The mHealth Revolution

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ESSEC\’s professional thesis from Bruno Rakotozafy (2011). Following an internship at General Electric Healthcare

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The mHealth Revolution

  1. 1. ADVANCED MASTER’S DEGREE INSTRATEGY AND MANAGEMENT OF INTERNATIONAL BUSINESS The M-Health revolution: which opportunities for a medical device company? GE Healthcare Presented by Bruno RAKOTOZAFYProfessional Thesis Advisor: Xavier PavieMission Advisors: Laurent Roche & Eliane Apert
  2. 2. RésuméLe secteur de la santé est un secteur particulièrement complexe car il implique de nombreuxacteurs et touche potentiellement tout le monde. Il est également hautement dépendant desétats et des instances régulatrices ce qui le rend différent de tous les autres secteursd’activités. C’est peut-être pour ces raisons que le secteur de la santé n’a pas encore été, oupeu, impacté par les Technologies de l’Information et de la Communication (TIC) commel’ont été la plupart des autre activités. Cependant nous observons une tendance profonde aurapprochement entre la santé et les TIC, à l’heure où les gens apprivoisent l’usage del’Internet et des objets connectés dans leur quotidien. Cette convergence naturelle entre unescience millénaire et des technologies chamboulant l’ordre établi pourrait bien prendre sonessor avec l’apparition de solutions innovantes de M-santé (santé Mobile). Instrumentsmédicaux connectés, plateformes Internet participatives, applications santé sursmartphones, médecins connectés, téléassistance aux personnes dépendantes. Voiciquelques exemples d’applications promises par la M-santé et qui pourraient révolutionner lafaçon dont le secteur est structuré et les soins sont prodigués. Les fabricants d’équipementmédical possèdent la légitimité pour devenir les locomotives de ce mouvement en marche.C’est donc dès à présent qu’il convient, pour ces entreprises, de détecter les opportunités àsaisir, d’imaginer les produits et solutions pertinentes, de construire l’écosystème associé etenfin de prévoir les modèles économiques qui seront viables.Mot-clés : Santé, M-Santé, Equipement Médical, TIC, Internet, Smartphones, Docteurs.AbstractThe health sector is a particularly complex one because it implies lots of actors and impactspotentially everyone. It is also highly dependent on states and regulatory bodies making it bedifferent from the other business sectors. This may be the reason why the health sector hasnot been stricken by Information and Communication Technologies (ICT), on the contrary toother business fields. However we can notice a convergence trend between health and ICT,while people have adopted the use of Internet and connected devices in a daily basis. Thisnatural convergence is bringing the most promising applications with M-health solutions(Mobile health). Connected medical devices, web health platforms, smartphones’ health appsor connected physicians are some of the most encouraging solutions that could revolutionizethe health sector and the way healthcare is provided. Medical devices manufacturers havethe legitimacy to lead this undergoing movement. There is no more time to waste for thosecompanies to detect opportunities, design relevant products and solutions, build associatedecosystems and overall imagine correct business models.Keywords: Health, M-health, Medical Devices, ICT, Internet, Smartphones, Physicians.
  3. 3. INTRODUCTION……………………………………………………………………..2PART 1 -   THE HEALTH SECTOR: A CONSERVATIVE APPROACHDESPITE OF INNOVATIVE TECHNOLOGIES ................................................ 4   1-   HEALTH CONCEPT IN THE SOCIETY ......................................................................... 4   a)   Sociological and demographical aspects................................................................... 4   b)   Scientific aspects ....................................................................................................... 7   c)   Economic aspects...................................................................................................... 8   2-   THE HEALTH SECTOR GATHERS A LOT OF PLAYERS............................................... 10   a)   Women and men are the heart of healthcare .......................................................... 10   b)   Pharmaceutical and medical equipment industries are innovation leaders ............. 13   c)   Payers: State is the primary payer and health insurances complete the offer......... 16   d)   The patient: a forgotten end-user ............................................................................ 18   3-   A BIG PICTURE OF THE HEALTH SECTOR ............................................................... 19  PART 2 -   WHEN ICT MEET HEALTH.......................................................... 21   1-   FROM INFORMATION AND COMMUNICATIONS TECHNOLOGIES TO CONNECTED HEALTH TECHNOLOGIES ........................................................................................... 21   a)   A short story of communications and its recent ramping evolution.......................... 21   b)   Connected health technologies: E-health and M-health .......................................... 24   2-   DIFFERENT PLAYERS FROM DIFFERENT BACKGROUND IN THE M-HEALTH UNIVERSE. 27   a)   Consumer electronics manufacturers ...................................................................... 27   b)   Infrastructure builders and telecom operators ......................................................... 29   c)   Healthcare stakeholders .......................................................................................... 30   d)   A big picture of the M-health.................................................................................... 31  PART 3 -   WHICH POTENTIAL MARKETS TO TARGET AND BUSINESSMODELS TO DESIGN? .................................................................................. 32   1-   UNDERSTAND THE HEALTHCARE PATTERN AND IDENTIFY KEY CHANGING FACTORS . 32   a)   Education/prevention, diagnosis, therapy, post-treatment monitoring..................... 32   b)   Targeting the real challenges .................................................................................. 36   c)   Home care services ................................................................................................. 41   d)   Patient empowerment.............................................................................................. 42   e)   Cost, access, clinical outcomes ............................................................................... 43   2-   DESIGN A RELEVANT BUSINESS MODEL ................................................................ 44   a)   Why medical device companies are more likely to be leading players in M-health?44   b)   Build patient centric solutions .................................................................................. 45   c)   Adaptation to the complex practice of healthcare.................................................... 47   d)   Build partnerships to provide fully integrated M-health solutions............................. 48   e)   How to sell and monetized wireless health solution ................................................ 50   3-   FORESEE ADVERSE OR COLLATERAL EFFECTS OF M-HEALTH SOLUTIONS: BE CONSCIOUS AND RESPONSIBLE INNOVATORS. ............................................................. 54   a)   Ethics and health Information security..................................................................... 54   b)   Reduce impact on environment and people ............................................................ 54   c)   Use of M-health in the developing world.................................................................. 55   Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 1
  4. 4. IntroductionIt is not abusive to say that the world has entered a new area: the connected world. Thisevolution has led to many changes in the society and in human activity. This movement hasbeen supported by the emergence of Information and Communication Technologies alsoknown as ICT. ICT is often quoted nowadays and in reality those technologies are muchmore present than one can expect since they are deeply impacting our daily life. Thesetelecommunication technologies, and the consequential applications, are literally reshapingour life. In the meantime some activities stayed reluctant to these changes and have knownkind of inertia. One of the obvious sectors that have remained conservative toward this trendis the health sector.It would be crazy to think that the healthcare world will remain “disconnected” and completelyseparate from that revolution on the way. More and more people are now thinking aboutapplying all those discoveries to health. And especially how applying mobile technologies tohealthcare. It is still the preliminary phase of an important movement. What is sure is that thepath seems to be though because of the inherent sector’s complexity but also becausehealth is a serious matter. Yet this seriousness is also the most powerful reason to makechanges happened. One significant point to highlight is that ICT technologies have radicallychanged the business approach in economic sectors already impacted. The shift from aselling-industrial-product approach to a providing-integrated-services one. In our case itmakes sense since healthcare is basically a service.The purpose of this work is clear. Help understanding both health and ICT sectors in order tounderstand how they can converge and how it would be possible to deliver relevantsolutions. Understand the two universes means understand them deeply, understand theirtechnical aspects, understand their own philosophy, understand their relationship with thepeople they provide and understand how the different stakeholders of both worlds couldfinally find a mutual interest. To be simple the problematic we are going to answer is:“When health becomes mobile: which opportunities to catch and which business models toimplement in order to provide and improve health services through mobiles devices. Anatural convergence between ICT and medicine”In order to deal with this really exciting but complicated subject it has been necessary todefine the scope of such a work. Indeed it would have been pretentious trying to tackle everyaspect of this challenging topic. One reason is that both health and ICT fields are extremelywide ones and include tons of different things. Another reason is that the diversity of ourworld make this problematic be very region-specific.That is why first it has been chosen to focus on mature countries, and France will be ourmajor illustration. We will sometimes consider and talk about the US because it is still one ofthe most innovative countries in the world and it will help us to provide more examples.Second we will treat the subject from a business point of view. Obviously we will have to dealwith political, philosophical or ethical aspects but always as evidences to support thebusiness relevancy. Finally we have decided to include in the scope a reflection about howthose innovations could be responsibly designed. Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 2
