The mHealth Revolution

ADVANCED MASTER’S DEGREE IN

STRATEGY AND MANAGEMENT OF INTERNATIONAL BUSINESS

The M-Health revolution:
which opportunities for a
medical device company?

GE Healthcare

Presented by

Bruno RAKOTOZAFY

Professional Thesis Advisor: Xavier Pavie

Mission Advisors: Laurent Roche & Eliane Apert

Résumé
Le secteur de la santé est un secteur particulièrement complexe car il implique de nombreux
acteurs et touche potentiellement tout le monde. Il est également hautement dépendant des
états et des instances régulatrices ce qui le rend différent de tous les autres secteurs
d’activités. C’est peut-être pour ces raisons que le secteur de la santé n’a pas encore été, ou
peu, impacté par les Technologies de l’Information et de la Communication (TIC) comme
l’ont été la plupart des autre activités. Cependant nous observons une tendance profonde au
rapprochement entre la santé et les TIC, à l’heure où les gens apprivoisent l’usage de
l’Internet et des objets connectés dans leur quotidien. Cette convergence naturelle entre une
science millénaire et des technologies chamboulant l’ordre établi pourrait bien prendre son
essor avec l’apparition de solutions innovantes de M-santé (santé Mobile). Instruments
médicaux connectés, plateformes Internet participatives, applications santé sur
smartphones, médecins connectés, téléassistance aux personnes dépendantes. Voici
quelques exemples d’applications promises par la M-santé et qui pourraient révolutionner la
façon dont le secteur est structuré et les soins sont prodigués. Les fabricants d’équipement
médical possèdent la légitimité pour devenir les locomotives de ce mouvement en marche.
C’est donc dès à présent qu’il convient, pour ces entreprises, de détecter les opportunités à
saisir, d’imaginer les produits et solutions pertinentes, de construire l’écosystème associé et
enfin de prévoir les modèles économiques qui seront viables.

Mot-clés : Santé, M-Santé, Equipement Médical, TIC, Internet, Smartphones, Docteurs.

Abstract
The health sector is a particularly complex one because it implies lots of actors and impacts
potentially everyone. It is also highly dependent on states and regulatory bodies making it be
different from the other business sectors. This may be the reason why the health sector has
not been stricken by Information and Communication Technologies (ICT), on the contrary to
other business fields. However we can notice a convergence trend between health and ICT,
while people have adopted the use of Internet and connected devices in a daily basis. This
natural convergence is bringing the most promising applications with M-health solutions
(Mobile health). Connected medical devices, web health platforms, smartphones’ health apps
or connected physicians are some of the most encouraging solutions that could revolutionize
the health sector and the way healthcare is provided. Medical devices manufacturers have
the legitimacy to lead this undergoing movement. There is no more time to waste for those
companies to detect opportunities, design relevant products and solutions, build associated
ecosystems and overall imagine correct business models.

Keywords: Health, M-health, Medical Devices, ICT, Internet, Smartphones, Physicians.

INTRODUCTION……………………………………………………………………..2
PART 1 -
THE HEALTH SECTOR: A CONSERVATIVE APPROACH
DESPITE OF INNOVATIVE TECHNOLOGIES ................................................ 4

1-
HEALTH CONCEPT IN THE SOCIETY ......................................................................... 4

a)
Sociological and demographical aspects................................................................... 4

b)
Scientific aspects ....................................................................................................... 7

c)
Economic aspects...................................................................................................... 8

2-
THE HEALTH SECTOR GATHERS A LOT OF PLAYERS............................................... 10

a)
Women and men are the heart of healthcare .......................................................... 10

b)
Pharmaceutical and medical equipment industries are innovation leaders ............. 13

c)
Payers: State is the primary payer and health insurances complete the offer......... 16

d)
The patient: a forgotten end-user ............................................................................ 18

3-
A BIG PICTURE OF THE HEALTH SECTOR ............................................................... 19

PART 2 -
WHEN ICT MEET HEALTH.......................................................... 21

1-
FROM INFORMATION AND COMMUNICATIONS TECHNOLOGIES TO CONNECTED
HEALTH TECHNOLOGIES ........................................................................................... 21

a)
A short story of communications and its recent ramping evolution.......................... 21

b)
Connected health technologies: E-health and M-health .......................................... 24

2-
DIFFERENT PLAYERS FROM DIFFERENT BACKGROUND IN THE M-HEALTH UNIVERSE. 27

a)
Consumer electronics manufacturers ...................................................................... 27

b)
Infrastructure builders and telecom operators ......................................................... 29

c)
Healthcare stakeholders .......................................................................................... 30

d)
A big picture of the M-health.................................................................................... 31

PART 3 -
WHICH POTENTIAL MARKETS TO TARGET AND BUSINESS
MODELS TO DESIGN? .................................................................................. 32

1-
UNDERSTAND THE HEALTHCARE PATTERN AND IDENTIFY KEY CHANGING FACTORS . 32

a)
Education/prevention, diagnosis, therapy, post-treatment monitoring..................... 32

b)
Targeting the real challenges .................................................................................. 36

c)
Home care services ................................................................................................. 41

d)
Patient empowerment.............................................................................................. 42

e)
Cost, access, clinical outcomes ............................................................................... 43

2-
DESIGN A RELEVANT BUSINESS MODEL ................................................................ 44

a)
Why medical device companies are more likely to be leading players in M-health?44

b)
Build patient centric solutions .................................................................................. 45

c)
Adaptation to the complex practice of healthcare.................................................... 47

d)
Build partnerships to provide fully integrated M-health solutions............................. 48

e)
How to sell and monetized wireless health solution ................................................ 50

3-
FORESEE ADVERSE OR COLLATERAL EFFECTS OF M-HEALTH SOLUTIONS: BE
CONSCIOUS AND RESPONSIBLE INNOVATORS. ............................................................. 54

a)
Ethics and health Information security..................................................................... 54

b)
Reduce impact on environment and people ............................................................ 54

c)
Use of M-health in the developing world.................................................................. 55

Bruno Rakotozafy | M-Health revolution: which opportunities for a medical device company? 1

Introduction
It is not abusive to say that the world has entered a new area: the connected world. This
evolution has led to many changes in the society and in human activity. This movement has
been supported by the emergence of Information and Communication Technologies also
known as ICT. ICT is often quoted nowadays and in reality those technologies are much
more present than one can expect since they are deeply impacting our daily life. These
telecommunication technologies, and the consequential applications, are literally reshaping
our life. In the meantime some activities stayed reluctant to these changes and have known
kind of inertia. One of the obvious sectors that have remained conservative toward this trend
is the health sector.

It would be crazy to think that the healthcare world will remain “disconnected” and completely
separate from that revolution on the way. More and more people are now thinking about
applying all those discoveries to health. And especially how applying mobile technologies to
healthcare. It is still the preliminary phase of an important movement. What is sure is that the
path seems to be though because of the inherent sector’s complexity but also because
health is a serious matter. Yet this seriousness is also the most powerful reason to make
changes happened. One significant point to highlight is that ICT technologies have radically
changed the business approach in economic sectors already impacted. The shift from a
selling-industrial-product approach to a providing-integrated-services one. In our case it
makes sense since healthcare is basically a service.

The purpose of this work is clear. Help understanding both health and ICT sectors in order to
understand how they can converge and how it would be possible to deliver relevant
solutions. Understand the two universes means understand them deeply, understand their
technical aspects, understand their own philosophy, understand their relationship with the
people they provide and understand how the different stakeholders of both worlds could
finally find a mutual interest. To be simple the problematic we are going to answer is:

“When health becomes mobile: which opportunities to catch and which business models to
implement in order to provide and improve health services through mobiles devices. A
natural convergence between ICT and medicine”

In order to deal with this really exciting but complicated subject it has been necessary to
define the scope of such a work. Indeed it would have been pretentious trying to tackle every
aspect of this challenging topic. One reason is that both health and ICT fields are extremely
wide ones and include tons of different things. Another reason is that the diversity of our
world make this problematic be very region-specific.

That is why first it has been chosen to focus on mature countries, and France will be our
major illustration. We will sometimes consider and talk about the US because it is still one of
the most innovative countries in the world and it will help us to provide more examples.
Second we will treat the subject from a business point of view. Obviously we will have to deal
with political, philosophical or ethical aspects but always as evidences to support the
business relevancy. Finally we have decided to include in the scope a reflection about how
those innovations could be responsibly designed.


This work will be of interest especially for medical device companies which are, as we will
see, the most relevant players to lead the wireless health movement. In a larger extent this
report will be also useful for all actors that are involved in the healthcare and the ICT
industry. The health sector is clearly undergoing main transformations and those innovations
could be growth drivers in the near future. It will also be of interest for entrepreneurs who
would like to take part in this revolution, because opportunities are huge and there will have
space for a lot of actors.


