Machine-to-Machine (M2M) 2.0: mHealth Opportuniies
Machine-to-Machine (M2M) appears to be finally coming of age. What business model challenges are bringing this about in Healthcare, and how can Telcos add value? Below are some videos and summary analysis from the Telco 2.0 AMERICA Executive Brainstorm in Orlando:
- An overview of M2M and 'Embedded Mobile', with a sector focus on the opportunity in health, by Ken Figueredo, Principle, Ventura
- Challenges in the US Healthcare market, by Rick Cnossen, President, Continua Healthcare Alliance
- Orange's approach to the US healthcare market, by Niels Helkov, VP e-Health Americas, Orange Healthcare
M2M: a panacea for healthcare?
Ken Figueredo, Principle, Ventura, presented an overview of machine-to-machine (M2M) and embedded mobile, with a focus on the mHealth sector, and an examination of the key strategic choices for operators.
(NB We will also shortly publish a Telco 2.0 Executive Briefing on M2M that we are writing with Ken. This will describe examples and provide additional market data and greater detail on this emerging new sector.)
M2M: An idea that's time has finally come?
Interest and activity in M2M has blossomed recently in projects such as the GSMA's embedded mobile initiative (which Ken has advised), and initiatives by AT&T, Telenor, Verizon and Sprint among others.
Market growth estimates range from 50% to 500% additional device penetration, even though shipments of industrial M2M run at only 40m devices / year compared to 1bn handsets.
The concept of 'Embedded Mobile' expands the traditional industrial M2M opportunity definition by including service innovation as well as device innovation, and considering M2M as a new solution to:
• consumer needs (e.g.s Amazon Kindle, energy consumption and costs)
• industry value chain 'pain points' (e.g. high costs of service)
• the needs of broader sectors including transport, clean energy, healthcare, consumer electronics, and utilities
• government needs (e.g.s improving healthcare and reducing congestion).
These broader market opportunities create the potential for lower prices and higher ultimate market penetration.
But it is not all 'Plain Sailing'
There are also structural barriers to growth. The value chain is fragmented, operators' traditional industry segmentation is vastly different from the segmentation of needs in the industries, and operators do not have a long track record of offering a whole suite of M2M services.
Sector focus: mHealth Overview
As an example of how M2M addresses needs, we focused on US Healthcare.
The $2.3 trillion U.S. health sector costs $7,290 / person. This is much higher than in many other markets, and it is and will be a priority for US Administrations to reduce this cost and improve the quality of care now and in years to come.
Comparison of per capita health expenditures in the OECD (2007)
SOURCE: OECD (2009)
A Global Challenge
With increasing longevity and decreasing mortality, many populations are ageing, and managing costs and improving quality of healthcare will be a significant national challenge in most developed economies. Providing healthcare to developing nations with growing populations presents additional challenges. Managing improvements in healthcare with simultaneously rising populations and reducing costs is therefore a global challenge.
Many 'toes in the water'
There are a large number of operator initiatives in many disparate areas, and Ken covered some of these in his presentation. Examples include providing remote health monitoring services, and tracking people's calorie intake to help manage obesity.
The Key Strategic Question for Operators
What is already clear is that providing connectivity alone is not enough, and that service and business model innovation will be key to monetise the opportunities in different ways. However, the key strategic question for operators is whether to adopt horizontal, platform based solutions, or a vertical focus on a detailed solutions for targeted sub-segments.
Challenges of mHealth: the birth of an Industry?
Rick Cnossen from the Intel Digital Health Group, and President of the Continua Health Alliance that develops standards for mHealth, presented on early US market experiences and challenges.
Rick picked up from Ken's introduction, and reiterated that with costs projected to rise to 20% US GDP, healthcare provides an opportunity to create economic benefits as well as improve peoples' lives.
Opportunities for communications service range from 'here and now' examples, such as creating voice and messaging applications to contact and remind patients, through to full M2M solutions.
Key Challenges from the Early Life of the Industry
Rick detailed numerous examples of applications, and described a number of key challenges to solve in the Health ecosystem:
• Interoperability standards - (Continua's role)
• What are the Business models?
• Gaining Clinician Acceptance (workflow, data overload)
• Regulatory / Liability
• Security / Privacy (identifiers)
• Quality (coverage / bandwidth)
• International solution
Orange's approach to Healthcare in the US
Niels Helkov, VP e-Health Americas, Orange Healthcare, laid out additional compelling statistics behind the E-health demand surge. He pointed out that a baby born today has a statistical life expectancy of 100, while on the other hand, €17.7bn is spent on asthma in the European Union every year and $92bn on diabetes in the US. 25% of Europeans are over 60 and overall, healthcare is growing as a sector at 5% annually, significantly outpacing GDP.
Healthcare and Telecoms: All About Interfaces
Telcos, he said, are naturally intermediaries between actors. The sheer diversity of organisations and interest groups in healthcare implies a wealth of interfaces across which they can intermediate and profit. He gave as examples services for assisted-living, remote monitoring (of values like blood pressure), and "compliance" - i.e. whether patients take their prescribed medications.
In France, Orange is working on a wellness Web portal, a project that is intensely focused on self-care and patient empowerment. Another project, with the Sorin Group, centres on remotely monitoring the performance of heart implants and preventing the patients from being hospitalised. And this was backed with a further element in the form of a B2B2C tech support desk for both patients and clinicians.
Healthcare 2.0: Early Days + Big Opportunity = Time to Get On With It
Health represents a huge opportunity for telcos around the world and particularly in the US. All the demand drivers are there with an aging population, adverse and costly health trends such as obesity and its associated diabetes and heart issues and limited funds. These create a cost base that cannot be sustained in the long run.
Communications-Enabled Business Processes (using initially Voice and Messaging products) offer a way to massively turn around that cost paradigm in every sector of healthcare from equipment tracking, to appointment setting, bill settlement, wellness monitoring, medication alerts and much more besides.
However, the barriers to implementation are not trivial. Perhaps the largest factors will be the inertia of established players, and the initial inefficiency of the complex evolving ecosystem as new players jostle for position.
Nonetheless, there doesn't need to be a 'boil the ocean' approach here though but rather telcos can start where the barriers are lowest - with wellness monitoring, asset tracking and appointment reminders, rather than with medical advice.
What they really need to do is to enter this market soon as some of the lower hanging fruit is already being snapped up by iPhone and other apps.
(Ed. Further information and analysis from the Brainstorms will be made available to attendees and members of the Telco 2.0 Executive Briefing Subscription Service. For future Brainstorms and Virtual Events, please see here or email firstname.lastname@example.org.)