[This article was originally published in Essays June 2011]

There is a clear role for government agencies in the early days of an industry. According to work from Harvard Business School, government responds to an identified market failure by investing and raising the level of sophistication. Christensen et al. describe the stages that industries go through in The Innovator’s Prescription, as follows:

1. Subsidizing the foundation of the industry
2. Stabilizing and strengthening the companies involved, ensuring fair and equal access to their products and services and assuring that their products are safe and effective.
3. Encouraging competition to reduce price

Infoway and the Health IT industry in Canada have moved through Stage One successfully and are now in Stage Two — the stabilizing and strengthening stage. The fast pace of new technology development makes it likely that we will move very quickly into Stage Three (we have already in DI/PACS and a few other segments). Policymakers face difficult decisions about how best to realize the dream of digitized healthcare and the electronic health record (EHR). The end point may not be the same one we imagined when the journey began.

At the start of the first Infoway decade (2001) there were few mature vendors in the Canadian health IT space — a limited number of hospital information system (HIS) vendors, IBM, and hardware vendors who had machine-based systems mainly for diagnostic imaging (GE, and others). Infoway changed that and drew in national champions like CGI, Bell/Xwave, Telus as well as international system integrators (SI) and vendors for software, and diagnostic imaging. Infoway and provincial governments also subsidized the creation of provincial and sub-provincial agencies that both purchase and provide these same services within the broader public sector at arms-length from government. There are now dozens of commercial and public enterprises competing to serve this growing market. Talent is the cornerstone of the foundation and Infoway, the provinces and the industry they created have attracted the talent for future success. Those thousands of people came in because of government dollars but government dollars do not (and should not) provide them with a stable long term business model. 

Infoway largely met its 2009 target date for the core repository systems —Drugs, DI, Labs, EMPI, etc. This was another “foundation of the industry” investment. During this build, Infoway moved into Stage Two and began stabilizing and strengthening the industry. Efforts were made to shape a strong competitive environment using a mix of private and public vendors. This was greatly aided by IBM’s purchase of Initiate, Telus’ purchase of Emergis, and major investments by Microsoft, GE, HP and others that had a Canadian component. We are now firmly in the second stage and Infoway is quite thoughtfully making moves to shape the industry in the long term. There are several new challenges that have emerged that complicate how best to create the level playing field in Stage Two. In this essay we will review three of these challenges in detail: 1) Public vs. private delivery, 2) Virtual healthcare, and 3) the pace of technology and platform change.

Public vs. Private Delivery: The distortive effect of the provincial agencies competing with private sector delivery of eHealth began to be recognized in about 2009 (the start of Stage Two). The private sector Telcos began asking (privately) why government was running subsidized health only networks and email systems. Telcos noted that these systems directly compete with their offerings in the market, are more expensive, and provide none of the added security that policymakers initially posited as the rationale for entry. For example, one Telco had a contract with the entire provincial government at $25 a month per user for basic email but could not include the health IT agency whose costs were substantially higher (read 5-10x) and used a “last mile” which was over public networks anyway (hence no security advantage). Another Telco asked why their national second generation network was not being adopted by Provinces. Several software firms and SI’s now also recognize that these public entities compete directly with them. Several agencies and Ministries have substantial internal software development shops which directly compete with private industry. Many provincial and sub-provincial service providers are both purchasers of and providers of SI and outsourcing services. They are both clients and competitors at different points and so firms have an issue raising the concern.  The rationale for these “proto-Crown Corporations” was reasonable in Stage One. In Stage Two, they need to be put on a level-playing field with private industry and compete in open processes. What is the cost of Ontario’s “One Mail” email service, what is the hourly rate charged for integration services by hospital consortia (like SIMS or CCO), are these organizations held to the same service level agreements (SLAs) and privacy and security requirements as private sector providers, or are we merely assuming that because they are in the public sector they must be more secure and meet SLAs?

