Evolutionary Challenges of Home Based Healthcare

Katherine Szabo Fowler

21 MAY 2008

Advisor: Dr. Mahender Singh

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Agenda• Research Question• Definition of Home Based Healthcare• Research Design• Healthcare System• Drivers of Home Health• Case Studies• Dynamics of Stakeholder Relationships• Evolution of Strategy

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Research Question• What are the drivers of home based healthcare?• What are the challenges facing home healthcare

firms?• What is the current strategy of home care firms

and what strategies do firms need to adopt for sustainable growth?

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Home-Based Healthcare Defined

• Formal care activities• That takes place in the home• That could take place in a treatment

facility• That are available, accessible and

affordable

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Research Design

• An iterative process• Definition• Company selection• Interviews and case studies• Survey of literature

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The US Healthcare SystemPatient

Source: http://ctl.mit.edu/public/mehd_model_031307.png

DoctorsHospitals

Clinics

MEDICAL DEVICES MEDICAL DEVICES

SURGICAL DEVICES

SURGICAL DEVICES

RADIOLOGICAL/ LAB EQUIP

RADIOLOGICAL/ LAB EQUIP

CAPITAL EQUIPMENT CAPITAL

EQUIPMENT

Wholesaler or Distributor

Manufacturers

Suppliers

PHARMACEUTICALSPHARMACEUTICALS

InsurerInsurer

HEALTH AIDS- OTC Drugs- Wellness

HEALTH AIDS- OTC Drugs- Wellness

Suppliers

Pharmacy Retailer

Wholesaler or Distributor

Manufacturers

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Drivers of Home Healthcare

EconomicSocial

Technological

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Drivers of Home Care

Social Trends• Lack of informal

care• Baby Boomers

grow up• Capacity

shortage

Economic

Technological

Social

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Drivers of Home Healthcare

Economic• Increasingly

demanding consumer• Medicare• Rising cost

Technological

Social Economic

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Drivers of Home Healthcare

Technological• Miniaturization of

devices• New technologies• Remote access• Storage of medical

records

EconomicSocial

Technological

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Case Studies

• ABC Dialysis– Home Dialysis

• T2 Biosystems– Point-of-Care Diagnostic Testing

• Eli Lilly– Zyprexa bundled health services

®

®

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Commonalities

• Disruptive technologies

• Highly fragmented demand

• Main competitor is in-center

• Price takers

• Acceptance in the medical community is critical

• Patient compliance is necessary

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Affordability, Availability, and Acceptability as Forces

ABC Dialysis

In-Center

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Understanding Acceptability

Prescriber • Word of mouth

• Innovation feedback

• Insurer acceptance

Patient• Meet non-

theraputic Needs

• Ability to comply

• Insurer & prescriber acceptance

Insurer• Treatment

attractiveness

• Cost attractiveness

• Regulation relaxation

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Understanding Availability

• Miniaturization of devices• The importance of logistics• Identifying initial markets• Prescriber adoption• Insurer adoption

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Understanding Affordability

• System costs with home healthcare are less

• Standardization of products• Scale economies• Price ceiling with quality floor

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Current Strategies

Strategically Focused Prospectors

• Close relationships with patients and prescribers

• First to market• Innovators

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Future Strategies

From Consolidation to Differentiation

• To achieve scale economies• To create recognition on a single attribute • To create power to raise prices

Thank You!

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Future Research Suggestions

• Who will hold e-Records?– New Stakeholder– Shift in dynamics

• Economies of Scope versus Scale• Ownership structure of home based

medical devices– Leasing vs. Patient/Prescriber Ownership