A number of factors are combining to drive greater use of network connectivity in health care, including government determination to lower health care costs, the ubiquity of high-speed wireline and wireless networks and growing use of video and data feeds in conjunction with a new generation of portable devices tied to remote care procedures.
Just how big is the telemedicine market? Consider what one physician recently told Jim White, vice president of health care market development at Alcatel-Lucent.
“His hospital produces more video content than the BBC,” White says. “Some hospitals have 25-30 operating rooms operating 10 hours a day. They’re mini broadcast centers. That should be pretty interesting to carriers.”
By 2014, annual U.S. telemedicine spending will approach $3.6 billion, according to an October Pike & Fischer report. AT&T will have the largest market share, followed closely by Verizon and Sprint Nextel, the report predicts.
One market driver is the $20 billion that the federal government has earmarked for health IT. At least $5 billion of that will be spent on broadband-enabled telemedicine services such as remote patient monitoring and mobile access to medical records, Pike & Fischer says.
That spending complements existing public and private spending, such as on state-operated telemedicine networks. The $7.2 billion broadband stimulus package should help segments such as home health care by making telemedicine viable for more rural clinics and patients.
Yet another market driver is the democratization of medical equipment. For example, over the past several years, ultrasound gear has steadily decreased in price and size, to the point that home health nurses can take the equipment to patients. Even if that diagnostic information is read in the patient’s home, it still has to be uploaded to the physician at some point.
The increasing number of portable and handheld medical devices also means equipment that needs network connectivity no longer is just in a predictable, limited set of places such as hospitals and physicians’ offices. That’s one of the reasons why analyst firms such as Pike %26 Fischer expect a major portion of future telemedicine spending to wind up in wireless carriers’ pockets.
A diverse marketplace
Telemedicine users can be divided into three segments: ambulatory (basically doctors), acute (hospitals) and home health. The segments have similar business drivers, such as using telemedicine to improve care quality, but the pace of adoption varies.
“[Home health care companies] tend to be privately owned,” says Ed Davalos, national director for health care at Sprint. “So the adoption there is much quicker.”
The telemedicine market also can be segmented by specialty, such as teledermatology and telepsychiatry. Each specialty has different needs in terms of bandwidth, as well as different levels of maturity, all of which affect a telco’s or MSO’s ability to enter that segment.
Teleradiology, for example, is one of the oldest segments, with a mature ecosystem.
“To some degree, you’re a supplier in a value chain that’s been established,” says Alcatel-Lucent’s White. “Remote patient monitoring is what I’d call total market development mode. It’s not just defining how the technology works. It’s defining how the business model works: Who gets paid? What’s the benefit? Who can afford to make the investment to monitor you?”
Not all telemedicine deployments require deep government subsidies.
“More and more of our sites – about one-third – are self-funding their telehealth lines and equipment,” says E. Rachel Mutrux, director of the Missouri Telehealth Network, one of the country’s oldest systems. “They have reached a point that they have a successful business model that works.”
Is sub-1 mbps enough?
All telemedicine services require wide-area network connectivity, but each one’s bandwidth needs varies. For example, a videoconferencing-like consultation between a patient in a rural clinic and a specialist in a city hospital doesn’t necessarily require a T1.
“The de facto standard is 384 kilobits per second; you don’t want to go any lower than that,” says Ron Emerson, global director of healthcare at Polycom. “Even at 384, you get 4CIF [704×576] resolution. You need about 832 kbps to get HD.”
So far, there’s no clinical research showing that diagnoses and other outcomes are better when the consultation uses HD video rather than SD.
“Missouri Telehealth Network is looking to do studies comparing medical care using SD and lower bandwidth (384 kbps or 768 kbps) versus HD and high bandwidth (1 megabit per second or higher),” Mutrux says. “We believe that much more bandwidth is needed to accommodate the growth of telehealth, teleradiology and the push for electronic health records and health information exchanges.”
In some cases, physicians are looking for details that are unaffected by resolution.
“They don’t use it the way you think they would: looking at pupils dilating or the color of your skin,” says Alcatel-Lucent’s White.
