mobile health applications.

customers in less well establisHed markets

Much o the discussion in the previous section

has been ocused on achieving reimbursementin countries with well established health systems.

While developing countries account or relatively

little spend today, they represent the greatest areas

o spending growth.

In poorer countries, NGOs are signicant

customers o mass market mobile health solutions.

These are usually quite simple SMS based solutions

addressing basic health needs. While not as directly

rewarding to shareholders, such projects clearly

contribute enormously to the health o populations

and reect well on the corporate responsibility o

the operators involved. Such projects need a some-

what diferent commercial approach, and operators

will need to expect to share the benets to help

address health inequalities. However, in the longer

term, they help establish a powerul mobile brand

and position companies well to play a major role in

the development o local health systems.

The role o consumers in countries with less

well established health systems is potentially more

signicant than the state dominated health systems

o the Western World. The emerging middle classhas not been conditioned to expect state payment

or healthcare, and may well prove more avid

buyers o consumer health solutions. The proes-

sionally recommended consumer segment is also

likely to emerge as a signicant market. However,

as soon as consumers become wealthy enough to

aford insurance then the dynamics are likely to shit

toward those o more established markets.

Figure 18: Employers assessment o potential impact o a mobile health solution

Sources of value creation from a mobile health solution

Staffturnover

Healthcarecosts

Productivityrate

Sicknessrate

Stresslevel

Employeesatisfaction

Corporatebrand image

Earlyretirement

rate

16%

14%

5% 5%

16%

17%

20%

5%


28/40


Targetaudience

Healthcarep

rofessionals

Patients

Generalpublic

General Disease specic Product specic

Real-time tracking of lab results Information and news

Prognosis calculator Risk calculator Information Education EKG readings Decision making tools

Product dosage calculator Prescribing information Risk calculator Disease progression calculator

Disease awareness Education Patient Diary Treatment tracker Indicators tracker Symptoms tracker Clinical trials locator Specialist search engine Reminders

Medication tracker, reminders

and connect to healthcare team

Source: First World, InPharm, A.T. Kearney analysis

Johnson & JohnsonJohnson & Johnson Roche

Johnson & Johnson

Roche

Roche

MERCK Shire

sano aventis

sano aventis

Novartis

Pzer

Pzer

Pzer

GSK

Pzer

MERCK

GSK

GSK

Abbott

BAYERBAYER

Novartis

Novartis

Novartis

Educational games Specialist locator Disease awareness News and information Message boards

Health record / information Food tracker, restaurant locator Vaccination tracker Pharmacy locator

Johnson & Johnson

sano aventis

App scope

Figure 19: Functionalities o Rx iPhone apps by large pharma companies as o July 2010

Figure 20: Value propositions tailored to each customer segment

Heart monitorIllustrative Example

A roadmap to scaling up mobile health solutions

CRITICAL

AT

RIS

K

WEL

L

Famil

ies/Social

Hospice

s

Directto

Dir

ectto

Ambulan

ce

Medical

Pu

blic

branding

care

carers

pr

ivat

e

andcare

ICUsu

pp

lies

hospitals

andspo

rts

centre

consum

er

productco-

in

sur

ers

hom

es

hospita

ls

insurers

private

Public/

services

devicecompanies

pro

v

iders

Consumer Dire

ctto

Gym

s

distrib

utio

n

&b

randi

ng

ph

armac

y

Retail

(ownb

randin

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Retail

ph

arm

acy

dis

trib

uti

on

Trigger

Avo

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capitativebudgetsegm

ent

asfeefo

rservice

alarmsf

or

enh

ancem

ent

areasreimbu

rsed

Notify

emer

genc

y

areasreimbursedas worried

-well

unne

cessa

ry

Ambulance

propositionintherapy

Sportsp

erform

ance

Wellbein

gfor

Healthpayer

Healthprovider

visitsto

docto

r

living

system

serv

ic

es

pro

position

inth

erapy

Ear

lydi

sch

arg

e

f rom

h

ospit

al

indepen

dent

monitoring

mgmt.

tra

cker

li

vin

g

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rm

Remo

te

Rem

oteStress

Spo

rts

Hea

lth

y

Criticalsys

tem

monitor

ing

caresystem

LEVELOFFRAGMENTAT

ION

LEVELOFFRAGMENTATIONDierent applications

Dierent value propositions

Dierent channels

Tailored to dierentcustomer needs

Tailored to dierentfunding models

Access and uptake(reputation, branding, etc.)