  5. 5. This work will be of interest especially for medical device companies which are, as we willsee, the most relevant players to lead the wireless health movement. In a larger extent thisreport will be also useful for all actors that are involved in the healthcare and the ICTindustry. The health sector is clearly undergoing main transformations and those innovationscould be growth drivers in the near future. It will also be of interest for entrepreneurs whowould like to take part in this revolution, because opportunities are huge and there will havespace for a lot of actors. Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 3
  6. 6. Part 1 - The health sector: a conservative approach despite of innovative technologiesCompared to other business fields the health sector is highly complex to approach. For ourpurpose, the aim is to understand how this sector is structured from a business point of view.But healthcare is much more than a simple business. Fundamentally it is even frequentlyassumed that healthcare is a public topic and for the Universal Declaration of Human Right1health is recognized as a universal right (article 25).In this particular context it is crucial to capture the full picture of the health environment. Inorder to do so we will first try to understand how healthcare activities are imbricate in humansocieties, at socio-demographic, scientific and economic levels. A second part will bededicated to introduce the myriad of stakeholders playing a role in the healthcare universe. Itwill include healthcare professionals, industrial actors, payers and last but not least patients. 1- Health concept in the society a) Sociological and demographical aspects Humans and healthHealth is a topic at the center of human existence as it is directly and indirectly linked to lifeand death considerations. From the first historical record discovered so far health issueshave been mentioned. The first doctor known is Imhotep, an Egyptian who lived twomillenaries before Christ2. Among other genius activities Imhotep left a textbook on how totreat some illness. To illustrate the importance of health and, as a direct consequence, thepower obtained by persons who can master it, Imhotep was so revered that Egyptians usedto worship him as a god. Medicine genesis can even be tracked before Antiquity, thanks torecords of plant use for medicinal purpose.According to the World Health Organization “health” is “a state of complete physical, mentaland social well-being, and does not consist only of the absence of disease or infirmity”3. Thismodern definition of health put emphasize on the fact that health not only includesanatomical aspects but also psychological and mental ones. We will not try to debate aboutthe border between well-being and being healthy because it is not relevant for our purpose.But we could be sure that as a general matter, health is a key occupation in human’s life. Is health an individual or a group concern?In the 1940’s a psychologist called Abraham Maslow delivered a theory to explain whatmotivated humans. His theory, originally presented as a hierarchical model was latersimplified into a pyramidal scheme, as showed in Figure 1.1 Déclaration universelle des droits de lhomme, 1948 (http://goo.gl/1c7kv)2 Saari, Peggy. “Medicine And Disease – Who Was The First Doctor In History?.” History Fact Finder. Ed. Julie L. Carnagie.UXL-GALE, 2001. eNotes.com. 2006. 30 Sep, 20093 Preamble to the Constitution of the World Health Organization, 1946 (http://goo.gl/ZRAUF) Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 4
  7. 7. This representation helps us to realize that health is a basic need. And because it is a basicneed for each of us, maintaining a good level of health is a strong individual motor. Nevertheless we can feel that health is more than an individual concern, it is also a group preoccupation. First, the ill person often cannot treat itself. It receives treatment from another person. Answering the health need require, at least, 2 people. Second because a disease not only impact the sufferer but also its entourage. Because either the disease is contagious, or because the sick person cannot take care of itself. So quickly civilizations and society had to organized healthstructures in order to manage or monitor individuals’ health. In a society this organization is Figure 1 - Maslows hierarchy of needs often known as “public health”. According to Charles-Edward AmoryWinslow, a famous American thinker and teacher at Yale University, public health is “thescience and art of preventing disease, prolonging life and promoting health through theorganized efforts and informed choices of society, organizations, public and private,communities and individuals”4. This concept was theorized quite recently but we can observepractical examples of it since ancient times. For instance Romans understood that it wasnecessary to control human waste diversion in order to limit diseases among urbanpopulations.Today public health is a major concern in western countries and in 1948 a world-scalestructure were set up to tackle with this issue: the World Health Organization (WHO). In amajority of mature countries, including France, health is highly funded by governments andrepresents a huge part of states’ expenditures. Governments implication is justify by the factthat health is considered as a primary right. National health insurances will be described laterbut we can already write that health, as a group concern, is an economic subject.So we better understand now that health is both an individual and a group concern. It isimportant to know that for our purpose. Indeed we will take into account this doubleconsideration when we will talk about relevant business models to design. Mobile solutionswill have to be individually accepted while promoted by opinion leader groups. Different cultures, different health standardsAs we have just seen health is a double concern. But we can also underline that health isculture-dependent. Health is closely link to cultures and religions since it concerns person’sintimacy. The science that focuses on that relationship is called medical anthropology.Herman, in 2000, defined the medical anthropology as “how people in different cultures and4 The Untilled Fields of Public Health, C.-E. A. Winslow, 1920 (http://goo.gl/NcyPY) Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 5
  8. 8. social groups explain the cause of ill-health, the type of treatments they believe in, and towhom they turn if they do become ill”5. It is not a revelation to say that in different cultureshealth is considered differently. Eastern countries put emphasize on traditional and softmedicine. For them plants are the most efficient drugs. And mind is the better tool to preventor fight illness. In some other cultures or religion, women are treated differently than men.Even if we will focus on western countries in this work, it is useful to be aware of that sincepopulations in those mature countries are being more and more multi-cultural.In general, health in the western world is characterized by its technical-medical approach. Ifwe have another look at the WHO definition of health (“state of complete physical, mentaland social well-being, and does not consist only of the absence of disease or infirmity”) wecould say that health practice in western world is focused on “physical” and “absence ofdisease or infirmity”. In practice it means that health is a scientific subject that should behandled as a pragmatic, factual and empirical one. Little credit is given to non-visible, non-demonstrable solutions. Strong evidences are mandatory and it is the only valuable way toproceed.We should keep that idea in mind because rationality will be the principal way to give value tomobile solutions. It will be necessary to provide strong evidences and measurable benefits. Health and demographyTo conclude with the importance of health in our societies it makes a point to talk abouthealth and demography. Not only health discoveries have strongly impacted the worlddemography but the opposite is also true. Demographic changes influence health systems.Life expectancy has globally (but unequally) rose all along human history in parallel to healthinnovation that has allowed reducing mortality. As a consequence the world population hasexponentially grown. Hardly 1 billion human on earth in 1800 it is assumed that we will be 9billion in 2050. For sure those medical innovations were major improvements for humanity.But in the meantime there are side effects of this demographic explosion, indirectly impactinghealth of people. It will be tough to detail all factors that have been influenced bydemographic changes and in return threat our health so we will just give some easyexamples.Demographic boom has increased populations’ concentration. In addition to rural exodus inmature countries during the last century it has led to a very high human density in urbanareas. And this over-population not well structured can sometimes causes different issues.Among others it is a factor creating insanitary zones and promoting spreading of contagiousillnesses.Ageing population is another heavy demographic trend. Medical progress allowed peopleliving longer but this has also brought a bunch of new diseases specific to elderly. This isparticularly important in mature countries and we will see further the impact of that ageingtrend.5 Culture and Health: Applying Medical Anthropology, Michael Winkelman, 2008 (http://goo.gl/csWTu) Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 6
