Last week we had a talk with Monique Philippens,
director of
KPN Healthcare. The unit is still small, but shows some healthy growth. It has its own sales, marketing, product management and business development units and comprises 3 companies that KPN acquired over the past few years:
I wrote about the market
before. It is potentially very large and diverse. It benefits from a number of long-term trends, such as the ageing population, the rise in the number of chronically ill, and a (quite worrying) labor shortage. Therefore, it is not just an opportunity for all sorts of service providers - it is bare necessity to digitize and automate the healthcare industry. The market is also quite complicated. There are many participants:
The overall Dutch healthcare market was worth about EUR 50bn in 2006, of which a mere 2% (EUR 1bn) was spent on ICT. The market is expected to grow to EUR 77bn by 2025, and it seems inevitable that ICT expenditure will expand to more of a market average such as 5-6% (which would imply EUR 4bn). KPN doesn't break out figures for Healthcare, but the unit is deeply entrenched in the market. It counts all 104 Dutch hospitals as clients, and services more than 50% of the other professionals (doctors, pharmacists, clinics, care organisations, etc.). By far the
biggest challenge for the overall industry is creating (centrally located)
electronic health records. In the Netherlands, a fully connected system is probably a generation off. There is however an
LSP ('landelijk schakelpunt', national switch point), which is supposed to connect three existing 'information systems':
- ZIS (z for ziekenhuizen = hospitals)
- HIS (h for huisartsen = GPs)
- AIS (a for apothekers = pharmacists).
In the US, Google (
Google Health) and Microsoft (
HealthVault) have set up websites for this purpose. What they do is, in fact, shift the burden of collecting all relevant information from hospitals, doctors and pharmacists to patients. Smart idea! However, there are two problems. First, this can only work if ZIS, HIS and AIS are well organized (which could be the case in the US, but certainly is not in the Netherlands), in order to allow consumers to collect all necessary information. Second, there are all sorts of privacy issues: Who has the right to know what? What does all that have to do with KPN? Obviously, a lot. KPN supplies connectivity to professionals and value-added services to both professionals and consumers. We have to say that we were positively impressed by KPN's strategy toward this market. It comes down to these three steps:
- Traditional ICT services.
- Connecting professionals (information exchange), plus value-added services from third-party providers.
- Consumer services.
We regrouped these capabilities in a slightly different way:
- Link professionals. Building a relationship with professionals is essential in this market. KPN uses the fact that it is a certified ZSP (healthcare service provider), which allows it to exchange information between market participants. The first step in the execution of this part of the strategy was to build a nationwide secure network (basically, a closed VPN), called ZorgConnect ('care connect'). The larger participants are hooked up by fiber (hospitals, of which roughly 50% are now connected).
- Value-added services for professionals. Some examples here. Recently, KPN scored a deal with ZorgDomein, which built a referral application for GPs. Using this, the doctor can easily refer patients who need specialist care. The doctor can see at which hospital a specialist works whose services are needed, check availability and make an appointment. Also, KPN has an application that allows oncologists nationwide to join in a videoconference and share multimedia content.
- Information and entertainment for patients, whether in hospitals, clinics or at home. KPN built a platform (UI) that combines offerings from its traditional portfolio (VoD, internet access, etc) with information that is relevant to the patient-as-a-patient. For the latter, KPN uses third-party applications exclusively. KPN wants the platform to remain open; adding applications of its own would turn off other suppliers. To this purpose, KPN is even selling its in-house applications factory (part of Getronics). An example is Koala, for which KPN teamed with Menzis (insurance co), a local healthcare provider in Groningen as well as the recently acquired company IPT. KPN is building 5 services for now:
- Video communication
- Monitoring (heartbeat, etc.)
- Alarm
- Self-management
- Domotics
To round off, a few remarks.
- KPN seems very well positioned to consolidate the market. It has built a network + services, and can now work to expand the KPN Healthcare unit. But of course, there are competitors such as Tele2/Versatel.
- E-health is a complex and yet well defined market, with the patient clearly in the middle. Not quite the same goes for students (as the center of the telelearning market) and workers (in the teleworking market), but still: these markets could be approached in a similar way. There are dedicated networks linking schools, and it isn't very hard to think of applications for these markets (for students and workers on the one hand, teachers and managers on the other). To take the argument even further: how about soccer? (think of a network linking fans to stadiums, and service them with applications including games, gambling, Web 2.0, etc.).
- I particularly like the bit where they say they do not want to develop applications themselves. They want an open platform (very much in Telco 2.0 style) and they want to be friends with everybody, in order to be the platform of choice.
- When it comes to B2C services, the Daily Media box comes to mind. Not only does it allow service access from the TV, the Daily Media platform and business model hook into KPN's strategy very nicely. It is open too, so an health insurance company (for instance) could come on board to distribute the box and use it as a store front.
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