Steve Moye's 2013 presentation on virtual health initiatives and structuring a digital company's ideation process.

1. Virtual Health Services April 2013
VirtualHealthServices
Innovation in
Healthcare
Steve Moye
President, CHI VHS

2. VHS 3.0 Governance discussion
Virtual Health Services | Steve Moye, President
VirtualHealthServices
Innovation in
Healthcare

3. Objectives:
•Define a future-state governance model
•Identify and prioritize revenue generating
opportunities
•Design a future-state business and operating
model to pursue the new opportunities
•Describe the steps necessary to operationalize
the new model through an implementation
roadmap
Engagement Overview
Status and finding to-date per work stream:
•Governance Framework: Identified key CHI and VHS
governance issues. Drafted recommended solutions to be
refined after revenue generating opportunities are
finalized
•Revenue Generating Opportunities: Identified and
prioritized revenue generating opportunities based on
evaluation criteria
•Business and Operating Model: In process of drafting
future-state business and operating model
Objectives Progress
Objectives for the project are to identify revenue generating
opportunities, and then define and align the governance, and business and
operating models to best position VHS to achieve its’ goals
Copyright © 2013 Accenture All Rights Reserved.

4. CHI andVHSVirtual Health Capabilities –
related but unique
From a CHI enterprise perspective, three capabilities support virtual health
programs across MBOs. While related, the competencies are different with
unique resource and capabilities requirements.VHS’ strategy and resources are
focused on achieving the third.
The best path to address the first two is yet to be defined.
Industry trends monitoring
ü Primary and secondary research and analysis to remain abreast of new approaches that support
CHI’s mission and may be considered by MBOs (similar to Gartner or other industry analysis)
Consulting services
ü Advisory services to MBOs that help evaluate potential services or manage existing services
ü Technology advising and support specific to virtual health platforms
Operational entity
ü Creating and delivering virtual health services relevant to both MBOs and the market as a for-
profit, successful business venture
Copyright © 2013 Accenture All Rights Reserved.

5. CHI andVHSVirtual Health Capabilities –
related but unique
From a CHI enterprise perspective, three capabilities support virtual health
programs across MBOs. While related, the competencies are different with
unique resource and capabilities requirements. VHS’ strategy and resources
are focused on achieving the third.
The best path to address the first two is yet to be defined.
Industry trends monitoring
ü Primary and secondary research and analysis to remain abreast of new
approaches that support CHI’s mission and may be considered by MBOs
(similar to Gartner or other industry analysis)
Consulting services
ü Advisory services to MBOs that help evaluate potential services
or manage existing services
ü Technology advising and support specific to virtual health platforms
Operational entity
ü Creating and delivering virtual health services relevant to both MBOs and
the market as a for-profit, successful business venture
VHS
Focus
(as a for-profit)
Copyright © 2013 Accenture All Rights Reserved.

6. ✓Prioritize limited number of core offerings
✓Only take-on activities that are profitable
✓Focus and commit resources to for-profit activities
✓Avoid the trap of being all things to everyone
Focus
on for-profit
opportunities
VHS’ Core Directive from the Board:
Within five years, VHS is to be financially independent,
able to obtain external funding and success in the market place
VHS Future State
How can VHS get there?
Copyright © 2013 Accenture All Rights Reserved.

7. ✓Be driven by an innovative operating model
that provides its portfolio offerings at scaleBe
driven by an innovative business model that
redesigns care delivery to unlock and reduce
healthcare labor intensity
Be driven by
Innovative
Models
VHS’ Core Directive from the Board:
Within five years, VHS is to be financially independent,
able to obtain external funding and success in the market place
VHS Future State
How can VHS get there?
Copyright © 2013 Accenture All Rights Reserved.

8. ✓Achieve a unique market positionRetain
earnings to fund future growthPosition for
success withVC and other investorsBuild
services that combine enabling technologies and
services
VHS Future State
Position itself
for success
VHS’ Core Directive from the Board:
Within five years, VHS is to be financially independent,
able to obtain external funding and success in the market place
How can VHS get there?
Copyright © 2013 Accenture All Rights Reserved.Copyright © 2013 Accenture All Rights Reserved.

9. High-levelTimeline
What the next three years will look like as VHS establishes creditability,
grows its customer base and takes the opportunities to the external market
Copyright © 2013 Accenture All Rights Reserved.

10. Preliminary Concept for Discussion
Copyright © 2013 Accenture All Rights Reserved.

11. An Overlooked Industry Opportunity Offers
a UniquePosition forVHS
Situation Opportunity
§ Industry strategies for healthcare cost reduction
are focused on utilization management and
quality strategies
§ Of the $2.6 trillion spent in 2010 on health care in
the United States, 56% consisted of wages for
health care workers
§ Bending the cost curve hinges on reducing the
cost of labor per unit of service
§ Yet unlike virtually all other sectors of the U.S.
economy, health care has experienced no gains
in labor productivity over the past 20 years
§ At the same time, health care labor is becoming
more expensive more quickly than other types
of labor
§ Labor cost innovation approaches are a whitespace
opportunity in the U.S. health sector
§ Virtual healthcare delivery models provide
significant advantages for labor cost savings
over traditional in-person care models
§ With a focus on labor cost innovation VHS’ value to
CHI will complement existing initiatives to reduce
costs through population health management and
best quality practices
§ Developing a portfolio focused on labor cost
innovation services VHS will be attractive to both
external investors and have a compelling value
proposition for external customers
Copyright © 2013 Accenture All Rights Reserved.