  9. 9. b) Scientific aspectsFor a better understanding of health sector it is important to exhibit a brief timeline of medicalpractice and technologies.From antiquity to Middle AgesThe first proof of medical practice is dated from the new Stone Age6 with the discovery oftrepanations practice. Trepanation consists in boring a hole in the skull. It is believed thattrepanning was used to relieve horribly painful headaches.As said previously Imhotep was the first physician known by name. But it is considered thatthe born of modern medicine came with Hippocrates, around 400 years B.C. Hippocrates(460-310 B.C) based medicine on objective observation and deductive reasoning. Galen(131-201 A.D) was considered to be the most important contributor to medicine followingHippocrates. He was personal physician to several emperors and published some 500treatises. Up to now he is still respected for his contributions to anatomy, physiology, andpharmacology.Persian doctor Rhazes (865-925 A.D) is famous for having pioneered pediatrics and wasknown to have been the first to use anesthesia before surgery. Muslims have brought a lot inthe history of medicine. Avicenna (980-1037) wrote The Book of Healing and The Canon ofMedicine, establishing experimental medicine and evidence-based medicine. He was theprecursor of modern hospital concept in the Middle East. Those books remained a standardin European universities until the 18th century. A second Muslim, Avenzoar (1091–1161) isknown to be the father of modern anesthesia.From 16th to 18th centuriesBut this is not until the early 16th century that Paracelsus, a German alchemist, pioneered theuse of chemicals and minerals in medicine. Then there was a major revolution in Europeanmedicine with the release of Fabrica Corporis Humani, written by Andreas Vesalius, whichcorrected major Greek medical errors. In the meantime variolation (infecting peoplepurposively with smallpox) was implemented in China7. Variolation, and inoculation ingeneral, would further lead to vaccination’s concept.In 1590 Janssen invented the first rudimentary microscope. This was an important milestonein medicine’s history since Anton van Leeuwenhoek (1670) used this tool to first tocharacterized human cells. In 1650 Sir Christopher Wren was the first to administermedications intravenously and experiments with canine blood transfusions.Later, Edward Jenner (1749-1923) developed a method to protect people from smallpox byexposing them to the vaccine virus (a cow disease). The process became known asvaccination. Jenner is sometimes called the founding father of immunology.The 19th century: revolution of tools6 History of medicine, Wikipedia (http://goo.gl/HBTB7)7 Une petite histoire de la medicine, Valentin Daucourt, 2002 (http://goo.gl/oZfi4) Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 7
  10. 10. For a long time, the practice of medicine was based on patient’s descriptions of symptomsnot based on hands-on experience such as examination of a patient’s body. The 19th centurywas a turning point for physicians thanks to innovations in medical techniques andequipment to better diagnose and treat patients.Stethoscope (1816), ophthalmoscope (1851), laryngoscope (1859), X-ray use for medicalimaging (1895), sphygmomanometer (blood pressure meter, 1896) and ECG (1901) changedthe way diagnosing people, to hear, feel and see their bodies.The first human blood transfusion (1819), the first vaccine for cholera (1879) and the firstbottle of aspirin sold (1899) were major innovations to treat or prevent people.In parallel new methods improving medicine practice appeared. Antiseptic Principle of thePractice of Surgery (1867) by Joseph Lister, convinced of the need for cleanliness inoperating rooms. In the 1870’s Louis Pasteur and Robert Koch established the germ theoryof disease. Before this discovery, most doctors believe diseases were caused byspontaneous generation.The 20th century and nowEverything went faster during the 20th century. The use of technologies from other fieldsallowed a revolution in diagnosis. Medical imaging breakthroughs (X-ray, ultrasound,computed tomography, magnetic resonance imaging) resulted from advances in physics,mechanics and computer sciences. Biological diagnosis benefits from innovations in biologyand automation. There was in the same time a revolution in treatment. Drug manufacturingbenefits from chemistry and biology improvements. Equipment like intensive care units orpace makers overcome unpaired human functions. Transplantations and grafts became areality thanks to biology advances.Today we even go further with biotechnology and bionic sciences. We are almost able tocreate super-humans or living beings from scratch.Despite of this huge step further in health technologies during the last century, practice ofmedicine has not evolved as fast. This prosperous era of technology improvement was agood thing for the emergence of health industry (pharmaceutical and equipment industry).But when we talk about how healthcare is provided, progresses are few. More than that,healthcare professionals have loose influence and weight in favor of the industry. c) Economic aspectsIn order to evaluate the weight of health in our society it is important to determine theeconomic impact. The aim of this report is to select best opportunities to be addressed bymobile solutions and it is worth understanding the most promising health sub-sectors.The Chart 1 gives us an overview of health expenditures’ weight compare to the GDP inFrance. Representing 11,7% of GDP in 2009, French health expenditures are far below theUSA spending around 17,4% of their GDP. Nevertheless it is above the OECD average(9,5% of GDP). Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 8
  11. 11. 2000 2009Care and medical goods consumption (CMGC) 115,1 175,7 Funding pattern of CMGC: Social security 77,1% 75,5% Local collectivities 1,2% 1,3% Complementary Organisms (Mutual fund, Private Insurance) 12,7% 13,8% Households 9,0% 9,4%Residential Care Facilities 2,9 7,4Daily indemnity 8,2 11,9Prevention 4,1 6,2Health professionnals social coverage 1,6 2,0Research 5,4 7,5Training 0,8 1,3Administration costs 11,4 15,3National health expenditures 146,9 223,1% of GDP 10,2% 11,7% Chart 1 - France health expenditures, € billions (source: INSEE)Obviously “Care and Medical Goods Consumption” is the first account but it is remarkable tonotice that administrative costs ranked second, with almost 7% of the total.Translate into per capita expenditures it gives €3600 for every French citizen. “Care andMedical Goods Consumption” is mainly financed by the Social Security with up to 75% ofexpenditures covered. But between 2000 and 2009 the part of households andcomplementary organisms in that funding rose by 1,5%. 2000 2009Hospital care 52,7 78,0In-town care 31,2 48,3 Physicians 15,2 22,1 Healthcare associates 6,3 11,6 Dentists 6,7 9,8 Analysis 2,8 4,5 Other 0,3 0,3Transportation 1,9 3,6Medications 23,6 35,4Other medical goods (glasses, prosthesis, disabled 5,7 10,5vehicles, small equipment and bandage)Care and Medical Goods Consumption 115,1 175,7% of GDP 8,0% 9,2% Chart 2 – Breaking down of Care and Medical Goods Consumption, € billions (source: INSEE)A deep dive into the principal account of national health expenditure, “Care and MedicalGoods consumption”, shows us that some categories have almost doubled (Chart 2). Forinstance the “healthcare associates expenditures” account, mainly represented by nursesand physical therapists rose from €6,3 to €11,6 billion. The same observation can be madeabout the “other medical goods” category. It could be explained by a volume increase and aprice increase. Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 9
  12. 12. Finally it is important to notice that the economical weight of health depends on the population’s age. Figure 2 explicitly proofs that the older the person is , the higher health expenditures are. The impact of ageing population is then obvious. Graph 1 - Health expenditure per capita by age (source IRDES) 2- The health sector gathers a lot of players.In this section will be exposed and detailed the categories of players that are involved in thehealth sector. The description will be based on mature countries scheme, especially onFrench and US ones. It will help us to determine who hold influence and decision’s powers.In order to approach the sector easily, four groups of « involved parties » have beenidentified and will be set forth. First, healthcare professionals, representing the heart ofhealthcare service. Second, health industrial companies, including pharmaceutical andmedical devices firms, providing healthcare professionals with tools and products to treatindividuals. Strongly linked to the first category they often are the initiators of innovations.Then states and governments will be depicted as central players in the stakeholder map.Finally patients will be outlined. Although they are the final beneficiaries of any healthcareservice it makes a point to describe this group lastly if we consider its power of influence. a) Women and men are the heart of healthcareThe general practitioner is the common image that comes to one’s mind when the healthprofessional word is mentioned, at least in western countries. But it would be improper tolimit the healthcare workforce to this unique category of women and men.Because « healthcare » include the word « care » it will not be surprising that the healthcareprofessional category includes social and paramedical occupations in addition to general andspecialist physicians. Health occupations: from medicine competencies to social activitiesHealthcare professionals constitute a non-homogeneous group of people aiming at providinghealth services to individuals, families and communities. But their action is not limited to cureill people as they also provide preventive, promotional or rehabilitation services. This waythey also have an impact on healthy people. Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 10
  13. 13. Physicians and pharmacists: the upper classAccording to INSEE standards (French Statistics Institute)8 a first sub-group can beidentified. It gathers the medical and pharmaceutical professionals. Highly knowledgeableabout medicine, doctors in medicine, professors in medicine, pharmacists but also dentalsurgeons represent an upper class within the health workforce, since they are the mostskilled. Their mission is to promote, maintain or restore human health thanks to the inquiry,diagnosis, and cure of physical disorders, diseases or mental impairments.In almost all countries, educative paths to become medical or pharmaceutical professionalare among the toughest and the most elitist ones. For instance in France a doctor isauthorized to practice after 6 years of higher education at university and 3 years of internatunder the responsibility of an experienced physician. A numerus clausus is applied as soonas the second year and limits the number of practitioners. If one desires to be a specialist,the internship part is again longer. Education for pharmacists or dental surgeons is roughlyas long and hard.Being a practitioner is often a vocation. The personal choice to carry out a hard educativecourse may be motivated by different factors but generally it has roots in the idea of helpingand curing others. The Hippocratic Oath9 shows exactly that state-of-mind. Requiring a highlevel of knowledge for treating people and make them being in a better shape there is also ahigh degree of psychology in the art of medicine. The psychoanalyst Mr Balint has studiedthe particular physician-patient relationship and it results to 3 key points10. i) One of modern medicine’s weak is its trend to focus more on curing a disease than treating an ill person. ii) One third of the medicine practice is only a psychotherapist one. iii) The physician-patient relationship is based on domination and submission, linked to the power of the physician and the weakness of the patient.Other aspects of this physician-patient relationship will be discussed further in a partdedicated to the rebalance of the power and its acceptance for the development of healthmobile services. One last point is that people (and physicians too) often considers the activityof physicians as synonymous with high ethical and integrity standards and hardly with acommercial occupation. That is also a fundamental point in the design of an acceptablebusiness model for mobile health services.Pharmacists are in a quite similar position than physicians in their relation with patient. Theirmission is to guarantee the well distribution and selling of medication and to ensure the safeand effective use of medication. They act as intermediaries between the prescriber and thepatient. In this role they share a heavy legal responsibility with physician. In France,pharmacists have also prescriptive authority. Moreover these medication specialists are oftenthe first point-of-contact for patients and their role more and more includes the managementof health. That mechanically increases their responsibility. On the contrary to physicians, the8 INSEE, Healthcare professionals in France, 2010 (http://goo.gl/uQgjZ)9 Hippocratic Oath, Translated by Michael North, National Library of Medicine, 2002. (http://goo.gl/yZuI3)10 Balint M. " Le Médecin, son malade et la maladie " Trad. J.P. Valabrega,Petite collection Payot, Paris, 7ème éd. 1996 Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 11