Take home health care, an application where multi-megabit connections aren’t always available.
“Are the lights on? Is the house clean? Are you dressed?” White says. “The video gives them so much context, and it doesn’t have to be high-resolution.”
750 MB files
At the other extreme is teleradiology.
“A head CT [scan] can range from between 15 and 60 megabytes uncompressed to between 7 and 30 MB compressed,” says Doug Johnson, director of solutions and strategic accounts at NightHawk Radiology Services, which specializes in teleradiology.
Many teleradiology services support emergency rooms, where severe injuries can mean scanning a patient’s entire body. That produces enormous files, even with 2:1 lossless compression.
“[For] sites that send that many images, we are always running compression, so that would amount to 750 MB,” Johnson says.
For those kinds of urgent care applications, a fast broadband connection can mean life or death. When there’s a trauma victim on the ER table, doctors can’t wait 15 minutes for the files to upload to the radiologist who reads them.
As the resolution of CT scanners and other imaging equipment increases, so do the files they produce. More than 1,300 U.S. hospitals transmit those files to companies such as NightHawk, which reads the images, freeing the hospital from the cost of one or more staff radiologists.
“They’ve had to upgrade their connectivity in order to be able to send these out to companies such as ours,” Johnson says.
How much of an upgrade? As in much of the rest of telemedicine, there is no clear-cut answer. NightHawk’s name reflects its initial market: providing radiological services only overnight, with hospital staff taking over during the day. Hospitals typically have less radiological work overnight, so a slower connection – say, a T1 – usually is fine.
But some hospitals are outsourcing their daytime radiology work, too. For them, a faster connection is necessary because there are more files to send each hour, and a slow link would mean an unacceptable long queue.
“You need to be able to cut that down to one or two minutes for each patient [file],” Johnson says. “That’s where the connectivity is a huge issue.”
If T1s aren’t most common in telemedicine, then they’re at least the minimum for many applications. NightHawk, for example, recommends that its clients have at least a T1, while some state-run services rely almost entirely on T1s.
“The great majority of our connections are Frame Relay T1 lines, with a few larger Ethernet connections,” says Missouri Telehealth Network’s Mutrux.
Affordability and availability are relative
Although the telemedicine market is growing at a healthy clip, the availability and affordability of broadband remain significant barriers to even wider adoption.
Take rural areas and small towns, where a shortage of physicians is a major reason why telemedicine was created in the first place. If T1-or-faster connections are available at clinics and other facilities, they often come at a steep premium compared to urban areas.
“We have a connection in Anderson [pop. 1,856] that is $1,065 per month compared to a line in St. Louis that is $218 per month,” Mutrux says. “So the cost of the line is definitely a barrier in the growth of telehealth.”
But some in telemedicine see availability as a bigger barrier than affordability. One example is Rural Health Telecom, whose services to health care providers range from Frame Relay connections to assistance with identifying funding sources.
“The federal Universal Service Fund and many state initiatives have had an impact on affordability,” says Tim Koxlien, principal at Rural Health Telecom. “Availability of broadband, on the other hand, still has a way to go. I am optimistic about how availability is being addressed throughout the country. There are many regional initiatives that are focused on solving this problem in their areas.”
Although health care providers in urban areas typically have more broadband choices and better pricing to choose from, they still have their share of headaches. Some of those headaches affect the market opportunity for telemedicine.
For example, one hospital in urban New Jersey lost its radiology staff and tried to outsource those tasks to NightHawk.
“We couldn’t do it because they had only a T1,” Johnson says. Even with emergency priority, “it was going to take 30 days for their provider to light up a new line.”
That problem could be an opportunity for operators that offer bandwidth-on-demand (BoD) services, where customers can order an upgrade and have it provisioned in a matter of hours. And at least in areas where it’s offered, BoD could be a way for rural health care providers to avoid leasing overly fast connections just in case they suddenly need to start using high-bandwidth telemedicine apps.
“It’s not wise for rural hospitals to have large Internet pipes if they don’t need it,” Johnson says. “But when they do need it, it’s never pre-planned. Then it’s an always emergency, and it takes 30 days to light up, at best. They’re screwed. Patient care suffers.”
