Telehealth SustainAbility: Where Did the

Money Go?

Joseph R. Biggs, Ph.D., HSPP

Jeffrey S. Harper, Ph.D., CFE

The Lugar Center for Rural Health Division of Union Hospital

380 bed not-for-profit medical centerServes over 200,000 patients per year

Established in 1992 as Midwest Center Mission

Advancing rural health through education, innovation, and collaboration.

The Lugar Center for Rural Health Began utilizing technology to advance rural

health in 1999 Telehealth services have expanded through

grant fundingUS Department of Health and Human ServicesHealth Resources and Services Administration

(HRSA)Office for the Advancement of Telehealth (OAT)

Telehealth Network Grant Program (TNGP)

Lugar Center was 2010 grant recipientHRSA – H2ARH20178

Monies used to:Support infrastructure upgradesExpand telehealth services into neighboring rural

communitiesformalize and subsidize the Wabash Valley Rural

Telehealth Network (WVRTN)

Wabash Valley Rural Telehealth Network

Partnership of multiple health care organizations and specialty practices

Participate in Live Video Interactive (LVI) telehealthPurpose: to alleviate the barriers to accessing

equitable health care services Annual telehealth consult volume has grown

From 300 to over 5,000

Telehealth specialties include:

Behavioral health Cardiology Pulmonology Nephrology Child psychiatry Neurology Diabetes education Field STEMI

Occupational health Pediatric consults

for burns, microplasty, and congenital anomalies.

A Methodology for Sustainability Phase I – Needs Assessment

Define the objectives and scope of the assessment

Identify partners/clients, products, and services to include in the assessment

Determine stakeholder needs/requirementsAssess product/service attributes and viabilityMeasure current resource allocation to current

product/service delivery

A Methodology for Sustainability Phase I – Needs Assessment (Continued)

Identify present revenue sources and potential future revenue sources

Data analysisDevelop findings for strategy formulationPresentation to management/staff for

agreement/adjustment

A Methodology for Sustainability Phase II – Strategy Formulation

Treat the findings from Phase I with various analytical tools (competitive forces, value chain and virtual value chain, BCG matrices, decision chain, gap analysis, and others as applicable)

Define strategic alternatives

A Methodology for Sustainability Phase II – Strategy Formulation (Continued)

Present to management for strategic choiceDevelop goals and objectives to support strategic

choicePresentation to management/staff for

agreement/adjustment

A Methodology for Sustainability Phase III – Action Plan Development

Develop product/service design and implementation schedule

Develop revenue projectionDevelop responsibilities and milestones matrixDevelop quality assurance/client satisfaction

metrics

A Methodology for Sustainability Phase IV – Obtain Stakeholder Buy-In

Final report issued to management, presentations by the consultant as necessary

Management review and accountability plan

A Methodology for Sustainability Preliminary Investigation

Scope○ All Telehealth○ WVRTN

Review of Best PracticesEmerging industryHome health care

Strategic Analyses

A Methodology for Sustainability Industry Analysis

Market sizeScope of competitive rivalryAvailability of economies of scaleWhether industry profitability is above or

below par

A Methodology for Sustainability Competitive Analysis

Rivalry among competing organizationsThe potential entry of new competitorsCompetitive pressures from substitute

productsBargaining Power of SuppliersBargaining Power of Customers

A Methodology for Sustainability Key Findings – Competitive Analysis

The sustainability plan will be most effective by ensuring that future partners/affiliates are committed to the network and will incur significant switching costs if they choose to move to a competitor;

A good strategy will include a plan for continued research and development to maintain competitive advantage;

A Methodology for Sustainability Key Findings – Competitive Analysis

It is relatively unlikely that telehealth will see a large influx of new players in the short term;

Potential affiliates will probably not find substitute products for online telehealth readily available;

WVRTN should be attentive to its membership as the sustainability model is developed and introduced.

A Methodology for Sustainability Analysis of Key Driving Forces

Changes in the industry growth rateProduct innovation and technology changeDiffusion of technical know-howRegulatory influences and government policy

changes

Key Findings from Preliminary Investigation The telehealth market is new and unproven.

Therefore, a successful strategy will be based upon thoughtful projections and “best-guesses” that will require a degree of flexibility and rethinking as it is carried out.

The strategy must include an adequate revenue stream from telehealth “customers” that will fund operations and innovation.

The Telehealth Department has the present capacity to deliver robust services and applications to new customers.

Key Findings from Preliminary Investigation (Continued) The organization’s reputation, recognition, and

potential referrals to new customers from its present partners indicate high potential for market expansion.

Continued innovation will be a key in future market penetration.

The strategic plan should capitalize on the organization’s reputation, present products, and future innovations – each of which is a core competency and competitive advantage.

The strategy will be dependent upon a market-driven organizational culture (see next slide).

Key Findings from Preliminary Investigation (Continued)

A market-focused strategy will have to be adopted. The strategy will need to include:Development of an appropriate profile for

future affiliates; Establishment of a market-based pricing model

that is justifiable to CFOs of affiliates;Reasonable acquisition targets and methods;

andFunding metrics that will show progress to

sustainability.

Key Findings from Preliminary Investigation (Continued)

A specific subset of industry opportunities will need to be agreed upon in order to develop precisely targeted activities for exploiting new and sustainable revenues.

Sustainability Retreat

All Center administration and staff, plus key players from the hospital;

One-day agenda focusing on a market-based approach to growth; and

Intention: to build a consensus regarding future direction.

Strategy Formulation Retreat Session 1: INTRODUCTION

Review of Preliminary Findings Working Sustainability Strategy Statement

Presentation“Next steps” process discussion How will our new strategy work with Union

Hospital? How will our new strategy work with our

partners?

Strategy Formulation Retreat Session 2: Market Identification

What kinds of organizations should we pursue as partners (customers)?

Where will our partners be located? How will we find our prospective partners? How important are eCommerce and the

Internet in our new sales model?

Strategy Formulation Retreat Session 3: Our Products and Services

What products and services do we presently provide that have great value to the market?

What products and services do we presently provide that have limited or little value to the market?

What new products and services can we provide in the near term that will have great value to the market?

Strategy Formulation Retreat Session 4: Sales and Development

ResponsibilitiesWho “sells” our products and services now?Who creates our products and services

now?Who will sell our products and services to a

larger market?Who will create our products and services for

a larger market?

Strategy Formulation Retreat Session 5: Product and Service Pricing

What is the price of our products and services?

What is the cost of our products and services?

How should future pricing be structured?What prices should we charge?What is our justification for our prices?

Strategy Formulation Retreat Session 6: Assimilation

Where do research, innovation, and creativity fit in?

What is our “Elevator Speech?”How will we know when we are successful?

Lessons Learned Through the Process

Culture shift is painful It is important to let everyone have input Differing perspectives, ideas, and

attitudes must be considered An outside facilitator is needed Consensus ≠ Compromise