  14. 14. pharmacist’s status suffers from a lack of recognition. Although they bear an enormous levelof responsibility they tend to be seen like commercial professions. Plus their relations withphysicians have often been conflicting when it is about to decide the limits of each other’sactivity, and the share of decision power between them. The emergence of generic and over-the-counter drugs continues to create divergences. However pharmacists remain key playersin health systems and a 2009 poll in France11 illustrates this statement. 55% of intervieweesanswered that the pharmacist is the second most viewed health professional and for 96% ofthe sample “the pharmacist is an essential health professional”.All these factors have feed the idea that medical and pharmaceutical professionals are abovethe average persons. In a 2009 French poll title “Perception of occupations”12, the generalpractitioner occupation is ranked 2nd in both term of prestige (48% of interviewees answered“lot of prestige”) and term of utility (79% answered “very useful”). As a result it may be logicalthat a feeling of superiority appears among the medical professionals themselves. The pointhere is not to criticize their status and the importance of their competencies but tounderstand how they can feel uncomfortable faced upon major changes the mobile healthrevolution could bring.Medical assistant occupations: the insidersBesides the medical and pharmaceutical sub-group, still according to the INSEEcategorization, we found medical assistant occupations. This category gathered a wide panelof health professionals including nurses, diverse therapists (physiotherapists, podiatrists,speech therapists, orthoptists, opticians or audiologists) and technicians (mainly X raytechnicians). Their role is totally supplementary to the first sub-group of physicians andpharmacists in providing health services. These occupations are seen as less prestigious inmodern health system. This is the case for some therapists, not considered as specialistphysicians, and overall the case for nurses. The education path is for sure shorter and theirscientific knowledge level is obviously lesser than physicians one. But they play a key role inthe act of providing health care and support the physician or pharmacist’s activity. In generalthey also pay more attention to the environment and the history of patients than physiciansand as a consequence are really good interlocutors for patients.Within this group nurses and midwives represent the largest contingent. Indeed, according to2011 WHO (World Health Organisation) statistics in (Chart 3), nurses and midwives areglobally twice as much as physicians. Physicians Pharmacists Nurses & midwives France 213 821 75 432 548 429 World 9 171 877 2 587 043 19 379 771 Chart 3- Healthcare workforce (source: WHO health report statistics, 2011)Although they do not or hardly have prescriptive authority, medical assistant workers are keyactors in the development of mobile health services for different reasons: i) They are numerous and constitute a dense network. ii) They really are on-the-field and have the empirical knowledge of the health system11 Vision Critical, Image et attachement des Français à la profession de pharmacie, 2009 (http://goo.gl/xShto)12 Logica-TNS Sofres, L’image des professions, 2009 (http://goo.gl/4gNDh) Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 12
  15. 15. iii) In some areas they are the only health actors, especially in remote areas. iv) They are receptive to innovations that increase their recognition. v) They are interesting in solutions improving their efficiency. b) Pharmaceutical and medical equipment industries are innovation leadersThere are two industries that are predominant in the health universe. First is thepharmaceutical industry. Second is the medical equipment one. Both of them are verypowerful, scientifically and economically. The major milestones of medicine innovation havebeen previously explains and it showed that at the beginning initiators of breakthroughs weremostly men and women. Pharmacists were used to create drugs in their own laboratories.And ingenious people invented physical or mechanical systems to diagnose or helpphysicians curing diseases. Then in the last century, the health sector was deeplytransformed by the industrial revolution that occurred in all the business areas. Todaypharmaceutical and medical equipment firms are unavoidable and among the most influentialand profitable at a global level.The aim of this part is first to discover how these industries are organized. The secondobjective is to understand the exact role of those companies and how they interact with theother health actors in mature countries. A last point will raise the paradoxical situationbetween the purpose of a for-profit enterprise and the ethical dimension of health business. Pharmaceutical companiesThe pharmaceutical industry develops, produces, and markets drugs for use as human orveterinary medications. It is one of the most profitable industry gathering pharmaceuticallaboratories and biotechnology companies.Facts and figuresAt the beginning medication used to be made by apothecaries and sold in drugstores. Thefirst of this store known was active in the medieval Islamic world, a fertile region and periodfor health innovations, as previously detailed. Most of contemporary’s pharmaceuticalcompanies were born during the chemical revolution at the end of 19th century when drugscould be synthesized.The 2009 global pharmaceutical market was evaluated at $810 billion. The French domesticmarket weighted more than $40,5 billions the same year according to IMS Health13, at thefourth position after the US, Japan and Germany. The average net income for the top tencompanies is around 19% according to Global 500’s Fortune ranking.Produce a pharmaceutical product requires a lot of money and time. In addition to be one ofthe most profitable industries it is also the one spending the most in research anddevelopment. Overall 2009 global expenditure on discovering and developing new medicinesamounted to an estimated of $70 billion14, i.e. 9% of revenues.13 Global pharmaceutical industry and market, ABPI (http://goo.gl/NT73t)14 Drug R&D spending fell in 2010, and heading lower, Reuters, 2011(http://goo.gl/hEBsa) Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 13
  16. 16. Just to understand briefly the pharmaceutical activity it is useful to have a look at Figure 3.As showed, the development process for one drug, before being on the market, lastsbetween 10 and 12 years and costs in average $850 million15 according to a recent study. Figure 2 - Development of a pharmaceutical productMarketing expenses and compliance in the pharmaceutical industryAfter R&D, the marketing and promoting effort is the most important activity forpharmaceutical firms. Worldwide pharmaceutical marketing & sales spending were of $89billion in 2009 according to Cegedim16, a market research company. Yet this is significantlyhigher than R&D expenditures and it can be explain because of different factors.The most valuable assets for a pharmaceutical company are its patents. In general a patentlasts 20 years with the possibility to extend this period for few years. A patent allows the firmto make sustainable selling of the patented drug without being threat by the competition. Ifwe have a look to pharmaceutical firms‘ financial accounts we can observe that revenues areconcentrated on the best-seller drugs, also called blockbuster. Unfortunately we are today ina period were a lot of patents are falling in the public domain, without being really replacedby new blockbusters. It is a marvelous opportunity for a new kind of pharmaceuticalcompanies that manufacture generic drugs based on this unpatented blockbusters. In suchan environment the battle occurs on the marketing and sales fields that need huge amountsof money.Another particularity of the pharmaceutical industry is the tough regulatory frame. The Figure3 shows that a market launching follows 2 pre-approvals and one final approval fromregulatory bodies. In France the regulatory organism is called AFSSAPS. And it is neverfinished since during the commercialization a drug is still assessed. The phase 4, orpharmacovigilance phase, aims at evaluating the benefit/risk ratio. Some recent events inFrance (for instance Servier case) have showed that this continuous evaluation is bothnecessary for the users and critical for the companies.15 Estimating The Cost Of New Drug Development: Is It Really $802 Million?, C. P. Adams and V.V. Brantner,2011(http://goo.gl/MXn0U)16 2010 Audited Pharmaceutical Marketing Expenditure Results, Cegedim Strategic Data (CSD), 2011 (http://goo.gl/i4TXe) Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 14