One technology

Leveraging scale

tointegrate

forproviders

Soldascomponent

NGOs

packag

epro

vision

Partn

erw

ith

forend-to-end

healthp

roviderXUNWELL


29/40


66. Building a scale mobile health business

an industry in early development

Mobile health is still in the early stages o develop-

ment and it is likely to be years beore the industry

reaches maturity. Although operators have global

aspirations or their mobile health businesses, solu-

tions have not yet reached scale.

Currently, very ew mobile health solutions are

directly reimbursed by health payers. Most are

targeted at health providers or as consumer

products. Most services are at the pilot stage, or have

only a ew installations, and ew are ully

commercially established. Most are limited

to the home market and have not yet been

internationalised.

In the developed world, ew operators provide

clinical content or services. Where this is the case,

however, services are simple and ocused on

wellness and consumer-type propositions.

In the developing world, more clinically intense

solutions are being provided. These are generally

supplied by healthcare company partner

organisations.

Taking into consideration all the actors outlined in

this paper, we believe there are six key actors that

operators need to consider to build a scale mobile

health business:

1. Building scalable solutions

2. Deciding the role o the operator

3. Finding the right partners

4. Developing appropriate distribution andcommercial models

5. Building the right inrastructure

6. Dening the right path

building scalable solutions

A single mobile health technology can have multiple

applications, but the approach and commercial

model varies by application and by country. Each

application needs a clear value proposition, with

robust evidence to prove that it works.

The situation is analogous to that ound in the

pharmaceutical industry. Core technologies have

multiple applications called indications. Clinical

trials need to be carried out to prove each indicationin turn beore it is licensed or use, and pharmaceu-

tical companies plan to increase the number o indi-

cations over time, starting with those which have

the highest demonstrated benet and demand.

Operators should see mobile health in a similar

way, as a series o layered solutions, where core

technologies are linked to a range o applications

ocused on diferent customer objectives, with a

specic value proposition tailored to the particular

customer segment and unding model (fgure 20).

As the solution moves nearer to the customer,

it needs to become more specialised and local-

ised, with a wider range o partners and business

models.

While the overall approach to scalability should

be considered early on, the approach to roll-out

will typically need to be done application-by-appli-

cation and country-by-country, ocusing on areas

where there are the highest unmet health needs

which are most accessible to operators. Most oper-

ators we talked to had started with less clinically

critical applications, and in their home country.

Each o the applications will need to be sup-

ported by robust proo o ecacy, demonstrating

that the technologies can address unmet health

needs and reduce costs, and operators should pace

their expansion plans to build this body o evidence.

The technical robustness o the solutions will be

an absolute requirement, including the ability tointegrate with a wide range o clinical systems o

varying levels o sophistication.


30/40


This need or proo and robustness has an

impact on product liecycles. Healthcare buyers

are unlikely to be interested in the technology itsel,

and very wary o cutting-edge technology which

would usually translate as unproven. Incremental

innovation of a proven platorm is likely to be the

most attractive positioning. Common standards

will be critical to building scalable solutions by

enabling interoperability o devices and systems

and common solutions across markets. Health-

care providers have an expectation o a airly long

lie rom investment in technology, and are loath

to make major investments in proprietary tech-

nology. The uptake o digitised Picture Archivingand Communication Systems (PACS) has been

accelerated by the introduction o the DICOM

standard or medical images. Similar standards or

device connectivity and interaces to core clinical

systems will be important, and operators should

ensure that solutions are consistent with emergent

standards such as HL7 (a messaging standard or

medical devices), ICD10 (which describe disease

states) and SNOMED CT (which classies medical

inormation).

deciding tHe role of tHe operator

In discussions with mobile operators questioned

as research or this pape

Documents

Mobile Health Atk