Healthcare is one of the few sectors where, in every country, there is a huge and ongoing need. This demand will only rise as populations age and grow, exacerbating significant pain points relating to costs and funding models, and unmet needs. Meanwhile, the combination of cost pressures, the sensitive nature of health data and the complexity of healthcare systems have left it as one of the least digitised sectors. Thus, many telcos have identified healthcare as a sector where there is significant opportunity to drive efficiency through new services leveraging their network infrastructure and customer reach.
In some respects, telcos are well positioned to fill the healthcare sector’s needs. For example, enabling doctors to offer virtual care to patients through secure messaging or video chats, and to share electronic health records with patients and other doctors more easily, seem like low hanging fruit. However, in practice this is much more complicated; hospitals, primary care providers (general practitioners, family doctors), specialised clinics (e.g. mental health, physiotherapy) and pharmacies all store patient records in different systems (that are not necessarily digitised), and have different views on how to securely share data between each other. Every healthcare system also has a unique funding model, ranging from predominantly privately funded through insurance providers or out of pocket payments, like the United States, to single payer models like the UK, where the National Health Service accounts for more than 80% of healthcare spending, and budgets – including IT solutions – are closely tied to electoral and economic cycles.
These synergies have prompted a number of telcos to launch consumer health services or to pursue opportunities in the health IT market. Besides TELUS, AT&T, Verizon, Vodafone, Telefónica, NTT DoCoMo, Telstra, Deutsche Telekom AG and BT have all been active in healthcare. We explore their strategies and differences in comparison with TELUS’ approach on page 33. Why TELUS? This report focuses on TELUS Health, which has one of the longest and the most committed investment into the healthcare sector by a telco that we are aware of. We see it as a leading example of how telcos can build a business in healthcare, as well as in other sectors that are not instinctively linked to telecoms.
To put the Canadian healthcare market, which TELUS entered ten years ago, into context:
- Canada’s healthcare system is fragmented between 13 provincial/territorial systems and the federal level.
- The payer model is split between the government (70%) for necessary hospital and physician services and private insurers (30%) for supplemental care and drug prescriptions.
- Healthcare spending accounted for 11.1% of GDP in 2016, on par with other developed countries globally.
- The huge geographical distances mean that the 19% of Canadians living in rural areas have very limited access to specialist care.
- Adoption of electronic medical record (EMR) systems among family doctors and specialised clinics started from a low base of 20% in 2006, rising to 62% in 2013 and 80% by 2017.
Why TELUS got into healthcare: a viable growth opportunity
Starting in 2005, led by the CEO Darren Entwistle, TELUS executives came to a consensus that just focusing on connectivity would not be enough to sustain long term revenue growth for telecoms companies in Canada, so the telco began a search into adjacent areas where it felt there were strong synergies with its core assets and capabilities. TELUS initially considered options in many sectors with similar business environments to telecoms – i.e. high fixed costs, capex intensive, highly regulated – including financial services, healthcare and energy (mining, oil).
In contrast with other telcos in Canada and globally, TELUS made a conscious decision not to focus on entertainment, anticipating that regulatory moves to democratise access to content would gradually erode the differentiating value of exclusive rights.
By 2007, health had emerged as TELUS’ preferred option for a ‘content play’, supported by four key factors which remain crucial to TELUS’ ongoing commitment to the healthcare sector, nearly a decade later. These are:
- Strong correlation with TELUS’ socially responsible brand. TELUS has always prioritised social responsibility as a core company value, consistently being recognised by Canadian, North American and global organisations for its commitment to sustainability and philanthropy. For example, in 2010, the Association for Fundraising Professionals’ named it the most outstanding philanthropic corporation in the world. Thus, investing into the healthcare, with the aim of improving efficiency and health outcomes through digitisation of the sector, closely aligns with TELUS’ core values.
- Healthcare’s low digital base. Healthcare was and remains one of the least digitised sectors both in Canada and globally. This is due to a number of factors, including the complexity and fragmented nature of healthcare systems, the difficulty of identifying the right payer model for digital solutions, and cultural resistance among healthcare workers who are already stretched for time and resources.
- Personal commitment from the CEO, Darren Entwistle. TELUS’ CEO since he joined the company in 2000, Based on personal experiences with the flaws in the Canadian healthcare system, Darren Entwistle forged his conviction that there was a business case for TELUS to drive adoption of digital health records and other ehealth solutions that could help minimise such errors, which was crucial in winning and maintaining shareholders’ support for investment into health IT.
- Healthcare is a growing sector. An ageing population means that the burden on Canada’s healthcare system has and will continue to grow for the foreseeable future. As people live longer, the demands on the healthcare system are also shifting from acute care to chronic care. For example, data from the OECD and the Canadian Institute for Health Information show that the rate of chronic disease among patients over 65 years old is double that of those aged 45-64 (see figure 3). Meanwhile, funding is not increasing at the same rate as demand, convincing TELUS of the need for the type of digital disruption that has occurred in many other sectors.
That all four of TELUS’ reasons for investing in healthcare remain equally relevant in 2017 as in 2007 is key to its unwavering commitment to the sector. Darren Entwistle refers to healthcare as a ‘generational investment’, saying that over the long term, TELUS may shift into a healthcare company that offers telecoms services, rather than the other way around.
- Executive Summary
- Healthcare can be a viable investment opportunity…
- …But there are risks
- Why TELUS got into healthcare: a viable growth opportunity
- How TELUS got into healthcare: buying a way in
- Overview of the Canadian healthcare system
- The payer model
- Access to healthcare and demographics
- TELUS’ objectives and evidence of success in healthcare
- Build a new revenue stream
- Synergy: supporting telecoms revenues
- Differentiate brand among consumers
- Drive better health outcomes
- Understanding TELUS Health’s strategy
- TELUS Health’s three step strategy
- eHealth market challenges: how is TELUS responding?
- Comparing TELUS with other telcos: a deeper dive
- Lessons for other telcos
- Challenges of the digital health market
- Healthcare is a long-term play
- Healthcare matrix: mapping the healthcare sector for telcos
- Figure 1: Snapshot of TELUS Health business
- Figure 2: Public vs. private healthcare services in Canada
- Figure 3: Rate of chronic disease rises dramatically among seniors
- Figure 4: TELUS Health’s reach in the healthcare market
- Figure 5: TELUS Health is outpacing TELUS in revenue growth
- Figure 6: TELUS Health’s contribution to TELUS revenues
- Figure 7: Healthcare investment contributes to improving customer loyalty
- Figure 8: How do consumers feel about TELUS?
- Figure 9: TELUS vs. other Canadian telcos’ consumer brand score and rank
- Figure 10: BC pilot of HHM shows reduction in hospital admissions
- Figure 11: TELUS acquisitions
- Figure 12: Methodology for building collaborative solutions
- Figure 13: List of collaborative solutions and end-users
- Figure 14: Roadmap for eClaims solution
- Figure 15: Roadmap for PharmaSpace solution
- Figure 16: Roadmap for Mobile EMR solution
- Figure 17: Patient engagement is central to TELUS Health’s target growth opportunities
- Figure 18: Home health monitoring overview
- Figure 19: Results of HHM trials across two health authorities in British Colombia
- Figure 20: Healthcare in TELUS ad campaigns
- Figure 21: Sample of TELUS Health investments and partnerships
- Figure 22: Telco digital health strategies
- Figure 23: Healthcare Matrix scoring criteria
- Figure 24: Where are telcos’ strengths in digital health?