  17. 17. Are pharmaceutical firms responsible innovators?Up to now pharmaceutical companies have not been the most active in integratingresponsibility in their innovation process and in the lifecycle of their products. For instancetough debates are tough about the animal testing during pre-clinical trials. In 1959 Russeland Burch have described the “3Rs” principle for the use of animals in research17. i) Replacement refers to the preferred use of non-animal methods over animal methods whenever it is possible to achieve the same scientific aim. ii) Reduction refers to methods that enable researchers to obtain comparable levels of information from fewer animals, or to obtain more information from the same number of animals. iii) Refinement refers to methods that alleviate or minimize potential pain, suffering or distress, and enhance animal welfare for the animals still used.Drug recycling channels exist but have experience issue. In France Cyclamed was createdby pharmaceutical companies to cope with the collect of pharmaceutical products. Theseproducts are particularly sensitive ones since they include complex component.Unfortunately Cyclamed has to stop its recycling activity (sending of unused drugs in poorcountries) in 2008 due to embezzlement problems. Medical device companiesMedical device companies are the other health industry actors. According to the WHO amedical device means “any instrument, apparatus, implement, machine, appliance, implant,software, or material to be used for human beings for the purpose of diagnosis, prevention,monitoring, treatment of a disease or an injury”18. By definition this term covers a vast rangeof equipment, from simple tongue depressors to MRI machines, including wheelchairs orpacemakers. In other words this industry provides thousands of different products. It is stillpossible to categorize those products into different classes: i) Diagnostic/analysis devices ii) Drug administration or surgery devices iii) Substitution/support devices iv) Monitoring devicesFacts and figuresAs a consequence there are hundreds of companies operating in this market, but themajority of revenues are concentrated by thirty of the top companies, among them: Johnson& Johnson, Siemens Healthcare, Medtronic, GE Healthcare and Baxter.According to Kalorama19, the 2009 global medical device market was valued at $290 billion,roughly a third of the pharmaceutical market. The French market is estimated at $14.6 billionby SNITEM20, representing around 5% of the global market.17 The Removal of Inhumanity: The Three Rs, Russel and Burch, 1959 (http://goo.gl/jmP7C)18 Medical device regulations: Global overview and guiding principles, WHO, 2003 (http://goo.gl/acWMP)19 Medical Device Revenue to Top $300 Billion This Year, Kalorama, 2011 (http://goo.gl/8CNb0) Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 15
  18. 18. Over the last decades medical devices technologies have experienced an impressiveevolution contributing to the general improvement of healthcare. Amongst other, medicalimaging companies democratized the use of today routine machine, such as MRI or CT, andcontinue discovering new applications every day. The diagnostic process has becomeconsiderably more precise thanks to those technologies.In the same time the different technologies have not only converged between them but alsowith pharmaceutical ones. Diagnostic imaging firms, like GE Healthcare or Siemens, haveacquired in vitro diagnosis ones. Laboratories like Abbot, Roche and Baxter have developedstrong business segments in medical devices. Indeed medical devices technologies havekey advantages over their drug counterparts. Product development process last between 3 to5 years, compared to 10 to 12 years for a drug. Regulatory approvals are also less riskysince the majority of medical devices are not invasive.This industry has a higher potential than the pharmaceutical industry, to answer the healthchallenges including cost efficiency, care accessibility and diagnosis accuracy in order todeliver the most relevant treatments. And this trend is already observable in figures since thesector growth over-performs the pharmaceutical industry one21.From a responsible innovation point of view, the medical device industry is as critical as thepharmaceutical industry. Let us remember that old thermometers were made with mercuryinside. It is not before 1999, with a law forbidding marketing mercurial thermometers thandevice makers stopped manufacturing them. There is also a high concern about thedisposable character of some medical accessories. c) Payers: State is the primary payer and health insurances complete the offer.As an introduction to this part we will repeat that the scope of this work is limited to maturecountries and especially to France. Indeed in many countries it is left to the individual to gainaccess to health care goods and services by paying for them directly as out-of-pocketexpenses. On the contrary, in France, health is heavily funded thanks to the national socialsecurity, up to 75% for the Care and Medical Goods expenditure as detailed previously.The French National Health Insurance systemIn France the Social Security was founded just after the WW2, in 1945. The Social Securityincludes 3 branches: Health Insurance, Retirement Insurance and Family Insurance. Thepurpose of this system is to “guarantee employees and their family with a protection againstany potential risks likely to cut or suppress their income, covering maternal and familyexpenditures” (article 1)22. Before this date there were social insurances but they wereorganized by workers associations23. After 1945 those group claimed to keep the socialadvantages they already had.20 Le marché en chiffres des dispositifs médicaux en France, SNITEM, 2011 (http://goo.gl/MoV2R)21 Global medical device market outperforms drug market growth, M. Rosen, 2008 (http://goo.gl/5dIsn)22 Ordonnance portant organisation de la securite sociale, 1945 (http://goo.gl/oUS6R)23 Le financement du système de santé en France, WHO, 2004 (http://goo.gl/mNHup) Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 16
  19. 19. The National Health Insurance system is simple in theory. Every worker and employer has tocontribute via mandatory taxes to fill a national health insurance fund, as a proportion of thesalary earned or spent. In return those contributors could benefit from the health insurancewhen he or she will need care or medications. Solidarity is an important element of theFrench insurance system: the more ill a person becomes, the less the person pays. Figure 3 - Scheme of the French Health Insurance Fund in 2009Figure 4 presents how the French Health Insurance was financed and redistributed themoney in the health system in 2009. One important point is the asymmetry of this system.Indeed there are more expenses than income, and the deficit was about €11 billion in 2009.And it is a chronic problem even tough regular modifications have been made. At thebeginning, in 1945, there were no taxes to fund the Health Insurance. The CSG tax, basedon employee revenues, was only implemented in 1990. While expenses were still overtakingincomes the deficit had to be cover by debt. Then in 1996 the CRDS tax (Contribution toReimburse the Social Debt) was added. The same year the French government voteddifferent laws to help reducing health expenditures, including hospital reforms and efficiencyrules.Up to now the Health Insurance deficit remains an issue and the consequences have a realimpact over the whole health system. For instance states do not hesitate to put pressure onthe health industry, via regulatory agencies, in order to better control price, quality orefficiency of drugs and medical devices. Another tactic is to reduce reimbursement of somemedical products or care. For instance in the 1960, dental and optical care reimbursementswere strongly reduced. In that case the impacted stakeholders are patients because theyhave to pay out-of-pocket.In parallel to national health insurances, usually not covering 100% of health expenditures,people have the choice to subscribe a private health insurance. In 2008 92% of French werecovered by a complementary insurance, compared to only 69% in 198024 (Chart 4).24 La complémentaire santé en France en 2008 :une large diffusion mais des inégalités d’accès, IRDES (http://goo.gl/4S0xi) Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 17
  20. 20. Mutual Fund Private Insurance Contingency Fund French population 59% 24% 17% coverage Health expenditures 7,7% 3,5% 2,5% coverage Chart 4 - Health complementary insurances in France (source: DREES)In that kind of state-controlled health system with a population relying on a dominant NationalHealth Insurance, selling a health product is not that easy. The business model should eitherinclude a solid partnership with a payer (regulatory approval or private insurance partnership)or an inexpensive product for patients. It will definitely be an important point to describe. d) The patient: a forgotten end-userWe deliberately finish the description of health sector stakeholders with the patient since it isthe end-user and final beneficiary of the health system. The word “patient” originally meant“one who suffers”. We will portray patients under different angles. Sometimes patient, sometimes consumerThe patient is the receiver of any healthcare service, most often ill or injured. In comparisonwith other business sector, the patient could be considered as the counterpart of theconsumer. In reality fundamental barriers exists between a consumer and a patient. Bydefinition the consumer is the “economic agent who choose, (buy), use and consume a goodor a service”. In the health system the patient systematically differs from the decision maker(generally the prescribing doctor) and very often also from the bearer of the costs (generallythe health insurance system). Moreover the patient suffers from an asymmetrical level ofknowledge concerning health products and is dependent on health providers. Thischaracteristic causes divergent interests and a lack of clarity in relations between the healthactors. Pharmaceutical companies focus more on healthcare professionals and stateagencies than on patients (anyway advertisement toward patients is forbidden for them). Thesame way physicians hardly asked for patient opinions before treating them. In practicepatient is a passive player with no influence power.Things are moving and the patient role is gaining importance within the health system.Causes come from the inside and the outside. Within the system, due to pressure from thegovernment, patients are progressively educated. Education campaigns aim at rising patientawareness in the way they receive care and consume medications. For example, thecampaign to limit antibiotic usage succeeded in its purpose to control the misusage of thosedrugs. The reforms to improve patient health pathway gave people the responsibility tochoose a general practitioner and respect the procedure in order to be fully reimbursed. Moreover recent health scandals, like Servier’s Mediator case in France, have contributed toincrease a mistrust feeling among peoples. They claim for better transparency andcommunication from the health providers, the health industrials and from the healthcaresystem in general. Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 18