Part 1 - The health sector: a conservative approach
despite of innovative technologies
Compared to other business fields the health sector is highly complex to approach. For our
purpose, the aim is to understand how this sector is structured from a business point of view.
But healthcare is much more than a simple business. Fundamentally it is even frequently
assumed that healthcare is a public topic and for the Universal Declaration of Human Right1
health is recognized as a universal right (article 25).

In this particular context it is crucial to capture the full picture of the health environment. In
order to do so we will first try to understand how healthcare activities are imbricate in human
societies, at socio-demographic, scientific and economic levels. A second part will be
dedicated to introduce the myriad of stakeholders playing a role in the healthcare universe. It
will include healthcare professionals, industrial actors, payers and last but not least patients.

1- Health concept in the society
a) Sociological and demographical aspects

Humans and health

Health is a topic at the center of human existence as it is directly and indirectly linked to life
and death considerations. From the first historical record discovered so far health issues
have been mentioned. The first doctor known is Imhotep, an Egyptian who lived two
millenaries before Christ2. Among other genius activities Imhotep left a textbook on how to
treat some illness. To illustrate the importance of health and, as a direct consequence, the
power obtained by persons who can master it, Imhotep was so revered that Egyptians used
to worship him as a god. Medicine genesis can even be tracked before Antiquity, thanks to
records of plant use for medicinal purpose.

According to the World Health Organization “health” is “a state of complete physical, mental
and social well-being, and does not consist only of the absence of disease or infirmity”3. This
modern definition of health put emphasize on the fact that health not only includes
anatomical aspects but also psychological and mental ones. We will not try to debate about
the border between well-being and being healthy because it is not relevant for our purpose.
But we could be sure that as a general matter, health is a key occupation in human’s life.

Is health an individual or a group concern?

In the 1940’s a psychologist called Abraham Maslow delivered a theory to explain what
motivated humans. His theory, originally presented as a hierarchical model was later
simplified into a pyramidal scheme, as showed in Figure 1.

1
Déclaration universelle des droits de l'homme, 1948 (http://goo.gl/1c7kv)
2
Saari, Peggy. “Medicine And Disease – Who Was The First Doctor In History?.” History Fact Finder. Ed. Julie L. Carnagie.
UXL-GALE, 2001. eNotes.com. 2006. 30 Sep, 2009
3
Preamble to the Constitution of the World Health Organization, 1946 (http://goo.gl/ZRAUF)


This representation helps us to realize that health is a basic need. And because it is a basic
need for each of us, maintaining a good level of health is a strong individual motor.
Nevertheless we can feel that
health is more than an individual
concern, it is also a group
preoccupation.

First, the ill person often cannot
treat itself. It receives treatment
from another person. Answering the
health need require, at least, 2
people. Second because a disease
not only impact the sufferer but also
its entourage. Because either the
disease is contagious, or because
the sick person cannot take care of
itself. So quickly civilizations and
society had to organized health
structures in order to manage or monitor individuals’ health. In a society this organization is
Figure 1 - Maslow's hierarchy of needs often known as “public health”.
According to Charles-Edward Amory
Winslow, a famous American thinker and teacher at Yale University, public health is “the
science and art of preventing disease, prolonging life and promoting health through the
organized efforts and informed choices of society, organizations, public and private,
communities and individuals”4. This concept was theorized quite recently but we can observe
practical examples of it since ancient times. For instance Romans understood that it was
necessary to control human waste diversion in order to limit diseases among urban
populations.

Today public health is a major concern in western countries and in 1948 a world-scale
structure were set up to tackle with this issue: the World Health Organization (WHO). In a
majority of mature countries, including France, health is highly funded by governments and
represents a huge part of states’ expenditures. Governments implication is justify by the fact
that health is considered as a primary right. National health insurances will be described later
but we can already write that health, as a group concern, is an economic subject.

So we better understand now that health is both an individual and a group concern. It is
important to know that for our purpose. Indeed we will take into account this double
consideration when we will talk about relevant business models to design. Mobile solutions
will have to be individually accepted while promoted by opinion leader groups.

Different cultures, different health standards

As we have just seen health is a double concern. But we can also underline that health is
culture-dependent. Health is closely link to cultures and religions since it concerns person’s
intimacy. The science that focuses on that relationship is called medical anthropology.
Herman, in 2000, defined the medical anthropology as “how people in different cultures and

4
The Untilled Fields of Public Health, C.-E. A. Winslow, 1920 (http://goo.gl/NcyPY)


social groups explain the cause of ill-health, the type of treatments they believe in, and to
whom they turn if they do become ill”5. It is not a revelation to say that in different cultures
health is considered differently. Eastern countries put emphasize on traditional and soft
medicine. For them plants are the most efficient drugs. And mind is the better tool to prevent
or fight illness. In some other cultures or religion, women are treated differently than men.
Even if we will focus on western countries in this work, it is useful to be aware of that since
populations in those mature countries are being more and more multi-cultural.

In general, health in the western world is characterized by its technical-medical approach. If
we have another look at the WHO definition of health (“state of complete physical, mental
and social well-being, and does not consist only of the absence of disease or infirmity”) we
could say that health practice in western world is focused on “physical” and “absence of
disease or infirmity”. In practice it means that health is a scientific subject that should be
handled as a pragmatic, factual and empirical one. Little credit is given to non-visible, non-
demonstrable solutions. Strong evidences are mandatory and it is the only valuable way to
proceed.

We should keep that idea in mind because rationality will be the principal way to give value to
mobile solutions. It will be necessary to provide strong evidences and measurable benefits.

Health and demography

To conclude with the importance of health in our societies it makes a point to talk about
health and demography. Not only health discoveries have strongly impacted the world
demography but the opposite is also true. Demographic changes influence health systems.
Life expectancy has globally (but unequally) rose all along human history in parallel to health
innovation that has allowed reducing mortality. As a consequence the world population has
exponentially grown. Hardly 1 billion human on earth in 1800 it is assumed that we will be 9
billion in 2050. For sure those medical innovations were major improvements for humanity.
But in the meantime there are side effects of this demographic explosion, indirectly impacting
health of people. It will be tough to detail all factors that have been influenced by
demographic changes and in return threat our health so we will just give some easy
examples.

Demographic boom has increased populations’ concentration. In addition to rural exodus in
mature countries during the last century it has led to a very high human density in urban
areas. And this over-population not well structured can sometimes causes different issues.
Among others it is a factor creating insanitary zones and promoting spreading of contagious
illnesses.

Ageing population is another heavy demographic trend. Medical progress allowed people
living longer but this has also brought a bunch of new diseases specific to elderly. This is
particularly important in mature countries and we will see further the impact of that ageing
trend.

5
Culture and Health: Applying Medical Anthropology, Michael Winkelman, 2008 (http://goo.gl/csWTu)


b) Scientific aspects
For a better understanding of health sector it is important to exhibit a brief timeline of medical
practice and technologies.

From antiquity to Middle Ages

The first proof of medical practice is dated from the new Stone Age6 with the discovery of
trepanations practice. Trepanation consists in boring a hole in the skull. It is believed that
trepanning was used to relieve horribly painful headaches.

As said previously Imhotep was the first physician known by name. But it is considered that
the born of modern medicine came with Hippocrates, around 400 years B.C. Hippocrates
(460-310 B.C) based medicine on objective observation and deductive reasoning. Galen
(131-201 A.D) was considered to be the most important contributor to medicine following
Hippocrates. He was personal physician to several emperors and published some 500
treatises. Up to now he is still respected for his contributions to anatomy, physiology, and
pharmacology.

Persian doctor Rhazes (865-925 A.D) is famous for having pioneered pediatrics and was
known to have been the first to use anesthesia before surgery. Muslims have brought a lot in
the history of medicine. Avicenna (980-1037) wrote The Book of Healing and The Canon of
Medicine, establishing experimental medicine and evidence-based medicine. He was the
precursor of modern hospital concept in the Middle East. Those books remained a standard
in European universities until the 18th century. A second Muslim, Avenzoar (1091–1161) is
known to be the father of modern anesthesia.

From 16th to 18th centuries

But this is not until the early 16th century that Paracelsus, a German alchemist, pioneered the
use of chemicals and minerals in medicine. Then there was a major revolution in European
medicine with the release of Fabrica Corporis Humani, written by Andreas Vesalius, which
corrected major Greek medical errors. In the meantime variolation (infecting people
purposively with smallpox) was implemented in China7. Variolation, and inoculation in
general, would further lead to vaccination’s concept.

