Everyone in Australia recognises Telstra as the previously Government owned telecommunications monopoly that was privatised a little over a decade ago, while being opened to competition. However it has still remained the dominant provider of fixed line, internet and mobile services while at the same time expanding its reach as a provider of cloud services and also increasing its role as a provider of support services to the National Broadband Network (NBN) for a very considerable sum. It is presently one of Australia’s largest companies with a market capitalisation of more than $75 Billion and annual turnover of more than $33 Billion
Much less well known is that in the last 2-3 years Telstra has been steadily developing a presence in the E-Health space. At the time of writing (mid-April 2015) Telstra had made over 15 investments in e-Health related companies - many of which have been purchased outright - and has formed a separate operating unit termed Telstra Health.
You can read all about Telstra Health from this link:
What is interesting recently is that Telstra Health has, as it has made these acquisitions and formed its various partnerships, has begun to much more clearly articulate a business strategy and some business objectives. As a listed company we can be sure Telstra’s motives are financial not charitable.
They identify what they describe as a six point strategy.
Our six-point strategy
We’re focusing on key health segments and building an eHealth ecosystem to address six of the biggest challenges facing the Australian healthcare system.
· Consumer Control - Providing people with greater control of their health and wellness
· Connectivity - Increasing access to healthcare regardless of location
· Admissions - Reducing hospital and aged care admissions
· Integration - Improving integration of health information
· Pharmacy - Creating a safer, efficient and more convenient pharmacy system
· Efficiency - Improving efficiency and productivity across the system
With these in mind there does emerge a pretty clear and logical rationale for the various acquisitions that have been made - although I would have to say some have a much clearer basis than others. The good thing is that many of the acquisitions have been successful in their own right in delivering relevant and useful clinical and other support services and that many of the developers have been very much engaged in and understanding of the health sector at large. Sadly, in some ways, their size, and financial capability, has allowed them to ‘pick the eyes’ out of the best available in Australia which outcome might just stifle innovation in the future.
As an observer of the e-Health space for now over thirty years I have seen all sorts of entities attempt to develop an engagement with the health sector and make a sustained and profitable (from their perspective) venture within the sector. It would be fair to say, I believe, that, when considered over years, most organisations have run both hot and cold on the possibilities for them in the sector with very few, if any, being able to develop clearly sustainable and long term businesses, indeed before this present initiative Telstra has itself had different forms of engagement with the health sector over the last two or so decades. It is notable that the current push has considerable commitment at the level of the soon to retire CEO (David Thodey) who has mentioned e-Health frequently over the years as a significant growth engine for the company - with suggestions that the goal is to build a health / e-health business with annual revenues of $1 Billion over the next five years. Clearly it is only at this scale could the goal of making a significant commercial difference be achieved. With that said it is clear Telstra has not been afraid to invest for growth in the sector with the announced venture / acquisitions clearly amounting to many tens of millions.
The key issue that flows from all this is just how they will be able to generate the sort of returns on investment and margins that a commercial entity requires. They clearly recognise - from these three paragraphs - that there may be some considerable challenges.
“We’ve seen what the digital technology revolution has done to meet challenges in other industries. We believe Australia’s healthcare system can benefit significantly from a successfully implemented, connected eHealth system, reducing the reliance on multiple face-to-face interactions and removing an often siloed approach to care.
It’s a huge job, so we’re working with government, providers, patients and healthcare funds to deliver a connected future with improved productivity, safety, convenience, and quality control.
It’s not about selling products, rather working with you to understand your challenges and develop solutions that will create brilliant new opportunities for Australia’s health system. Our products are our capabilities and it’s how we connect them, and the various parts of the system, that will make us truly successful.”
Here is the link:
Many before them have noticed this potential opportunity and challenge but very few have succeeded!
If they are to succeed they will really need to develop deep expertise and relationships with the sector and be patient, while at the same time realising that success will only come from establishing truly stable and worthwhile revenue streams by offering services that are sufficiently differentiated and worthwhile that they will be valued. Initially I suspect they will be met with considerable scepticism and that their ‘big business’ character may be a barrier to successful engagement.
I noticed that in the recent announcement of the successful tenderers for the replacement of the Medicare Locals that Telstra Health was involved in the successful bid for the Brisbane North Metro Network. (Note e-health is one focus of the new Primary Health Networks). Is this a pointer to at least part of how Telstra is seeking engagement (and revenue)?
Another pointer to the underlying strategic direction is the recent announcement of MyCareManager. This application is an e-health solution for the aged and community care and disability sectors that includes a self-service portal and telehealth monitoring platform for clients. Here Telstra deploys both its network capacities as well as specific health functionality in a total solution package for a target market.
Read all about it here:
There is an interesting recent article from the leader of the initiative found here:
To me the jury is still out as to just how successful this initiative might be in the future but with Telstra’s scale and reach anything is possible, think maybe the PCEHR (or a replacement) being run in the cloud on Telstra’s network, Telstra taking over provision of basic e-Health infrastructure services, provision of GP and / or hospital computing as a service or even taking over NEHTA. Some such outcomes are possible and I am sure can’t be ruled out! I will certainly watching with interest.
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Comments welcome.
David.
4 comments:
You make an assumption that Australia is the target market, I would like to table an assumption that Australia is the trial and error market and that Chinia and possibly India and the lands between, are the profitable markets. With the Telstra brand and organisational structure it is probably the best way for these successful but smallish companies to get their innovative products out there.
Good idea! Thanks.
David.
A timely article David given the Telstra story in PulseIT today.
You refer to Telstra’s 6 point strategy!!:
Consumer control. Do people really want greater control of their health and wellness? Where is the evidence? “Greater Control” – easy to say but ‘so what’. "What" does Telstra think it has to deliver to give the consumer “greater control”. I don’t think Telstra has thought that conundrum through.
Connectivity. Nothing new in this concept. Telstra needs to expand on “what” is to be connected, “how” will it be connected, “what” will be delivered when it has been connected, “who” will want it and “why”.
No argument with the decade old aspirations of reducing admissions and improving integration but these are not “strategies”. Neither is a safer efficient more convenient pharmacy system or improving efficiency and productivity. None of these are strategies, just marketing rhetoric and noble aspirations.
All this makes one wonder whether Telstra understands what problem it is trying to solve and why and how it is going to solve it.
I sense a lot of muddled thinking lacking in precision and clarity.
PulseITs Kate McDonald wrote:
The industry is somewhat perplexed by Telstra’s various acquisitions and partnerships.
It has been difficult to understand what Telstra Health plans to do with them all.
Managing Director Shane Solomon admitted as much at the launch of Telstra Health's new MyCareManager solution.
He said he was often asked what his strategy was.
He pointed to MyCareManager, describing it as typifying what Telstra hoped to achieve.
It has been designed by DCA Health one of Telstra's first acquisitions.
It is a platform rather than a simple product, it brings together existing products already under the Telstra banner.
So now we know. Telstra has developed a new product which will tie everything together.
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