  21. 21. In the same time, changes come from outside the health universe. Large adoption of Internetamong households allows them to access a lot of information. They seek for information thatare often more objective. It is so true that seeking for health-related information activity onthe Internet is now comparable to e-mailing activity in term of spending time. Physiciantestimonials relate that some patients come and visit them with a pre-diagnosis or sometimescontradict their conclusion. It is obvious than people are becoming involved in the healthsystem and are gaining weight. The healthy, the ill and the entouragePatient’s group is far from being a homogeneous category. Because a patient is overall anindividual and because diseases are numerous it is tough to constitute sub-groups. Moreoverit makes a point to include healthy people into the patient group. Indeed healthy people arecontributing to the National Health Insurance fund. Indeed healthy people are also seekingfor health information and are potentially future patients. For example the preventive activityis clearly dedicated to healthy people aiming at keeping them healthy. Finally the patient’sgroup should also include sick persons’ entourage. Indeed a health problem directly impactsthe sufferer’s entourage, often its family, and they are willing to be involved. Minor diseasesor injuries softly involve the entourage. But if we consider chronic diseases the entouragebecomes crucial. For example an Alzheimer patient will be entirely substitute by itsentourage, becoming indirect sufferers. It is remarkable that this fact is hardly take intoconsideration by the health system but it is a major challenging point. 3- A big picture of the health sectorThanks to the detailed description of health players it is time to integrate them in the healthsystem. We will use the value chain model to understand the bases of relationship andcompetition between suppliers and provider. It will also be an ideal representation to highlightchanges and opportunities along the value chain.A traditional healthcare value chain has been established and popularized by Lawton Burnsin 2002, as represented in Figure 5. Figure 4 - The Healthcare value chain (source: Lawton Burns)This pattern shows 5 different categories of actors, 3 majors and 2 intermediaries. The firstone is the producers’ category. We have already analyzed those actors, includingpharmaceutical and medical equipment manufacturers. They are the innovation initiators and Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 19
  22. 22. provide products and tools to healthcare providers. Those last, gathering hospitals (public orprivate), physicians but also pharmacies promote the consumption of health products. Theyprescribe medications and use medical equipment. They are the link between endbeneficiaries, patients, and health manufacturers. They bring value to products thanks totheir medical knowledge. Between producers and providers stood distributor intermediariesaiming at buying health products to the first category and sold them to the atomizedproviders’ category. Although healthcare providers can directly buy to producers, theintermediation of wholesalers makes possible to reduce costs of distributed goods whileincrease the buying power.At the end of the chain we find patients that are the end beneficiaries. There is here a bigdifference with other sectors since the payment is mainly indirect. Indeed payer bodies insurean intermediary role. Those payers are mainly governments thanks to public healthinsurances and private insurances in complement. Based on taxes and fees patients arecovered for the majority of health expenditures (medication and health care). Either they donot pay at all or they do and are reimbursed afterwards thanks to claims sent by healthcareproviders. At the end it appears that some health expenditures are not entirely covered andpatients have to directly pay to providers. This indirect payment pattern exists in the healthsector (remember that this study is focused on mature countries) to provide health to themany and avoid disparities by increasing the power of regulation.We can observe in this value chain that innovation goes from left to right and the money fromright to left. If we refer to marketing concepts health products are more pushed bymanufacturers than pulled by patients or providers. Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 20
  23. 23. Part 2 - When ICT meet healthNow that the health service universe has been described this second part will explains inmore detail the ICT world. ICT stands for Information and Communications Technologies. Itis important to understand the evolution of these technologies and how they are knocking atthe medical field’s doors. We will study in the first part the genesis of that convergence. Thenthe actors of this movement will be identified. 1- From Information and Communications Technologies to Connected Health TechnologiesNowadays the ICT acronym often refers to the Internet or telecommunications but as anextended definition it refers to all kind of data exchange between two or more entities. Forour purpose we will obviously consider communications between humans. History ofcommunication is as old as history of humanity. From cave paintings to 3G-mobile phones letus discover the exponential development of information and communications technologies. a) A short story of communications and its recent ramping evolution. Communication history milestonesFrom the origins, humans have communicated. For this purpose they created codes,languages and alphabets. Speech, hand signs, smoke messages, drums or writtendocuments: everything was good to carry messages.From the beginning: writing’s birthCommunication was first oral. It needed a constant interconnection in space and timebetween the transmitter and the receiver. The writing phase comes in a second time. It hasallowed a disconnected communication between the transmitter and the receiver in time andspace. This revolution represents the starting point of the Humanity story. Writing is the firstmilestone in the communication story.Writing story corresponds to two different kind of writing: ideographic writing and alphabeticalwriting. The first was born in Mesopotamia probably around three thousand years beforeChrist. Egyptians also used this mean of communication but improved it thanks to morecomplex signs called hieroglyphs. Phoenicians are inventors of the alphabetical writing(around 1800 years B.C.) but we have to wait until the Greeks to witness of an efficienttranscription of the spoken language. From this date, intellectual production has been deeplymodified thanks to writings and information exchange improvements were keys in the goldenage of antic civilizations. Knowledge was share and spread. Rhetoric was particularlyemphasized under the Roman period and then become a communication technique.Yet in antic society there were places dedicated to information and communication purpose.Agoras, temples or forums are some of them. Acta diurna were official daily publicationdisplayed in the ancient Rome walls to let citizens updated. Transport of messages was bothhuman (the marathon-man legend is the perfect symbol) and animal (for instance carrierpigeons). Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 21
  24. 24. When the printing technology changed the worldThe next breakthrough and second key milestone in the communication story was thecreation of printing techniques by Gutenberg. The move from written documents to printedones match with the end of the Middle Age, a period of intellectual and social changes. Thefirst colored printed book was Psalmorum Codex in 1457, five years after the first printedever: the Bible (42 line version). It is estimated that in 1470 a printed Bible was 5 timescheaper than a hand-written one. Such a drop in the cost of knowledge allowed a larger partof the population to become informed. In 1464 Louis XI institutionalized the mail service withthe implementation of a royal mail enterprise. The newspaper as a source of informationappeared in the early 17th century. In France, in 1631, La Gazette was the first periodicnewspaper (N.B: La Gazette’s writter Théophraste Renaudot was the king’s personal doctor).Development of newspaper was then supported by improvements in transportation. At thebeginning of the 19th century the first steam vehicles appeared (boats and trains). Thisevolution did not solely allow people to move faster, it has also reshaped the human activity,created new kind of exchange, promoting new ways of thinking.The first telegraph, information dematerializationIn 179225, few years after the French Revolution, the third key milestone in the history ofcommunication is officially announced. The optical telegraph was born and its creator isnamed Claude Chappe. In 1844 Morse, well known for its code made of straight lines andpoints, sent its first telegram in the US. This period is contemporary with the emergence ofinternational press agency such as Havas (1835), Wolff (18949) or Reuters (1851). In thesame time a new communication support is invented: the photography. Two inventors are thefathers of this new technique, Daguerre (France) and Talbot (US) and it has been officiallypresented in 1839.The American engineer Graham Bell leads the world to a new communication area in 1876when he invented the telephone. Sounds can now be transmitted, remotely, through anelectric wire. In the late 1880’s regular telephone communications are available. Theseinventions are strongly linked to the rise of electricity.Just before 1900, the first radio message was exchanged by Marconi between England andFrance. This is the start for wireless communications. In 1895 the cinema was born(Lumières brothers). Information became available for crowds and the media industry grewup thanks to these new tools. Regular radio broadcasts appeared in the US in the 1920’s andthe TV experience was a success for the time in 1930. Thanks to communication satellites,launched in the early 1960’s it was now possible to broadcast TV shows on both sides of theAtlantic Ocean. The world has becoming a “global village”. Today’s communicationsAfter a slow but continuous evolution of communication medium, we could say that ICT haverisen exponentially during the last 50 years. Joseph Schumpeter, a famous economiststudied the Kondratieff cycle theory to understand economic trends. Thanks to their work 525 Histoire des Télécommunications, L’Internaute (http://goo.gl/PhWPj) Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 22
  25. 25. super-cycles have been outlined since the beginning of the industrial revolution, dozen yearsbefore 1800 (Figure 6). Figure 5 - Kondratieff waves and Schumpeter analysisEach of this cycle is characterized by a major technological breakthrough that has drasticallychanged the way human move, work, produce and exchange good and even make appearsnew ideologies and new ways of thinking26.As we notice on that chronological graph, we are right now living within the fifth super-wavethat started around 1992. Non-surprisingly the technological revolution that triggered this fifthcycle is the Internet27. In general, it is the booming of telecommunications that is thefundamental of the wave.And the movement is spreading faster than never in the whole History. From simple text andinformation exchange trough computers too big and too expansive to be owned by Mr.Jones, we are now able to share instant videos on smartphones.In diverse geographic areas, among different society classes, information is accessible for acontinuously growing number of people. Like the other major innovations that initiated the 4thprevious cycle, telecommunication revolution is changing the society, really deeply. For ourpurpose we will focus on 2 examples illustrating this change. Rise of social networks andnomadism.After an era when information was pushed to people we are now in a period when peoplepulled it. Thanks to the Internet there is an infinite source of information available. Andpeople have now to seek and select the relevant one. So they start to exchange data andinformation between them, in parallel to traditional information providers (companies, media,etc.). They are able to share, advice or critic information of interest for them. They can nowexpress their opinion to the world. This has led to the emergence and diffusion of socialnetworks that is the major breakthrough in mass communication over the last years. Yetmany business sectors have adapted their model to this new way of communication and aretrying to turn that bottom-to-top pattern into an opportunity. Surprisingly the health sector hashardly integrated that 2.0 communication scheme. But as seen before health awareness isrising and it is a real challenge to answer it.26 Les cycles du Capital, Jean Zin, 2000 (http://goo.gl/lKTU0)27 Tim Berners-Lee, Wikipedia (http://goo.gl/UjzYJ) Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 23