In 1590 Janssen invented the first rudimentary microscope. This was an important milestone
in medicine’s history since Anton van Leeuwenhoek (1670) used this tool to first to
characterized human cells. In 1650 Sir Christopher Wren was the first to administer
medications intravenously and experiments with canine blood transfusions.

Later, Edward Jenner (1749-1923) developed a method to protect people from smallpox by
exposing them to the vaccine virus (a cow disease). The process became known as
vaccination. Jenner is sometimes called the founding father of immunology.

The 19th century: revolution of tools

6
History of medicine, Wikipedia (http://goo.gl/HBTB7)
7
Une petite histoire de la medicine, Valentin Daucourt, 2002 (http://goo.gl/oZfi4)


For a long time, the practice of medicine was based on patient’s descriptions of symptoms
not based on hands-on experience such as examination of a patient’s body. The 19th century
was a turning point for physicians thanks to innovations in medical techniques and
equipment to better diagnose and treat patients.

Stethoscope (1816), ophthalmoscope (1851), laryngoscope (1859), X-ray use for medical
imaging (1895), sphygmomanometer (blood pressure meter, 1896) and ECG (1901) changed
the way diagnosing people, to hear, feel and see their bodies.

The first human blood transfusion (1819), the first vaccine for cholera (1879) and the first
bottle of aspirin sold (1899) were major innovations to treat or prevent people.

In parallel new methods improving medicine practice appeared. Antiseptic Principle of the
Practice of Surgery (1867) by Joseph Lister, convinced of the need for cleanliness in
operating rooms. In the 1870’s Louis Pasteur and Robert Koch established the germ theory
of disease. Before this discovery, most doctors believe diseases were caused by
spontaneous generation.

The 20th century and now

Everything went faster during the 20th century. The use of technologies from other fields
allowed a revolution in diagnosis. Medical imaging breakthroughs (X-ray, ultrasound,
computed tomography, magnetic resonance imaging) resulted from advances in physics,
mechanics and computer sciences. Biological diagnosis benefits from innovations in biology
and automation. There was in the same time a revolution in treatment. Drug manufacturing
benefits from chemistry and biology improvements. Equipment like intensive care units or
pace makers overcome unpaired human functions. Transplantations and grafts became a
reality thanks to biology advances.

Today we even go further with biotechnology and bionic sciences. We are almost able to
create super-humans or living beings from scratch.

Despite of this huge step further in health technologies during the last century, practice of
medicine has not evolved as fast. This prosperous era of technology improvement was a
good thing for the emergence of health industry (pharmaceutical and equipment industry).
But when we talk about how healthcare is provided, progresses are few. More than that,
healthcare professionals have loose influence and weight in favor of the industry.

c) Economic aspects
In order to evaluate the weight of health in our society it is important to determine the
economic impact. The aim of this report is to select best opportunities to be addressed by
mobile solutions and it is worth understanding the most promising health sub-sectors.

The Chart 1 gives us an overview of health expenditures’ weight compare to the GDP in
France. Representing 11,7% of GDP in 2009, French health expenditures are far below the
USA spending around 17,4% of their GDP. Nevertheless it is above the OECD average
(9,5% of GDP).


2000 2009
Care and medical goods consumption (CMGC) 115,1 175,7
Funding pattern of CMGC:
Social security 77,1% 75,5%
Local collectivities 1,2% 1,3%
Complementary Organisms (Mutual fund, Private
Insurance) 12,7% 13,8%
Households 9,0% 9,4%
Residential Care Facilities 2,9 7,4
Daily indemnity 8,2 11,9
Prevention 4,1 6,2
Health professionnals social coverage 1,6 2,0
Research 5,4 7,5
Training 0,8 1,3
Administration costs 11,4 15,3
National health expenditures 146,9 223,1
% of GDP 10,2% 11,7%

Chart 1 - France health expenditures, € billions (source: INSEE)

Obviously “Care and Medical Goods Consumption” is the first account but it is remarkable to
notice that administrative costs ranked second, with almost 7% of the total.

Translate into per capita expenditures it gives €3600 for every French citizen. “Care and
Medical Goods Consumption” is mainly financed by the Social Security with up to 75% of
expenditures covered. But between 2000 and 2009 the part of households and
complementary organisms in that funding rose by 1,5%.

2000 2009
Hospital care 52,7 78,0
In-town care 31,2 48,3
Physicians 15,2 22,1
Healthcare associates 6,3 11,6
Dentists 6,7 9,8
Analysis 2,8 4,5
Other 0,3 0,3
Transportation 1,9 3,6
Medications 23,6 35,4
Other medical goods (glasses, prosthesis, disabled
5,7 10,5
vehicles, small equipment and bandage)
Care and Medical Goods Consumption 115,1 175,7
% of GDP 8,0% 9,2%

Chart 2 – Breaking down of Care and Medical Goods Consumption, € billions (source: INSEE)

A deep dive into the principal account of national health expenditure, “Care and Medical
Goods consumption”, shows us that some categories have almost doubled (Chart 2). For
instance the “healthcare associates expenditures” account, mainly represented by nurses
and physical therapists rose from €6,3 to €11,6 billion. The same observation can be made
about the “other medical goods” category. It could be explained by a volume increase and a
price increase.


Finally it is important to notice that
the economical weight of health
depends on the population’s age.
Figure 2 explicitly proofs that the
older the person is , the higher
health expenditures are. The
impact of ageing population is then
obvious.

Graph 1 - Health expenditure per capita by age (source IRDES)

2- The health sector gathers a lot of players.
In this section will be exposed and detailed the categories of players that are involved in the
health sector. The description will be based on mature countries scheme, especially on
French and US ones. It will help us to determine who hold influence and decision’s powers.

In order to approach the sector easily, four groups of « involved parties » have been
identified and will be set forth. First, healthcare professionals, representing the heart of
healthcare service. Second, health industrial companies, including pharmaceutical and
medical devices firms, providing healthcare professionals with tools and products to treat
individuals. Strongly linked to the first category they often are the initiators of innovations.
Then states and governments will be depicted as central players in the stakeholder map.
Finally patients will be outlined. Although they are the final beneficiaries of any healthcare
service it makes a point to describe this group lastly if we consider its power of influence.

a) Women and men are the heart of healthcare
The general practitioner is the common image that comes to one’s mind when the health
professional word is mentioned, at least in western countries. But it would be improper to
limit the healthcare workforce to this unique category of women and men.

Because « healthcare » include the word « care » it will not be surprising that the healthcare
professional category includes social and paramedical occupations in addition to general and
specialist physicians.

Health occupations: from medicine competencies to social activities

Healthcare professionals constitute a non-homogeneous group of people aiming at providing
health services to individuals, families and communities. But their action is not limited to cure
ill people as they also provide preventive, promotional or rehabilitation services. This way
they also have an impact on healthy people.


Physicians and pharmacists: the upper class

According to INSEE standards (French Statistics Institute)8 a first sub-group can be
identified. It gathers the medical and pharmaceutical professionals. Highly knowledgeable
about medicine, doctors in medicine, professors in medicine, pharmacists but also dental
surgeons represent an upper class within the health workforce, since they are the most
skilled. Their mission is to promote, maintain or restore human health thanks to the inquiry,
diagnosis, and cure of physical disorders, diseases or mental impairments.

In almost all countries, educative paths to become medical or pharmaceutical professional
are among the toughest and the most elitist ones. For instance in France a doctor is
authorized to practice after 6 years of higher education at university and 3 years of internat
under the responsibility of an experienced physician. A numerus clausus is applied as soon
as the second year and limits the number of practitioners. If one desires to be a specialist,
the internship part is again longer. Education for pharmacists or dental surgeons is roughly
as long and hard.

Being a practitioner is often a vocation. The personal choice to carry out a hard educative
course may be motivated by different factors but generally it has roots in the idea of helping
and curing others. The Hippocratic Oath9 shows exactly that state-of-mind. Requiring a high
level of knowledge for treating people and make them being in a better shape there is also a
high degree of psychology in the art of medicine. The psychoanalyst Mr Balint has studied
the particular physician-patient relationship and it results to 3 key points10.

i) One of modern medicine’s weak is its trend to focus more on curing a disease than
treating an ill person.
ii) One third of the medicine practice is only a psychotherapist one.
iii) The physician-patient relationship is based on domination and submission, linked to
the power of the physician and the weakness of the patient.

Other aspects of this physician-patient relationship will be discussed further in a part
dedicated to the rebalance of the power and its acceptance for the development of health
mobile services. One last point is that people (and physicians too) often considers the activity
of physicians as synonymous with high ethical and integrity standards and hardly with a
commercial occupation. That is also a fundamental point in the design of an acceptable
business model for mobile health services.