The reaction I received to Part One of this essay on this point was very strong so let me expand in some detail. There was a time when investing in public sector enterprises for Health IT made sense. I believe that the investments in CCO, Saskatchewan, PEI and Newfoundland health IT, and SIMS were all value-creating. Done well, these investments create value, capacity and the foundation for the industry. Done poorly, we do not create value. We merely create capacity and some foundation pieces, usually by way of employees departing and populating higher value organizations. There are several provincial initiatives that have created little value after multi-million dollar investments because of poor execution.

The challenge for the second decade is to move from the initial value proposition and consider what assets we have in each of these “proto-crown corps”. Here are some of the questions policymakers might ask:

• On a stable cost per user basis what are our costs? Are we able to compete?
• Are there still public policy reasons that we want to be providing services using a public model?
• Do we want to become more Infoway-like and make targeted investments and procurements while exiting direct service delivery?
• Can we partner with private industry (P3) to attract capital investments and to ensure reusability of our Intellectual Property?
• How differentiated/sustainable are we really? Is there a sustainable economic future outside of government funding for our organization?
• How much of our asset base is now in the health IT shop? Should we monetize that asset around a particular set of performance terms?

The recent decision to restructure Saskatchewan eHealth as a Treasury Board Crown Corporation is one good model. The deal between the NWT and Alberta for provision is another model of multi-jurisdictional services that makes economic sense — particularly for the smaller jurisdiction. In some provinces, a partnership with the private sector (P3) will be a better option for access to capital and asset monetization reasons. Some provinces should simply sell or outsource to the private sector because they have shown over the past decade that they are unable to execute successfully.

To repeat, there was a time when it made sense to have these investments and assets in-house, that time is passing and we need to be more critical about looking at these assets and the hundreds of millions that have been invested.

Virtual Healthcare: Stage Two Stabilization will be complicated and hastened by the rise of virtual healthcare. Virtual health (health treatment where there is no “physical” contact between a provider and a patient or another provider) is growing very quickly in Canada. Currently only an estimated 1-2% of all direct care is provided virtually (estimate is based on RN and MD FTE’s); I project that it will be a quarter of all healthcare delivered by the end of the decade based on the numbers coming from KP and my knowledge of Canadian healthcare. Admittedly this is a best guess but KP was at 26% of Primary care in one year and is now approaching 50%. This is in addition to the already very advanced virtualization of several core diagnostic services. Canada is at the forefront of care virtualization in part because of our great distances. We have the leading virtual pharmacy provider in the world in Pharmatrust. Ontario Telemedicine Network is the world’s leader in telenursing and telespecialty consults. The UHN/GE partnership for telepathology is providing pathology services for Manitoba and Newfoundland on University Avenue. St. Joseph’s Health System in Hamilton does two telesurgeries a week in Thunder Bay. Virtual health (or v-Health if you must) will explode when governments remove the arbitrary regulatory and payment barriers in the next few years.

While the EHR and repositories may have a role to play in virtual health, an eHealth record is not something that is added to these operations. eHealth is inside of v-Health businesses. These virtual health operations have “self-documenting care processes” and don’t expect Infoway or provincial supports to create an EHR. It would make no more sense to talk about these clinical businesses without an eHealth record than it would to speak about an ATM without an eBanking record. Even in the short term, the government role is very different. Government follows (invests) or gets the regulations out of the way to allow market-driven creativity.

Pharmatrust is now worth almost $200 M and has never taken a dime of government money. Infoway has followed this trend and published last week an excellent report on Telehealth. Some smart Infoway Execs are on top of this and responding well. They can lead by pushing jurisdictions to remove barriers to virtualization in regulations and fee schedules. Virtualization is great news for Canada as it provides a way for us to export our excellent healthcare system to the world while simultaneously accessing capital to provide the best healthcare to Canadians.