  26. 26. Nomadism is a second direct consequence of ICT revolution. Today people cancommunicate from everywhere and quickly. The rapid diffusion of mobile phone is the bestexample since even in poor countries this object is being common. Improvements in theelectronic field have made communication devices smaller and more powerful. In addition togive and receive calls it is now possible to surf the Internet with a mobile phone. In the futurethousands of daily objects will become connected. Another promising technology is the cloudcomputing. It means that data are stored in remote servers and accessible from anyconnected device. There is no need of large storage capacity but only high-speedconnection. b) Connected health technologies: E-health and M-healthIt has been only for a decade that Information and Communication Technologies have methealth. It is true that the health sector is complex, as developed in the first part of this reportand according to the US Institute of Medicine:“The challenge of applying information technology to health care should not beunderestimated. Health care is undoubtedly one of the most, if not the most, complex sectorsof the economy. The number of types of transactions (i.e. patient needs, interactions, andservices) is very large. Sizable capital investments and multi-year commitments to buildingsystems will be required. Widespread adoption of many information technology applicationswill require behavioral adaptations on the part of large numbers of patients, clinicians, andorganizations”.The first step was “connected health” which focused on increase efficiency of health servicesthrough connection of healthcare providers. Like companies in other business fields,hospitals started improving their efficiency thanks to the integration of IT systems. It is oftencalled E-health. The second wave, the core of our subject, is the rise of wireless healthsolutions, also known as M-health (Mobile health). Digitation of health information: E-healthThe health care system generally uses less ICT than other industries, but reports indicatethat providers are increasing their investments. The main use up to now is an “administrative”application especially in hospitals that are aiming at reducing costs and facilitatingcommunication. Those activities are also known as health information technologies. Themost frequent applications are listed in the Chart 5. Technology Definition This technology captures and integrates diagnostic and radiological images from Picture Archiving & various devices (e.g., x-ray, MRI, computed tomography scan), stores them, andCommunications System disseminates them to a medical record, a clinical data repository, or other points of (PACS) care. CPOE in its basic form is typically a medication ordering and fulfillment system. Computerized Provider More advanced CPOE will also include lab orders, radiology studies, procedures, Order Entry (CPOE) discharges, transfers, and referral. Bar coding in a health care environment is similar to bar-code scanning in other environments: An optical scanner is used to electronically capture information encoded on a product. Initially, it will be used for medication (for example, Bar coding matching drugs to patients by using bar codes on both the medications and patients’ arm bracelets), but other applications may be pursued, such as medical devices, lab, and radiology. Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 24
  27. 27. Health care organizations use EMM to track and manage inventory of medical Electronic Materials supplies, pharmaceuticals, and other materials. This technology is similar to Management (EMM) enterprise resource planning systems (ERP) used outside of health care. EHRs were originally envisioned as an electronic file cabinet for patient data from various sources (eventually integrating text, voice, images, handwritten notes,Electronic Health Record etc.). Now they are generally viewed as part of an automated order-entry and (EHR): patient-tracking system providing real-time access to patient data, as well as a continuous longitudinal record of their care. CDSS provides physicians and nurses with real-time diagnostic and treatment Clinical Decision recommendations. The term covers a variety of technologies ranging from simpleSupport System (CDSS) alerts and prescription drug interaction warnings to full clinical pathways and protocols. CDSS may be used as part of CPOE and EHR. Chart 5 - Common Health Information Technologies (source: Medpac)At first sight it is noticeable that technologies described in Chart 5 are more focused onimproving administrative and financial processes such as patient registration, billing, andpayroll, than on clinical applications. To be realistic the two last listed technologies, EHR andCDSS, which are real clinical application, are still at preliminary stages and much lessdiffused than the other above. In France there is a national EHR initiative called DMS28 (forDossier Medical Personalisé) that have been launched in January 2011. Initiators for the useof ICT in healthcare were naturally large organisms like hospitals or private clinic networks.Like in other business fields, the implementation of such systems allows to gain in efficiencyand as a consequence to save money. In smaller organisms it is still rarely implemented andconcrete benefit evidences are few. For example a PACS system implemented in a smallhospital could suffer from a lack of return due primarily to a low volume of imaging in thefacility. And it is important to talk about return on investment since integrating an ICT systemis very expensive.Among physicians, data about ICT integration in health practice are limited. But in general,like hospitals, physicians are more likely to use those technologies for administrativefunctions. The first barrier is the cost of required infrastructures. In France with healthadministrative reforms, such as implementation of Carte Vitale (chip-card used toelectronically record health-related transactions), almost every individual healthcareprofessional have installed a card-reader device to offer tele-payment. Another application ofICT in their daily practice is the use of Internet. This time it is more for clinical purpose.Adoption of health information technologies is obviously more difficult than in other business.Indeed healthcare professionals seem to be more reluctant, or focused on other subject thatcould improve quality and efficiency of their activity more directly. Actually there are no realincentives and no time to integrate complex ICT systems. The main challenge will be then toadapt ICT solutions to the healthcare complex environment in order to facilitate theprofessional use and finally the wide diffusion.Before continuing we could outline that E-health has bring responsible innovations to thehealth sector. Indeed, PACS systems have contributed to the extinction of conventionalradiographies films that used to be made of toxic components (silver salts).The digitization ofmedical claims have helped to reduce volume of paper used.28 Dossier medical Personnel, République Francaise (http://goo.gl/T6eAe) Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 25
  28. 28. ICT technologies applied to health described so far were mostly dedicated to healthprofessional. Does it mean that relevant patient dedicated applications are non-existent?Actually such applications exist but they are still few or still superficial (mobile apps forexample). Yet this is a really important innovation’s axe since we have seen the increasingweight of patients. Mobility of health: M-HealthMobile health is a sub-segment of E-health because it is based on technologies describedbefore. According to Triple Tree29, a venture capitalist firm focusing on this promising sector,M-health includes “any healthcare application or service that enables a seamless flow ofinformation across cellular, wireless, or other mobile networks and mobile devices thatimprove clinical care delivery, patient-provider communications, enterprise-wide mobility, anddecision support (patient, health provider, manufacturer and payer)”. We are here in the coreof our subject.The first support for mobile health solution development is the quick improvement of wirelesstechnologies and the diffusion among population and businesses. As mentioned previously,the massive use of ICT in many aspects of our daily lives has recently help the increase ofnomadism. More than many other technologies, mobile ones have the capacity to improvehealth systems. Major M-health solutions are for the moment mobile applications, from thesimplest like diet coach apps to more technical like blood pressure add-on from Withings30. Areport from Pyramid Research states that 200 million health mobile applications are availableto download on the different online stores at the beginning of 2011, and that figure couldtriple up to 2012. Another finding of their report concludes that “70% of people worldwide areinterested in having access to at least one m-health application, and theyre willing to pay forit”.To be more precise, Chart 6 identified a non-exhaustive list of potential possible healthoutcomes using wireless technologies.Solutions AdvantagePatient Documentation and medical safety at the bedside is a greenfield opportunity for m-healthSafety solutions. Medication and care errors at the bedside represent a multi-million dollar annual drain on the healthcare system. Solutions centered on patient identification and historical, dosage monitoring or process checking are enhanced significantly by wireless interfaces and devices that allow for ubiquitous access anywhere for inpatient and outpatient.Tracking & Stakeholders are beginning to leverage location-based tracking technologies providing anLocalizing ability to locate medical equipment and other healthcare assets while optimizing workflows. But mobile technologies can also help to localize individuals. Tracking the location of a patient during a treatment is a critical process for inpatient care and could be improve thanks to localization tools. In the case of ambulatory care or emergency situation the challenge is to locate health providers and resources. M-health solutions are highly relevant to tackle all these localization and coordination issues.Adherence Adherence is a challenge for a vast majority of patients and non-compliance to treatment isand both extra costly and a threat for medication efficiency. The reasons for non- compliance areCompliance multiples and proportional to the disease/injury complexity and length. Clinical trials, that are crucial for health industrials, also suffer from non-compliance. To cope with those problems innovations like wireless-enabled pill boxes and SMS reminder can lead to better health29 Wireless & mobile health, Triple Tree, 2009 (http://goo.gl/86o8J)30 Blood pressure monitor, Withings (http://goo.gl/PXBjh) Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 26