Pharmacists are in a quite similar position than physicians in their relation with patient. Their
mission is to guarantee the well distribution and selling of medication and to ensure the safe
and effective use of medication. They act as intermediaries between the prescriber and the
patient. In this role they share a heavy legal responsibility with physician. In France,
pharmacists have also prescriptive authority. Moreover these medication specialists are often
the first point-of-contact for patients and their role more and more includes the management
of health. That mechanically increases their responsibility. On the contrary to physicians, the

8
INSEE, Healthcare professionals in France, 2010 (http://goo.gl/uQgjZ)
9
Hippocratic Oath, Translated by Michael North, National Library of Medicine, 2002. (http://goo.gl/yZuI3)
10
Balint M. " Le Médecin, son malade et la maladie " Trad. J.P. Valabrega,Petite collection Payot, Paris, 7ème éd. 1996

pharmacist’s status suffers from a lack of recognition. Although they bear an enormous level
of responsibility they tend to be seen like commercial professions. Plus their relations with
physicians have often been conflicting when it is about to decide the limits of each other’s
activity, and the share of decision power between them. The emergence of generic and over-
the-counter drugs continues to create divergences. However pharmacists remain key players
in health systems and a 2009 poll in France11 illustrates this statement. 55% of interviewees
answered that the pharmacist is the second most viewed health professional and for 96% of
the sample “the pharmacist is an essential health professional”.

All these factors have feed the idea that medical and pharmaceutical professionals are above
the average persons. In a 2009 French poll title “Perception of occupations”12, the general
practitioner occupation is ranked 2nd in both term of prestige (48% of interviewees answered
“lot of prestige”) and term of utility (79% answered “very useful”). As a result it may be logical
that a feeling of superiority appears among the medical professionals themselves. The point
here is not to criticize their status and the importance of their competencies but to
understand how they can feel uncomfortable faced upon major changes the mobile health
revolution could bring.

Medical assistant occupations: the insiders

Besides the medical and pharmaceutical sub-group, still according to the INSEE
categorization, we found medical assistant occupations. This category gathered a wide panel
of health professionals including nurses, diverse therapists (physiotherapists, podiatrists,
speech therapists, orthoptists, opticians or audiologists) and technicians (mainly X ray
technicians). Their role is totally supplementary to the first sub-group of physicians and
pharmacists in providing health services. These occupations are seen as less prestigious in
modern health system. This is the case for some therapists, not considered as specialist
physicians, and overall the case for nurses. The education path is for sure shorter and their
scientific knowledge level is obviously lesser than physicians one. But they play a key role in
the act of providing health care and support the physician or pharmacist’s activity. In general
they also pay more attention to the environment and the history of patients than physicians
and as a consequence are really good interlocutors for patients.

Within this group nurses and midwives represent the largest contingent. Indeed, according to
2011 WHO (World Health Organisation) statistics in (Chart 3), nurses and midwives are
globally twice as much as physicians.

Physicians Pharmacists Nurses & midwives
France 213 821 75 432 548 429
World 9 171 877 2 587 043 19 379 771

Chart 3- Healthcare workforce (source: WHO health report statistics, 2011)

Although they do not or hardly have prescriptive authority, medical assistant workers are key
actors in the development of mobile health services for different reasons:

i) They are numerous and constitute a dense network.
ii) They really are on-the-field and have the empirical knowledge of the health system

11
Vision Critical, Image et attachement des Français à la profession de pharmacie, 2009 (http://goo.gl/xShto)
12
Logica-TNS Sofres, L’image des professions, 2009 (http://goo.gl/4gNDh)

iii) In some areas they are the only health actors, especially in remote areas.
iv) They are receptive to innovations that increase their recognition.
v) They are interesting in solutions improving their efficiency.

b) Pharmaceutical and medical equipment industries are
innovation leaders
There are two industries that are predominant in the health universe. First is the
pharmaceutical industry. Second is the medical equipment one. Both of them are very
powerful, scientifically and economically. The major milestones of medicine innovation have
been previously explains and it showed that at the beginning initiators of breakthroughs were
mostly men and women. Pharmacists were used to create drugs in their own laboratories.
And ingenious people invented physical or mechanical systems to diagnose or help
physicians curing diseases. Then in the last century, the health sector was deeply
transformed by the industrial revolution that occurred in all the business areas. Today
pharmaceutical and medical equipment firms are unavoidable and among the most influential
and profitable at a global level.

The aim of this part is first to discover how these industries are organized. The second
objective is to understand the exact role of those companies and how they interact with the
other health actors in mature countries. A last point will raise the paradoxical situation
between the purpose of a for-profit enterprise and the ethical dimension of health business.

Pharmaceutical companies

The pharmaceutical industry develops, produces, and markets drugs for use as human or
veterinary medications. It is one of the most profitable industry gathering pharmaceutical
laboratories and biotechnology companies.

Facts and figures

At the beginning medication used to be made by apothecaries and sold in drugstores. The
first of this store known was active in the medieval Islamic world, a fertile region and period
for health innovations, as previously detailed. Most of contemporary’s pharmaceutical
companies were born during the chemical revolution at the end of 19th century when drugs
could be synthesized.

The 2009 global pharmaceutical market was evaluated at $810 billion. The French domestic
market weighted more than $40,5 billions the same year according to IMS Health13, at the
fourth position after the US, Japan and Germany. The average net income for the top ten
companies is around 19% according to Global 500’s Fortune ranking.

Produce a pharmaceutical product requires a lot of money and time. In addition to be one of
the most profitable industries it is also the one spending the most in research and
development. Overall 2009 global expenditure on discovering and developing new medicines
amounted to an estimated of $70 billion14, i.e. 9% of revenues.

13
Global pharmaceutical industry and market, ABPI (http://goo.gl/NT73t)
14
Drug R&D spending fell in 2010, and heading lower, Reuters, 2011(http://goo.gl/hEBsa)


Just to understand briefly the pharmaceutical activity it is useful to have a look at Figure 3.
As showed, the development process for one drug, before being on the market, lasts
between 10 and 12 years and costs in average $850 million15 according to a recent study.

Figure 2 - Development of a pharmaceutical product

Marketing expenses and compliance in the pharmaceutical industry

After R&D, the marketing and promoting effort is the most important activity for
pharmaceutical firms. Worldwide pharmaceutical marketing & sales spending were of $89
billion in 2009 according to Cegedim16, a market research company. Yet this is significantly
higher than R&D expenditures and it can be explain because of different factors.

The most valuable assets for a pharmaceutical company are its patents. In general a patent
lasts 20 years with the possibility to extend this period for few years. A patent allows the firm
to make sustainable selling of the patented drug without being threat by the competition. If
we have a look to pharmaceutical firms‘ financial accounts we can observe that revenues are
concentrated on the best-seller drugs, also called blockbuster. Unfortunately we are today in
a period were a lot of patents are falling in the public domain, without being really replaced
by new blockbusters. It is a marvelous opportunity for a new kind of pharmaceutical
companies that manufacture generic drugs based on this unpatented blockbusters. In such
an environment the battle occurs on the marketing and sales fields that need huge amounts
of money.

Another particularity of the pharmaceutical industry is the tough regulatory frame. The Figure
3 shows that a market launching follows 2 pre-approvals and one final approval from
regulatory bodies. In France the regulatory organism is called AFSSAPS. And it is never
finished since during the commercialization a drug is still assessed. The phase 4, or
pharmacovigilance phase, aims at evaluating the benefit/risk ratio. Some recent events in
France (for instance Servier case) have showed that this continuous evaluation is both
necessary for the users and critical for the companies.

15
Estimating The Cost Of New Drug Development: Is It Really $802 Million?, C. P. Adams and V.V. Brantner,2011
(http://goo.gl/MXn0U)
16
2010 Audited Pharmaceutical Marketing Expenditure Results, Cegedim Strategic Data (CSD), 2011 (http://goo.gl/i4TXe)


Are pharmaceutical firms responsible innovators?

Up to now pharmaceutical companies have not been the most active in integrating
responsibility in their innovation process and in the lifecycle of their products. For instance
tough debates are tough about the animal testing during pre-clinical trials. In 1959 Russel
and Burch have described the “3Rs” principle for the use of animals in research17.

i) Replacement refers to the preferred use of non-animal methods over animal
methods whenever it is possible to achieve the same scientific aim.
ii) Reduction refers to methods that enable researchers to obtain comparable levels of
information from fewer animals, or to obtain more information from the same
number of animals.
iii) Refinement refers to methods that alleviate or minimize potential pain, suffering or
distress, and enhance animal welfare for the animals still used.