Platform and Pace of Technology: The innovation cycle has increased to a speed that is not possible for government process to keep up. It takes us six years to plan, commission, specify, procure and build a diabetes system in Ontario. No wonder our diabetes system has no iPad and no social network integration. These did not exist when we started the planning. And the Diabetes project is actually faster than most; a lab repository project with which I was involved took 14 years from conception to delivery. The pace of change is so quick that policymakers need to acknowledge their limitations and limit their role. We need to buy outcomes not boxes with lights. 

The best current example of where technology is making our carefully planned efforts look silly is iPads and smartphones. I published a piece with Sacha Bhatia https://www.longwoods.com/content/22323 that describes how doctors are adopting these new technologies and why we need to factor them into our plans rather than just telling MD’s to sit down at the computer. Mike Guerriere (of Telus) said it very well in a recent publication (“Is it time to re-think the e-Health Agenda?”):

“In health care, a majority of physicians now carry smart phones and many of them are now using medical reference, clinical alert and other applications, routinely accessed via phones or tablets. They use them, even when they may have access to similar applications through their hospital and clinic systems, because they find smart phone access quicker and more convenient.”

The response from the thoughtful planners is understandable and rooted in their paradigm. They say, information is more valuable in context and we are building that context in our EHR’s. Physicians will prefer those rich and robust systems. But they are wrong. Only sometimes do clinicians want the context. Sometimes they just want to communicate quickly. Next generation eHealth systems will support what the customer wants, not tell them what they should want. Infoway needs to follow here and adapt quickly or risk having the entire repository network be separated from the rich clinical communications that are now flowing everywhere on smartphones and will soon be on tablets. This is not just another peripheral or another way of viewing data; the way clinicians are communicating has changed in the past five years and the commercial EMR/HIS systems are missing the change.

And if Stage Two makes central planners look a bit slow, Stage Three will make us look lead-footed. Bandwidth will explode. Social networks will morph and people will choose to post private health info and their doctors will want to review it. Videocalling will be ubiquitous. Xboxes will monitor chronic disease and Grandpa will have to fight with the grandkids for access to the Kinect, Residents and Interns will continue to send unsecured emails using gmail accounts on iPhones, and if that is stopped they should send BBMs or Texts as they do in the developing world. Infoway has done a good job adapting with programs like its Adoption and Innovation program and by reassigning its most senior talent to these challenges. This will require strategic flexibility, humility, and some understanding on the part of policymakers. High tech ventures get assumptions wrong and need to adjust. Infoway is a high tech venture and will need to continue to adjust its assumptions

“Lead, Follow, or Get Out of the Way” is the subtitle for this piece. This is an attempt to set out the options that Infoway needs to clearly consider as we move quickly through Stage Two to Stage Three. There are still segments where leading the industry is the right choice. Infoway has successfully followed on patient portals, consumer health, telehealth, and with the adoption and innovation programs. There will need to be much more following as platform changes become unavoidable and as providers insist on having the latest smartphone and tablet tools available. Getting out of the way is harder; particularly for a centrally planned government agency.

Some governments have recognized this need and are “getting out of the way” so that competitive forces can come to bear. Ontario recently removed the regulatory barriers to physical presence of pharmacists necessary for dispensing that was blocking the adoption of Pharmatrust technology. OTN has been given encouragement and resources to add large numbers of “virtual RNs” to the care team. Infoway could play a key role here by advocating for the thoughtful modernization of our regulation and payment systems.

This could take at least the following three forms:

1. Changing provider compensation models to remove their biases for physical presence. Virtual visits, emails, and phone calls should be paid for.
2. Appropriately advocating for limits on privacy regulations that more realistically reflect actual practice and consumer demand.
3. Setting achievable standards for providers who are adopting new technologies that fit with payment and privacy regulations.

As with any ambitious teenager it won’t be any one thing alone that works. Infoway will need a combination of all three. Perhaps the title should be: Lead, Follow and Get Out of the Way. Congratulations on your first decade Infoway; Good luck with your teens.

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