  29. 29. outcomes.Information Mobile Internet has spread the possibility to search for everything from everywhere.Access Concerning health information, dedicated application could allow clinicians to easily access information to improve decision making at the point of care. For instance, secured remote connection with PACS to send patient’s X-Rays or MRI images to any physician smartphones, In parallel new mobile applications could enable people to quickly record any health-related event. Crowd-sourcing and participatory healthcare system might be a major change in the near future thanks to mobile.Patient Remote patient monitoring have quickly become the poster child for M-health applications.Monitoring Firms such as GE Healthcare (Joint Venture with Intel) are addressing the needs of home health monitoring. According to many industry sources, the market for those services is currently over $3 billion and will grow to over $8 billion by 2012. Opportunities are huge with the ageing population and the increase of chronic diseases and home care. Remote monitoring is based on mobile connected devices, more or less sophisticated depending on the monitored constant. It allows informing concerned people (caregivers or patient itself) in case of adverse event but also store data. In addition, advances in sensor technologies allow connecting them wirelessly. The connected mobile health device will become wearable or even implantable.Remote Scarcity or limited access to care providers is a persistent problem within the healthcarePresence system, especially in remote and congested metropolitan areas. Companies are working toand Robotics solve this problem through the use of remote presence. Telemedicine and telesurgery are ones of the best examples, mixing wireless connections and robotics. It will be possible for physicians to be multiple places at once, extending their reach and decreasing time to care. The other potential of smart connected robotics will be to support impaired or disabled people. Helping disabled people to move, blind to see or deaf and dumb to communicate. Chart 6 - Potential outcomes for M-health solutions (source: Triple Tree)Among all those M-health opportunities we will see what are the most relevant and how todesign a pertinent business model. This identification will be conduct in the third part. 2- Different players from different background in the M-health universeE-health is, by nature, aggregating players from both worlds. M-health environment is alsocomposed of lots of actors that can be classified into 5 categories. i) Device manufacturers ii) Infrastructure builders and telecom operators iii) Healthcare Service providers iv) Payers v) PatientsThe three last actors have already been detailed in the first part of this paper so we will focusmainly on device manufacturers and telecom operators. Indeed device makers not onlyinclude medical device but also general electronic device makers. Healthcare providers,payers and patients will be quickly reviewed from a M-health point of view. a) Consumer electronics manufacturersWe already described the medical device industry in the first part of that report and wenoticed that it includes a tremendous number of products or equipment. The sector is at leastten times wider if we consider the larger group of devices and appliances. Yet in M-healthsector all sort of device makers won’t be interesting. In fact the ones that could join the M-health adventures will be mainly the consumer electronics manufacturers. Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 27
  30. 30. Consumer electronics are electronic equipment intended for everyday use. The first majorconsumer product, the broadcast receiver, appeared in the early 20th century. Later theconsumer electronic industry has invented personal computers, telephones, music players,audio equipment, televisions, calculators, digital cameras or again players and recordersusing video media such as DVDs. According to the Consumer Electronic Association (CEA),the 2010 global industry revenue was of $873 billion31, and is expected to grow to $964billion in 2011, i.e. a 10% increase.The industry is historically centered in Asia with countries that have become specialists inthis particular sector like Japan or South Korea housing some of the biggest players. Giantsin the sector are named Panasonic, Samsung, Mitsubishi, LG or Sony in Asia, Philips orApple in Western countries.Electronic devices have massively integrated the daily lives of people because they weresubjected to continuous decreasing prices. Based on electronic technologies, those productsfollow the Moores Law, which states that microprocessor speed doubles every 18 months.Consequently the innovation pace is faster than in any other industry with new technologies’announcements every time. By changing the way people communicate, share information,and entertain themselves, consumer electronic products become a part of the culture. Theworld was different before television. It was different before radio, before cell phones, andbefore CD players.Consumer electronics are today undergoing the integration of ICT technologies. The trend isto make products connected and at the end create bridges between different technologies.With each passing year, and each new generation of products introduced in the marketplace,its getting harder and harder to differentiate companies and their products into traditionalcategories like telecommunications, computer hardware, and consumer electronics.Consumer electronics tends to be Swiss knifes. In addition to become connected thoseproducts are also becoming mobile, answering the fantastic evolution of human behaviors.The phone‘s history perfectly illustrates those evolutions. At the beginning phones used to bephysically linked with wires to communicate between them and be supplied in energy. Thenthey lose the wire and became mobile, including batteries. Later they enabled people toexchange short texts. Camera technologies were soon added and image exchange wasmade possible. Finally they were able to be connected to the Web, sharing all kind of dataincluding video. They are now called smartphones.Mobile phones are obviously among the most promising products for the development of M-health. According to the International Telecommunication Union32 the mobile phone globalpenetration rate was of 76% in 2010 with 116% in the developed world (more than 100%means that some people owned more than one mobile phone) and 67% in the developingone. Webphones are still more promising for M-health sector and was used by 13% of theworld population in 2010 (51% in developed countries, 5% in developing countries). Thisextraordinary diffusion will allow the mobile phone makers to vastly provide people withhealth-related solutions.31 Global Consumer Electronics Retail Sales Seen Up 10% In 2011, Forbes, 2011 (http://goo.gl/hJc0t)32 Key Global Telecom Indicators, International Telecommunication Union (http://goo.gl/FDBFK) Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 28
  31. 31. Over the last years the consumer electronics industry was exposed to the issue ofsustainability. Because they are widespread and based on electronic technologies thoseproducts represent an increasing part of energy consumption. For example there is aparticular issue with the standby power assumed to significantly increase the energy bill.Another problem is the fast rhythm of obsolescence striking consumer electronictechnologies. Integration of reusable material and recycling process are more and moretaken into account by innovators. b) Infrastructure builders and telecom operatorsThis category includes all the actors that are supporting the ICT sector, thanks toinfrastructures (networks and storage capacity) or services (telecom operators, softwareproviders). They are essential in M-health since they grant mobile devices to be connected. Telecommunication network buildersBasically a telecommunication network is a collection of terminals, links and nodes whichconnect together to enable telecommunication between users of the terminals. Terminals aremade by device makers. Links are the channels by which data is transmitted. They can bephysical (copper wires, fiber-optic cables) or immaterial for the case of wireless networks. Inorder to be transmitted through links, messages have to be converted by terminals intodifferent form of signal including radio frequencies, electric signals, light signals (infrared).Nodes are necessary to handle messages and route them down the correct link toward theirfinal destination.Protocols and standards are fundamental in networks and define how initial data is encodedthen transmitted throughout the network. For example the Internet protocol is called TC/IPprotocol. In mobile network there have been 4 categories of standards. The 1G network wasthe first automated cellular network implemented in 1979 in Tokyo. 2G standards appearedin 1991 in Finland. The 3G network was launched in 2001 in Japan too. Finally 4G standardsare available since 2006 but really implemented in few countries on the edge. Each of thesegenerations has increased the bandwidth thanks to more powerful satellites and antennas. Telecommunication operatorsTelecommunication operators are the companies performing the exploitation of networks.The first players, chronologically speaking, were the phone operators. Then Internetproviders came in, rapidly acquired by phone operators. Finally they are the ones who ledthe invention of mobile phone networks and added this activity to the fixed phone andInternet networks’ exploitation. In reality they provide a service: they allow people to properlyuse the telecommunication network. And this service is worth to be paid. When we arepaying for a mobile phone subscription we are actually buying the right to use a part of thenetwork, for a certain time. Mobile Subscribers 2010 Original Market Additional markets Operator (million)1 China Mobile China Pakistan 6272 Vodafone United Kingdom Middle East, Commonwealth, Europe 3613 Telefonica Spain Latin America, Europe 2274 America Movil Mexico Latin America 2365 Airtel India Bangladesh, Central & Austral Africa 221 Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 29

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