Drug recycling channels exist but have experience issue. In France Cyclamed was created
by pharmaceutical companies to cope with the collect of pharmaceutical products. These
products are particularly sensitive ones since they include complex component.
Unfortunately Cyclamed has to stop its recycling activity (sending of unused drugs in poor
countries) in 2008 due to embezzlement problems.

Medical device companies

Medical device companies are the other health industry actors. According to the WHO a
medical device means “any instrument, apparatus, implement, machine, appliance, implant,
software, or material to be used for human beings for the purpose of diagnosis, prevention,
monitoring, treatment of a disease or an injury”18. By definition this term covers a vast range
of equipment, from simple tongue depressors to MRI machines, including wheelchairs or
pacemakers. In other words this industry provides thousands of different products. It is still
possible to categorize those products into different classes:

i) Diagnostic/analysis devices
ii) Drug administration or surgery devices
iii) Substitution/support devices
iv) Monitoring devices

Facts and figures

As a consequence there are hundreds of companies operating in this market, but the
majority of revenues are concentrated by thirty of the top companies, among them: Johnson
& Johnson, Siemens Healthcare, Medtronic, GE Healthcare and Baxter.

According to Kalorama19, the 2009 global medical device market was valued at $290 billion,
roughly a third of the pharmaceutical market. The French market is estimated at $14.6 billion
by SNITEM20, representing around 5% of the global market.

17
The Removal of Inhumanity: The Three R's, Russel and Burch, 1959 (http://goo.gl/jmP7C)
18
Medical device regulations: Global overview and guiding principles, WHO, 2003 (http://goo.gl/acWMP)
19
Medical Device Revenue to Top $300 Billion This Year, Kalorama, 2011 (http://goo.gl/8CNb0)


Over the last decades medical devices technologies have experienced an impressive
evolution contributing to the general improvement of healthcare. Amongst other, medical
imaging companies democratized the use of today routine machine, such as MRI or CT, and
continue discovering new applications every day. The diagnostic process has become
considerably more precise thanks to those technologies.

In the same time the different technologies have not only converged between them but also
with pharmaceutical ones. Diagnostic imaging firms, like GE Healthcare or Siemens, have
acquired in vitro diagnosis ones. Laboratories like Abbot, Roche and Baxter have developed
strong business segments in medical devices. Indeed medical devices technologies have
key advantages over their drug counterparts. Product development process last between 3 to
5 years, compared to 10 to 12 years for a drug. Regulatory approvals are also less risky
since the majority of medical devices are not invasive.

This industry has a higher potential than the pharmaceutical industry, to answer the health
challenges including cost efficiency, care accessibility and diagnosis accuracy in order to
deliver the most relevant treatments. And this trend is already observable in figures since the
sector growth over-performs the pharmaceutical industry one21.

From a responsible innovation point of view, the medical device industry is as critical as the
pharmaceutical industry. Let us remember that old thermometers were made with mercury
inside. It is not before 1999, with a law forbidding marketing mercurial thermometers than
device makers stopped manufacturing them. There is also a high concern about the
disposable character of some medical accessories.

c) Payers: State is the primary payer and health insurances
complete the offer.
As an introduction to this part we will repeat that the scope of this work is limited to mature
countries and especially to France. Indeed in many countries it is left to the individual to gain
access to health care goods and services by paying for them directly as out-of-pocket
expenses. On the contrary, in France, health is heavily funded thanks to the national social
security, up to 75% for the Care and Medical Goods expenditure as detailed previously.

The French National Health Insurance system

In France the Social Security was founded just after the WW2, in 1945. The Social Security
includes 3 branches: Health Insurance, Retirement Insurance and Family Insurance. The
purpose of this system is to “guarantee employees and their family with a protection against
any potential risks likely to cut or suppress their income, covering maternal and family
expenditures” (article 1)22. Before this date there were social insurances but they were
organized by workers associations23. After 1945 those group claimed to keep the social
advantages they already had.

20
Le marché en chiffres des dispositifs médicaux en France, SNITEM, 2011 (http://goo.gl/MoV2R)
21
Global medical device market outperforms drug market growth, M. Rosen, 2008 (http://goo.gl/5dIsn)
22
Ordonnance portant organisation de la securite sociale, 1945 (http://goo.gl/oUS6R)
23
Le financement du système de santé en France, WHO, 2004 (http://goo.gl/mNHup)


The National Health Insurance system is simple in theory. Every worker and employer has to
contribute via mandatory taxes to fill a national health insurance fund, as a proportion of the
salary earned or spent. In return those contributors could benefit from the health insurance
when he or she will need care or medications. Solidarity is an important element of the
French insurance system: the more ill a person becomes, the less the person pays.

Figure 3 - Scheme of the French Health Insurance Fund in 2009

Figure 4 presents how the French Health Insurance was financed and redistributed the
money in the health system in 2009. One important point is the asymmetry of this system.
Indeed there are more expenses than income, and the deficit was about €11 billion in 2009.
And it is a chronic problem even tough regular modifications have been made. At the
beginning, in 1945, there were no taxes to fund the Health Insurance. The CSG tax, based
on employee revenues, was only implemented in 1990. While expenses were still overtaking
incomes the deficit had to be cover by debt. Then in 1996 the CRDS tax (Contribution to
Reimburse the Social Debt) was added. The same year the French government voted
different laws to help reducing health expenditures, including hospital reforms and efficiency
rules.

Up to now the Health Insurance deficit remains an issue and the consequences have a real
impact over the whole health system. For instance states do not hesitate to put pressure on
the health industry, via regulatory agencies, in order to better control price, quality or
efficiency of drugs and medical devices. Another tactic is to reduce reimbursement of some
medical products or care. For instance in the 1960, dental and optical care reimbursements
were strongly reduced. In that case the impacted stakeholders are patients because they
have to pay out-of-pocket.

In parallel to national health insurances, usually not covering 100% of health expenditures,
people have the choice to subscribe a private health insurance. In 2008 92% of French were
covered by a complementary insurance, compared to only 69% in 198024 (Chart 4).

24
La complémentaire santé en France en 2008 :une large diffusion mais des inégalités d’accès, IRDES (http://goo.gl/4S0xi)


Mutual Fund Private Insurance Contingency Fund
French population
59% 24% 17%
coverage
Health expenditures
7,7% 3,5% 2,5%
coverage

Chart 4 - Health complementary insurances in France (source: DREES)

In that kind of state-controlled health system with a population relying on a dominant National
Health Insurance, selling a health product is not that easy. The business model should either
include a solid partnership with a payer (regulatory approval or private insurance partnership)
or an inexpensive product for patients. It will definitely be an important point to describe.

d) The patient: a forgotten end-user
We deliberately finish the description of health sector stakeholders with the patient since it is
the end-user and final beneficiary of the health system. The word “patient” originally meant
“one who suffers”. We will portray patients under different angles.

Sometimes patient, sometimes consumer

The patient is the receiver of any healthcare service, most often ill or injured. In comparison
with other business sector, the patient could be considered as the counterpart of the
consumer. In reality fundamental barriers exists between a consumer and a patient. By
definition the consumer is the “economic agent who choose, (buy), use and consume a good
or a service”. In the health system the patient systematically differs from the decision maker
(generally the prescribing doctor) and very often also from the bearer of the costs (generally
the health insurance system). Moreover the patient suffers from an asymmetrical level of
knowledge concerning health products and is dependent on health providers. This
characteristic causes divergent interests and a lack of clarity in relations between the health
actors. Pharmaceutical companies focus more on healthcare professionals and state
agencies than on patients (anyway advertisement toward patients is forbidden for them). The
same way physicians hardly asked for patient opinions before treating them. In practice
patient is a passive player with no influence power.

Things are moving and the patient role is gaining importance within the health system.
Causes come from the inside and the outside. Within the system, due to pressure from the
government, patients are progressively educated. Education campaigns aim at rising patient
awareness in the way they receive care and consume medications. For example, the
campaign to limit antibiotic usage succeeded in its purpose to control the misusage of those
drugs. The reforms to improve patient health pathway gave people the responsibility to
choose a general practitioner and respect the procedure in order to be fully reimbursed. More
over recent health scandals, like Servier’s Mediator case in France, have contributed to
increase a mistrust feeling among peoples. They claim for better transparency and
communication from the health providers, the health industrials and from the healthcare
system in general.