12. Source: Kocher R, Sahni N. Rethinking HealthCare Labor. N Engl J Med 2011; 365:1370-1372. October 13, 2011. DOI:10.1056/NEJMp1109649
An Overlooked Industry Opportunity Offers
a UniquePosition forVHS
Rethinking Health Care Labor
Copyright © 2013 Accenture All Rights Reserved.

13. BioPharma as a customer
BioPharma’s are becoming more interested in whole person / patient
treatment. Virtual health solutions can help them more fully understand the
complete patient lifecycle and the value chain of their product
Copyright © 2013 Accenture All Rights Reserved.

14. How the Labor Intensity Organizing Principle
relates to Growth Opportunities
Telepharmacy 2.0b combines Telepharmacy 1.0
with medication management services. These
services would focus on management, compliance
and adherence, and would include: patient
coaching, medication adherence, and patient
support.
Remote consultation, assessment or intervention
by a specialist in which provisions of
mental/behavioral health services are provided
to patients.
Provide remote monitoring of patients with chronic
conditions (e.g. asthma, COPD, CHF, hypertension,
diabetes, obesity) and care management services.
Additional support services can be on-line social
networks and behavioral change tools.
Identify and design optimal workflows for each virtual
health service, combining both administrative and
clinical processes for end-to-end optimization. Co-
develop software and analytics platforms that support
Business Process Management (BPM) optimization.
Create and brand virtual care delivery training programs
for clinicians.
Telepharmacy 2.0b
Telemental Health
Chronic Disease
Management
Intellectual Property
(IP) Portfolio
Description Labor Intensity Levers
Increases physician productivity by allowing pharmacists to
focus on treatment of patients, automates processes around
medication management and allows adherence of treatments
to be self managed by patients or lower cost clinical
resources (e.g., technicians, call support staff)
Increases physician productivity by allowing clinicians to
virtually consult with patients across multiple geographies,
maximizes staff by leveraging clinical social workers,
counselors, retired therapists, and enables self-driven
programs
Increases physician productivity by allowing clinicians to
focus on treatment of patients, increases capacity by
enabling group visits, automates processes around
management of chronic diseases and allows adherence of
treatments to be self managed by patients or lower cost
clinical resources
Increases physician productivity by optimizing
administrative and clinical workflows
ivi ii
ivi ii
iii ivi ii
i

15. Rules of Engagement
Defining a comprehensive and transparent process for how virtual health
opportunities are communicated, evaluated, and pursued is key for VHS to
meet its objectives

16. Innovation strategies need to be supported
by the appropriate, coherent innovation
governance model ...
Innovative governance models and pros and cons (1 of 3)
• A mature business generates value by
running business as usual. To drive
innovation, these companies can establish
distinct units that work independently using
their own resources, processes and KPIs
• These units can be either complete
business units where the complete
process from idea generation to market
penetration is developed or Ventures
within an established business unit (e.g. a
business unit that has R&D department
plus venture unit)
• To plan and manage innovation, a
governing body with internal and external
members is formed
• Members come from different business
units within the company (usually senior
management) and are external advisors
with market and industry knowledge
• The Venture Board defines the overall
innovation strategy, manages the
innovation portfolio and overlooks the
“innovation performance”
Venture Board
Growth
Incubator
New Venture
Drive innovation within a mature business
Drive innovation based on strategic leadership
Ambidextrous Organizations
Venture Boards
• Autonomous structure makes
innovation is less influenced
by standard organizational
KPIs and performance metrics
• Idea generation takes place
only in the respective business
unit
• Know-how transfer and
communication between BU is
limited
• Mgmt and coordination of
innovation happens from a
global perspective across all BU
• Ideas of external advisors can
be integrated
Pros (+) and Cons (-)
• A bottom-up approach does
not exist
• Innovation is imposed from a
senior mgmt board
• Know-how transfer and
communication between BU is
limited