Telemedicine goes wireless
Timely access to broadband also is a factor in the home health care segment of the telemedicine market. For example, many home health patients are 65 or older, a demographic where broadband penetration is only about 30 percent, according to a Pew Internet %26 American Life Project survey earlier this year.
That means there’s less than a one-in-three chance that the patient will already have a cable broadband or DSL connection that the telemedicine service can piggyback on. Waiting days or longer to have one installed often isn’t an option.
“The most critical time when a patient goes into their home is immediately after the clinical encounter,” says Polycom’s Emerson. “We don’t have the luxury of waiting a couple of weeks. So we really need that versatility.”
That need creates an opportunity for wireless carriers to target the home health telemedicine market with 3G- or WiMAX-based services. The Pike %26 Fischer report is particularly bullish, predicting that 70 percent of telemedicine spending over the next five years will go to wireless devices, applications and services.
“On the consumer/end-user side, smartphone applications will play a large role in transforming the way people monitor their health and communicate with their physicians,” says Pike %26 Fischer senior analyst Timothy Deal. “And wireless broadband will connect rural locations and drive the development of telemedical services where they are needed the most – in remote locations.”
“Wireless technologies will become very important to the delivery of quality care in rural areas,” agrees Rural Health Telecom’s Koxlien. “I think that there are very cost-effective solutions for these fixed apps today.”
Besides providing a connection for medical gear that’s permanently or temporarily installed in a patient’s home, the wireless opportunity also includes supporting portable and mobile devices, such as caregivers’ laptops and smartphones.
“We are looking into some of the wireless products on the market for telehealth and are planning a testing phase,” says Missouri Telehealth Network’s Mutrux.
For some telemedicine users, wireless could be attractive as a way to avoid having to work with dozens of LECs.
“In western Pennsylvania, I might have 25 different carriers I have to deal with if I want to use fixed,” says Alcatel-Lucent’s White. “You can write a contract with a wireless provider and reach your whole population.”
Know the market
Wireless also is an example of the growing – and increasingly bewildering – number of choices that health care providers must navigate when assessing their telemedicine options. That problem creates an opportunity for service providers and other companies to offer a portfolio of solutions: from bandwidth to hardware to systems integration.
Service providers that want to go that route basically have two options. The first is to partner with companies that have the necessary expertise, plus the brand recognition and relationships that help open doors. The second option is to bring that expertise in house to some extent. For example, Sprint recently hired away the IT director for several hospitals in the Bronx.
“We’re hiring people who really understand this space,” Davalos says.
Rural Health Telecom takes an end-to-end approach, offering IT services in addition to broadband. That mix reflects the needs of its target market.
“Most of our clients suffer from IT skill set issues,” Koxlien says. “It is tough for rural America to acquire the skilled personnel needed to run the technology they need, and it only gets worse as they implement EMR systems. They don’t need to cobble things together because we have the ability to customize a solution that includes everything: WAN/Internet connectivity, e-mail and business application hosting, voice, video (videoconferencing) electronic medical records and all the equipment, including the desktops/laptops.”
So far, MSOs appear to be lagging in their pursuit of the telemedicine market when compared to telcos and mobile operators, Deal notes. “AT&T has been aggressively exploring telemedicine solutions and has well-established relationships with a number of hospitals and clinics nationwide through both its wireline and wireless businesses,” he says. “It is therefore well positioned to leverage those relationships along with its expansive business offering in order to respond to the nationwide push for telemedicine solutions.”
In contrast MSOs “do not seem to be talking about telemedicine initiatives, at least not publicly, and that may have a significant impact on the role they play as telemedicine solutions roll out,” Deal adds. “I think the telcos do have an edge, not only because they have a lot of channel partner relationships, but also because they have (for the most part) an established telemedicine strategy.”
But will MSOs and other less-than-aggressive players end up in the hunt for this business?
Considering the size of the overall health care market, the answer probably is yes.
“It’s the third largest industry in the United States,” says Sprint’s Davalos. “It’s a huge opportunity.”