In the same time, changes come from outside the health universe. Large adoption of Internet
among households allows them to access a lot of information. They seek for information that
are often more objective. It is so true that seeking for health-related information activity on
the Internet is now comparable to e-mailing activity in term of spending time. Physician
testimonials relate that some patients come and visit them with a pre-diagnosis or sometimes
contradict their conclusion. It is obvious than people are becoming involved in the health
system and are gaining weight.

The healthy, the ill and the entourage

Patient’s group is far from being a homogeneous category. Because a patient is overall an
individual and because diseases are numerous it is tough to constitute sub-groups. Moreover
it makes a point to include healthy people into the patient group. Indeed healthy people are
contributing to the National Health Insurance fund. Indeed healthy people are also seeking
for health information and are potentially future patients. For example the preventive activity
is clearly dedicated to healthy people aiming at keeping them healthy. Finally the patient’s
group should also include sick persons’ entourage. Indeed a health problem directly impacts
the sufferer’s entourage, often its family, and they are willing to be involved. Minor diseases
or injuries softly involve the entourage. But if we consider chronic diseases the entourage
becomes crucial. For example an Alzheimer patient will be entirely substitute by its
entourage, becoming indirect sufferers. It is remarkable that this fact is hardly take into
consideration by the health system but it is a major challenging point.

3- A big picture of the health sector
Thanks to the detailed description of health players it is time to integrate them in the health
system. We will use the value chain model to understand the bases of relationship and
competition between suppliers and provider. It will also be an ideal representation to highlight
changes and opportunities along the value chain.

A traditional healthcare value chain has been established and popularized by Lawton Burns
in 2002, as represented in Figure 5.

Figure 4 - The Healthcare value chain (source: Lawton Burns)

This pattern shows 5 different categories of actors, 3 majors and 2 intermediaries. The first
one is the producers’ category. We have already analyzed those actors, including
pharmaceutical and medical equipment manufacturers. They are the innovation initiators and


provide products and tools to healthcare providers. Those last, gathering hospitals (public or
private), physicians but also pharmacies promote the consumption of health products. They
prescribe medications and use medical equipment. They are the link between end
beneficiaries, patients, and health manufacturers. They bring value to products thanks to
their medical knowledge. Between producers and providers stood distributor intermediaries
aiming at buying health products to the first category and sold them to the atomized
providers’ category. Although healthcare providers can directly buy to producers, the
intermediation of wholesalers makes possible to reduce costs of distributed goods while
increase the buying power.

At the end of the chain we find patients that are the end beneficiaries. There is here a big
difference with other sectors since the payment is mainly indirect. Indeed payer bodies insure
an intermediary role. Those payers are mainly governments thanks to public health
insurances and private insurances in complement. Based on taxes and fees patients are
covered for the majority of health expenditures (medication and health care). Either they do
not pay at all or they do and are reimbursed afterwards thanks to claims sent by healthcare
providers. At the end it appears that some health expenditures are not entirely covered and
patients have to directly pay to providers. This indirect payment pattern exists in the health
sector (remember that this study is focused on mature countries) to provide health to the
many and avoid disparities by increasing the power of regulation.

We can observe in this value chain that innovation goes from left to right and the money from
right to left. If we refer to marketing concepts health products are more pushed by
manufacturers than pulled by patients or providers.


Part 2 - When ICT meet health
Now that the health service universe has been described this second part will explains in
more detail the ICT world. ICT stands for Information and Communications Technologies. It
is important to understand the evolution of these technologies and how they are knocking at
the medical field’s doors. We will study in the first part the genesis of that convergence. Then
the actors of this movement will be identified.

1- From Information and Communications Technologies to
Connected Health Technologies
Nowadays the ICT acronym often refers to the Internet or telecommunications but as an
extended definition it refers to all kind of data exchange between two or more entities. For
our purpose we will obviously consider communications between humans. History of
communication is as old as history of humanity. From cave paintings to 3G-mobile phones let
us discover the exponential development of information and communications technologies.

a) A short story of communications and its recent ramping
evolution.
Communication history milestones

From the origins, humans have communicated. For this purpose they created codes,
languages and alphabets. Speech, hand signs, smoke messages, drums or written
documents: everything was good to carry messages.

From the beginning: writing’s birth

Communication was first oral. It needed a constant interconnection in space and time
between the transmitter and the receiver. The writing phase comes in a second time. It has
allowed a disconnected communication between the transmitter and the receiver in time and
space. This revolution represents the starting point of the Humanity story. Writing is the first
milestone in the communication story.

Writing story corresponds to two different kind of writing: ideographic writing and alphabetical
writing. The first was born in Mesopotamia probably around three thousand years before
Christ. Egyptians also used this mean of communication but improved it thanks to more
complex signs called hieroglyphs. Phoenicians are inventors of the alphabetical writing
(around 1800 years B.C.) but we have to wait until the Greeks to witness of an efficient
transcription of the spoken language. From this date, intellectual production has been deeply
modified thanks to writings and information exchange improvements were keys in the golden
age of antic civilizations. Knowledge was share and spread. Rhetoric was particularly
emphasized under the Roman period and then become a communication technique.

Yet in antic society there were places dedicated to information and communication purpose.
Agoras, temples or forums are some of them. Acta diurna were official daily publication
displayed in the ancient Rome walls to let citizens updated. Transport of messages was both
human (the marathon-man legend is the perfect symbol) and animal (for instance carrier
pigeons).


When the printing technology changed the world

The next breakthrough and second key milestone in the communication story was the
creation of printing techniques by Gutenberg. The move from written documents to printed
ones match with the end of the Middle Age, a period of intellectual and social changes. The
first colored printed book was Psalmorum Codex in 1457, five years after the first printed
ever: the Bible (42 line version). It is estimated that in 1470 a printed Bible was 5 times
cheaper than a hand-written one. Such a drop in the cost of knowledge allowed a larger part
of the population to become informed. In 1464 Louis XI institutionalized the mail service with
the implementation of a royal mail enterprise. The newspaper as a source of information
appeared in the early 17th century. In France, in 1631, La Gazette was the first periodic
newspaper (N.B: La Gazette’s writter Théophraste Renaudot was the king’s personal doctor).

Development of newspaper was then supported by improvements in transportation. At the
beginning of the 19th century the first steam vehicles appeared (boats and trains). This
evolution did not solely allow people to move faster, it has also reshaped the human activity,
created new kind of exchange, promoting new ways of thinking.

The first telegraph, information dematerialization

In 179225, few years after the French Revolution, the third key milestone in the history of
communication is officially announced. The optical telegraph was born and its creator is
named Claude Chappe. In 1844 Morse, well known for its code made of straight lines and
points, sent its first telegram in the US. This period is contemporary with the emergence of
international press agency such as Havas (1835), Wolff (18949) or Reuters (1851). In the
same time a new communication support is invented: the photography. Two inventors are the
fathers of this new technique, Daguerre (France) and Talbot (US) and it has been officially
presented in 1839.

The American engineer Graham Bell leads the world to a new communication area in 1876
when he invented the telephone. Sounds can now be transmitted, remotely, through an
electric wire. In the late 1880’s regular telephone communications are available. These
inventions are strongly linked to the rise of electricity.

Just before 1900, the first radio message was exchanged by Marconi between England and
France. This is the start for wireless communications. In 1895 the cinema was born
(Lumières brothers). Information became available for crowds and the media industry grew
up thanks to these new tools. Regular radio broadcasts appeared in the US in the 1920’s and
the TV experience was a success for the time in 1930. Thanks to communication satellites,
launched in the early 1960’s it was now possible to broadcast TV shows on both sides of the
Atlantic Ocean. The world has becoming a “global village”.

Today’s communications

After a slow but continuous evolution of communication medium, we could say that ICT have
risen exponentially during the last 50 years. Joseph Schumpeter, a famous economist
studied the Kondratieff cycle theory to understand economic trends. Thanks to their work 5

25
Histoire des Télécommunications, L’Internaute (http://goo.gl/PhWPj)


super-cycles have been outlined since the beginning of the industrial revolution, dozen years
before 1800 (Figure 6).

Figure 5 - Kondratieff waves and Schumpeter analysis

Each of this cycle is characterized by a major technological breakthrough that has drastically
changed the way human move, work, produce and exchange good and even make appears
new ideologies and new ways of thinking26.

As we notice on that chronological graph, we are right now living within the fifth super-wave
that started around 1992. Non-surprisingly the technological revolution that triggered this fifth
cycle is the Internet27. In general, it is the booming of telecommunications that is the
fundamental of the wave.

And the movement is spreading faster than never in the whole History. From simple text and
information exchange trough computers too big and too expansive to be owned by Mr.
Jones, we are now able to share instant videos on smartphones.