17. ... which should foresee a specific positioning
at organizational level ...
Innovative governance models and pros and cons (2 of 3)
• The Innovation Council consist of a small
senior management group, that manages
innovation or awards budget across
several business units and facilitates
decisions across functions, businesses
and geographiesThe council prioritizes
projects and aligns resourcesIn contrast to
a Venture Board, the Innovation Council is
more operational while the Venture Board
is more focused on the overall innovation
strategy
• CoP are interest groups of key actors
from inside and outside the company that
interact on a regular basis to share
implicit knowledge for a certain areaCoPs
work without formal meetings and project
management tools and provide an
environment to share knowledge
freelyEstablishing CoP shapes the
organizational culture and helps to
leverage internal knowledge
Pros (+) and Cons (-)
Innovation Council
CoP
CoP
CoP CoP
CoP
à Coordinate innovation between business units
à Create a collaborative environment and
leverage innovation best practices
Innovation Council (Advisory Committee)
Communities of Practice (CoP)
• A more operative team can
allocate resourcesand support
innovation
• Management collaborates
across business units
• New ideas are less likely
to be generatedin this
organizational board
• CoP is an effective method to
transfer knowledge and best
practices
• Codification and storage of
knowledge is difficult
• Knowledge transfer does not
necessarily lead to
generation of new ideas and
innovation

18. ... and the right level of participation in the
innovation process
Innovative governance models and pros and cons (3 of 3)
• R&D is no longer a closed entity within
the business, it is open to ideas from
outside the companyExternal parties
like universities, research institutes or
the government can improve the R&D
process by generating new ideas and
expertiseThe invention does not
necessarily need to come from inside
the company to profit from it
• Employees engaged with innovative
topics should enter company
external networks to avoid being
stuck with only ideas grown within
the company and missing out new
white spaces, external knowledge
and insights are requiredPotential
network candidates can come from
academia, industry consultants or
even customers etc.Furthermore,
these sources are connected to own
networks which further facilitate the
generation of new ideas
Pros (+) and Cons (-)
Company
Consumers /
CustomersManufacturers
/ Suppliers
...
Consultants
Academia (Universities
and Research
Institutes)
Regulatory
Authorities
Financial
Institutes
Industry
Organizations
Other
organizations
Company
Customers
Universities
à Access external networks to capture ideas
à Structurally exploit external networks for innovation
Open Innovation Network
Thought Leader Resource Networks
• Firm gets access of external
knowledge
• Firm gets advices for the
generation of new ideas
• There must be mechanism in
place to capture and manage
knowledge to be successfully
used for innovation
• Internal knowledge gets
disclosed to a certain degree
• Networks ease access to
new ideas and expertise
• Revenue of marketed innovation
might need to be shared
• Internal knowledge gets disclosed
to a certain degree
• Limited development of internal
innovation practices

19. VirtualHealthServices
Business Development
• Site Visits
• Marketing Plan
• eICU Analysis

20. Site Meetings Conducted
Region
Type of Site CO FHS Iowa KY NE The Division Total
National Office 1 1 2
Health System Offices 1 1 1 1 2 6
Subsidiaries / Partners 2 1 3
TeleHealth Programs 1 1 1 1 4
Hospitals / Clinics 5 5 10
Total 1 9 2 3 8 2 25
Note: VHS has also given updates to the CHI Strategy Executive Group, Mercy Health Network CEOs and are
planning to attend the North Dakota Minnesota Division CEO meeting in June.
Business Development
VHS has actively engaged CHI and non CHI partners to collaborate
and provide current services across various geographies.
VirtualHealthServices

21. Current VHS TelePharmacy Sites
In Operation
13 CHI Sites
Lisbon Area Hospital – Lisbon, ND
St. Joseph’s Hospital – Dickinson, ND
Mercy Hospital of Devil’s Lake – Devil’s Lake, ND
Carrington Health Center - Carrington, ND
Mercy Medical Center – Williston, ND
Oakes Community Hospital – Oakes, ND
Mercy Hospital of Valley City – Valley City, ND
LakeWood Health Center – Baudette, MN
St. Francis Medical Center – Breckenridge, MN
Unity Family Healthcare – Little Falls, MN
Albany Area Hospital – Albany, MN
St. Joseph’s Health Services – Park Rapids, MN
St. Catherine Hospital – Garden City, KS
7 Non CHI Sites
Lutheran/Jamestown Regional – Jamestown, ND
LifeCare Medical Center – Roseau, MN
St. Mary’s Innovis Health Center – Detroit Lakes, MN
Madison County Memorial – Winterset, IA
Davis County Hospital – Bloomfield, IA
Manning Regional Healthcare – Manning, IA
Van Diest Medical Center – Webster City, IA
VirtualHealthServices

22. Current VHS TelePharmacy Sites
TelePharmacy Key Metrics
169,603 12,628
VirtualHealthServices

23. Current VHS TelePharmacy Sites
TelePharmacy Key Metrics
59,435 3,840
VirtualHealthServices

24. Current VHS TelePharmacy Sites
TelePharmacy Errors Prevented
40
VirtualHealthServices

25. Current VHS TelePharmacy Sites
TelePharmacy Growth
VirtualHealthServices

26. VirtualHealthServices
Growth Initiatives

27. VHS Business Model & Status
Acute Care Bundle
Customer:
•Acute Care Facilities
Customer Value:
•Access, Relationships, Cost, Quality
Services:
•telePharmacy, eED, teleHospitalist, teleConsultations, teleDiagnostics
Risk Factors:
•Adoption, Low Margin
•Limited Market
VirtualHealthServices

28. VirtualHealthServices
TeleHealth
the way of the future…