In diverse geographic areas, among different society classes, information is accessible for a
continuously growing number of people. Like the other major innovations that initiated the 4th
previous cycle, telecommunication revolution is changing the society, really deeply. For our
purpose we will focus on 2 examples illustrating this change. Rise of social networks and
nomadism.

After an era when information was pushed to people we are now in a period when people
pulled it. Thanks to the Internet there is an infinite source of information available. And
people have now to seek and select the relevant one. So they start to exchange data and
information between them, in parallel to traditional information providers (companies, media,
etc.). They are able to share, advice or critic information of interest for them. They can now
express their opinion to the world. This has led to the emergence and diffusion of social
networks that is the major breakthrough in mass communication over the last years. Yet
many business sectors have adapted their model to this new way of communication and are
trying to turn that bottom-to-top pattern into an opportunity. Surprisingly the health sector has
hardly integrated that 2.0 communication scheme. But as seen before health awareness is
rising and it is a real challenge to answer it.

26
Les cycles du Capital, Jean Zin, 2000 (http://goo.gl/lKTU0)
27
Tim Berners-Lee, Wikipedia (http://goo.gl/UjzYJ)


Nomadism is a second direct consequence of ICT revolution. Today people can
communicate from everywhere and quickly. The rapid diffusion of mobile phone is the best
example since even in poor countries this object is being common. Improvements in the
electronic field have made communication devices smaller and more powerful. In addition to
give and receive calls it is now possible to surf the Internet with a mobile phone. In the future
thousands of daily objects will become connected. Another promising technology is the cloud
computing. It means that data are stored in remote servers and accessible from any
connected device. There is no need of large storage capacity but only high-speed
connection.

b) Connected health technologies: E-health and M-health
It has been only for a decade that Information and Communication Technologies have met
health. It is true that the health sector is complex, as developed in the first part of this report
and according to the US Institute of Medicine:

“The challenge of applying information technology to health care should not be
underestimated. Health care is undoubtedly one of the most, if not the most, complex sectors
of the economy. The number of types of transactions (i.e. patient needs, interactions, and
services) is very large. Sizable capital investments and multi-year commitments to building
systems will be required. Widespread adoption of many information technology applications
will require behavioral adaptations on the part of large numbers of patients, clinicians, and
organizations”.

The first step was “connected health” which focused on increase efficiency of health services
through connection of healthcare providers. Like companies in other business fields,
hospitals started improving their efficiency thanks to the integration of IT systems. It is often
called E-health. The second wave, the core of our subject, is the rise of wireless health
solutions, also known as M-health (Mobile health).

Digitation of health information: E-health

The health care system generally uses less ICT than other industries, but reports indicate
that providers are increasing their investments. The main use up to now is an “administrative”
application especially in hospitals that are aiming at reducing costs and facilitating
communication. Those activities are also known as health information technologies. The
most frequent applications are listed in the Chart 5.

Technology Definition
This technology captures and integrates diagnostic and radiological images from
Picture Archiving &
various devices (e.g., x-ray, MRI, computed tomography scan), stores them, and
Communications System
disseminates them to a medical record, a clinical data repository, or other points of
(PACS)
care.
CPOE in its basic form is typically a medication ordering and fulfillment system.
Computerized Provider
More advanced CPOE will also include lab orders, radiology studies, procedures,
Order Entry (CPOE)
discharges, transfers, and referral.
Bar coding in a health care environment is similar to bar-code scanning in other
environments: An optical scanner is used to electronically capture information
encoded on a product. Initially, it will be used for medication (for example,
Bar coding
matching drugs to patients by using bar codes on both the medications and
patients’ arm bracelets), but other applications may be pursued, such as medical
devices, lab, and radiology.


Health care organizations use EMM to track and manage inventory of medical
Electronic Materials
supplies, pharmaceuticals, and other materials. This technology is similar to
Management (EMM)
enterprise resource planning systems (ERP) used outside of health care.
EHRs were originally envisioned as an electronic file cabinet for patient data from
various sources (eventually integrating text, voice, images, handwritten notes,
Electronic Health Record
etc.). Now they are generally viewed as part of an automated order-entry and
(EHR):
patient-tracking system providing real-time access to patient data, as well as a
continuous longitudinal record of their care.
CDSS provides physicians and nurses with real-time diagnostic and treatment
Clinical Decision recommendations. The term covers a variety of technologies ranging from simple
Support System (CDSS) alerts and prescription drug interaction warnings to full clinical pathways and
protocols. CDSS may be used as part of CPOE and EHR.

Chart 5 - Common Health Information Technologies (source: Medpac)

At first sight it is noticeable that technologies described in Chart 5 are more focused on
improving administrative and financial processes such as patient registration, billing, and
payroll, than on clinical applications. To be realistic the two last listed technologies, EHR and
CDSS, which are real clinical application, are still at preliminary stages and much less
diffused than the other above. In France there is a national EHR initiative called DMS28 (for
Dossier Medical Personalisé) that have been launched in January 2011. Initiators for the use
of ICT in healthcare were naturally large organisms like hospitals or private clinic networks.
Like in other business fields, the implementation of such systems allows to gain in efficiency
and as a consequence to save money. In smaller organisms it is still rarely implemented and
concrete benefit evidences are few. For example a PACS system implemented in a small
hospital could suffer from a lack of return due primarily to a low volume of imaging in the
facility. And it is important to talk about return on investment since integrating an ICT system
is very expensive.

Among physicians, data about ICT integration in health practice are limited. But in general,
like hospitals, physicians are more likely to use those technologies for administrative
functions. The first barrier is the cost of required infrastructures. In France with health
administrative reforms, such as implementation of Carte Vitale (chip-card used to
electronically record health-related transactions), almost every individual healthcare
professional have installed a card-reader device to offer tele-payment. Another application of
ICT in their daily practice is the use of Internet. This time it is more for clinical purpose.

Adoption of health information technologies is obviously more difficult than in other business.
Indeed healthcare professionals seem to be more reluctant, or focused on other subject that
could improve quality and efficiency of their activity more directly. Actually there are no real
incentives and no time to integrate complex ICT systems. The main challenge will be then to
adapt ICT solutions to the healthcare complex environment in order to facilitate the
professional use and finally the wide diffusion.

Before continuing we could outline that E-health has bring responsible innovations to the
health sector. Indeed, PACS systems have contributed to the extinction of conventional
radiographies films that used to be made of toxic components (silver salts).The digitization of
medical claims have helped to reduce volume of paper used.

28
Dossier medical Personnel, République Francaise (http://goo.gl/T6eAe)


ICT technologies applied to health described so far were mostly dedicated to health
professional. Does it mean that relevant patient dedicated applications are non-existent?
Actually such applications exist but they are still few or still superficial (mobile apps for
example). Yet this is a really important innovation’s axe since we have seen the increasing
weight of patients.

Mobility of health: M-Health

Mobile health is a sub-segment of E-health because it is based on technologies described
before. According to Triple Tree29, a venture capitalist firm focusing on this promising sector,
M-health includes “any healthcare application or service that enables a seamless flow of
information across cellular, wireless, or other mobile networks and mobile devices that
improve clinical care delivery, patient-provider communications, enterprise-wide mobility, and
decision support (patient, health provider, manufacturer and payer)”. We are here in the core
of our subject.

The first support for mobile health solution development is the quick improvement of wireless
technologies and the diffusion among population and businesses. As mentioned previously,
the massive use of ICT in many aspects of our daily lives has recently help the increase of
nomadism. More than many other technologies, mobile ones have the capacity to improve
health systems. Major M-health solutions are for the moment mobile applications, from the
simplest like diet coach apps to more technical like blood pressure add-on from Withings30. A
report from Pyramid Research states that 200 million health mobile applications are available
to download on the different online stores at the beginning of 2011, and that figure could
triple up to 2012. Another finding of their report concludes that “70% of people worldwide are
interested in having access to at least one m-health application, and they're willing to pay for
it”.

To be more precise, Chart 6 identified a non-exhaustive list of potential possible health
outcomes using wireless technologies.

Solutions Advantage
Patient Documentation and medical safety at the bedside is a greenfield opportunity for m-health
Safety solutions. Medication and care errors at the bedside represent a multi-million dollar annual
drain on the healthcare system. Solutions centered on patient identification and historical,
dosage monitoring or process checking are enhanced significantly by wireless interfaces and
devices that allow for ubiquitous access anywhere for inpatient and outpatient.
Tracking & Stakeholders are beginning to leverage location-based tracking technologies providing an
Localizing ability to locate medical equipment and other healthcare assets while optimizing workflows.
But mobile technologies can also help to localize individuals. Tracking the location of a patient
during a treatment is a critical process for inpatient care and could be improve thanks to
localization tools. In the case of ambulatory care or emergency situation the challenge is to
locate health providers and resources. M-health solutions are highly relevant to tackle all these
localization and coordination issues.
Adherence Adherence is a challenge for a vast majority of patients and non-compliance to treatment is
and both extra costly and a threat for medication efficiency. The reasons for non- compliance are
Compliance multiples and proportional to the disease/injury complexity and length. Clinical trials, that are
crucial for health industrials, also suffer from non-compliance. To cope with those problems
innovations like wireless-enabled pill boxes and SMS reminder can lead to better health

29
Wireless & mobile health, Triple Tree, 2009 (http://goo.gl/86o8J)
30
Blood pressure monitor, Withings (http://goo.gl/PXBjh)


outcomes.
Information Mobile Internet has spread the possibility to search for everything from everywhere.
Access Concerning health information, dedicated application could allow clinicians to easily access
information to improve decision making at the point of care. For instance, secured remote
connection with PACS to send patient’s X-Rays or MRI images to any physician smartphones,
In parallel new mobile applications could enable people to quickly record any health-related
event. Crowd-sourcing and participatory healthcare system might be a major change in the
near future thanks to mobile.
Patient Remote patient monitoring have quickly become the poster child for M-health applications.
Monitoring Firms such as GE Healthcare (Joint Venture with Intel) are addressing the needs of home
health monitoring. According to many industry sources, the market for those services is
currently over $3 billion and will grow to over $8 billion by 2012. Opportunities are huge with
the ageing population and the increase of chronic diseases and home care. Remote monitoring
is based on mobile connected devices, more or less sophisticated depending on the monitored
constant. It allows informing concerned people (caregivers or patient itself) in case of adverse
event but also store data. In addition, advances in sensor technologies allow connecting them
wirelessly. The connected mobile health device will become wearable or even implantable.
Remote Scarcity or limited access to care providers is a persistent problem within the healthcare
Presence system, especially in remote and congested metropolitan areas. Companies are working to
and Robotics solve this problem through the use of remote presence. Telemedicine and telesurgery are ones
of the best examples, mixing wireless connections and robotics. It will be possible for
physicians to be multiple places at once, extending their reach and decreasing time to care.
The other potential of smart connected robotics will be to support impaired or disabled people.
Helping disabled people to move, blind to see or deaf and dumb to communicate.

Chart 6 - Potential outcomes for M-health solutions (source: Triple Tree)

Among all those M-health opportunities we will see what are the most relevant and how to
design a pertinent business model. This identification will be conduct in the third part.

2- Different players from different background in the M-health
universe
E-health is, by nature, aggregating players from both worlds. M-health environment is also
composed of lots of actors that can be classified into 5 categories.

i) Device manufacturers
ii) Infrastructure builders and telecom operators
iii) Healthcare Service providers
iv) Payers
v) Patients

The three last actors have already been detailed in the first part of this paper so we will focus
mainly on device manufacturers and telecom operators. Indeed device makers not only
include medical device but also general electronic device makers. Healthcare providers,
payers and patients will be quickly reviewed from a M-health point of view.

a) Consumer electronics manufacturers
We already described the medical device industry in the first part of that report and we
noticed that it includes a tremendous number of products or equipment. The sector is at least
ten times wider if we consider the larger group of devices and appliances. Yet in M-health
sector all sort of device makers won’t be interesting. In fact the ones that could join the M-
health adventures will be mainly the consumer electronics manufacturers.


Consumer electronics are electronic equipment intended for everyday use. The first major
consumer product, the broadcast receiver, appeared in the early 20th century. Later the
consumer electronic industry has invented personal computers, telephones, music players,
audio equipment, televisions, calculators, digital cameras or again players and recorders
using video media such as DVDs. According to the Consumer Electronic Association (CEA),
the 2010 global industry revenue was of $873 billion31, and is expected to grow to $964
billion in 2011, i.e. a 10% increase.

The industry is historically centered in Asia with countries that have become specialists in
this particular sector like Japan or South Korea housing some of the biggest players. Giants
in the sector are named Panasonic, Samsung, Mitsubishi, LG or Sony in Asia, Philips or
Apple in Western countries.

Electronic devices have massively integrated the daily lives of people because they were
subjected to continuous decreasing prices. Based on electronic technologies, those products
follow the Moore's Law, which states that microprocessor speed doubles every 18 months.
Consequently the innovation pace is faster than in any other industry with new technologies’
announcements every time. By changing the way people communicate, share information,
and entertain themselves, consumer electronic products become a part of the culture. The
world was different before television. It was different before radio, before cell phones, and
before CD players.

Consumer electronics are today undergoing the integration of ICT technologies. The trend is
to make products connected and at the end create bridges between different technologies.
With each passing year, and each new generation of products introduced in the marketplace,
it's getting harder and harder to differentiate companies and their products into traditional
categories like telecommunications, computer hardware, and consumer electronics.
Consumer electronics tends to be Swiss knifes. In addition to become connected those
products are also becoming mobile, answering the fantastic evolution of human behaviors.
The phone‘s history perfectly illustrates those evolutions. At the beginning phones used to be
physically linked with wires to communicate between them and be supplied in energy. Then
they lose the wire and became mobile, including batteries. Later they enabled people to
exchange short texts. Camera technologies were soon added and image exchange was
made possible. Finally they were able to be connected to the Web, sharing all kind of data
including video. They are now called smartphones.

Mobile phones are obviously among the most promising products for the development of M-
health. According to the International Telecommunication Union32 the mobile phone global
penetration rate was of 76% in 2010 with 116% in the developed world (more than 100%
means that some people owned more than one mobile phone) and 67% in the developing
one. Webphones are still more promising for M-health sector and was used by 13% of the
world population in 2010 (51% in developed countries, 5% in developing countries). This
extraordinary diffusion will allow the mobile phone makers to vastly provide people with
health-related solutions.

31
Global Consumer Electronics Retail Sales Seen Up 10% In 2011, Forbes, 2011 (http://goo.gl/hJc0t)
32
Key Global Telecom Indicators, International Telecommunication Union (http://goo.gl/FDBFK)


Over the last years the consumer electronics industry was exposed to the issue of
sustainability. Because they are widespread and based on electronic technologies those
products represent an increasing part of energy consumption. For example there is a
particular issue with the standby power assumed to significantly increase the energy bill.
Another problem is the fast rhythm of obsolescence striking consumer electronic
technologies. Integration of reusable material and recycling process are more and more
taken into account by innovators.

b) Infrastructure builders and telecom operators
This category includes all the actors that are supporting the ICT sector, thanks to
infrastructures (networks and storage capacity) or services (telecom operators, software
providers). They are essential in M-health since they grant mobile devices to be connected.

Telecommunication network builders

Basically a telecommunication network is a collection of terminals, links and nodes which
connect together to enable telecommunication between users of the terminals. Terminals are
made by device makers. Links are the channels by which data is transmitted. They can be
physical (copper wires, fiber-optic cables) or immaterial for the case of wireless networks. In
order to be transmitted through links, messages have to be converted by terminals into
different form of signal including radio frequencies, electric signals, light signals (infrared).
Nodes are necessary to handle messages and route them down the correct link toward their
final destination.

Protocols and standards are fundamental in networks and define how initial data is encoded
then transmitted throughout the network. For example the Internet protocol is called TC/IP
protocol. In mobile network there have been 4 categories of standards. The 1G network was
the first automated cellular network implemented in 1979 in Tokyo. 2G standards appeared
in 1991 in Finland. The 3G network was launched in 2001 in Japan too. Finally 4G standards
are available since 2006 but really implemented in few countries on the edge. Each of these
generations has increased the bandwidth thanks to more powerful satellites and antennas.

Telecommunication operators

Telecommunication operators are the companies performing the exploitation of networks.
The first players, chronologically speaking, were the phone operators. Then Internet
providers came in, rapidly acquired by phone operators. Finally they are the ones who led
the invention of mobile phone networks and added this activity to the fixed phone and
Internet networks’ exploitation. In reality they provide a service: they allow people to properly
use the telecommunication network. And this service is worth to be paid. When we are
paying for a mobile phone subscription we are actually buying the right to use a part of the
network, for a certain time.

Mobile Subscribers 2010
Original Market Additional markets
Operator (million)
1 China Mobile China Pakistan 627
2 Vodafone United Kingdom Middle East, Commonwealth, Europe 361
3 Telefonica Spain Latin America, Europe 227
4 America Movil Mexico Latin America 236
5 Airtel India Bangladesh, Central & Austral Africa 221


The mHealth Revolution

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