Telecom industry looking for growth in health care

The announcement this week by BlackBerry Ltd. that it would invest in a U.S.-based health-care technology company is the latest effort by a company in Canada’s wireless sector to look to the health-care market in an attempt to find new sources of revenue outside the maturing wireless market. BlackBerry said in a Tuesday release that it had invested in and would collaborate with NantHealth LLC, which provides cloud-based platforms that BlackBerry said are present in about 250 hospitals, connect more than 16,000 medical devices and collect more than three billion vital signs each year. The purchase could signal a new direction for the handset maker, and reflects the ongoing shift in Canada’s wireless industry as companies adjust to a market that appears poised for a plateau in the next few years. “These are not one-trick ponies,” said Seaboard Group analyst Iain Grant in a phone interview on Wednesday. “As look for the next revenue opportunity, they see themselves offering their skills in communications and information technology to help the health-care system reform processes, systems and organizations.” Digitizing health data and connecting health care devices can have a variety of benefits, from more accurate prescriptions and more reliable patient histories to real-time monitoring of a patient’s vital signs and remote diagnostics. Telus Corp. purchased electronic health care and medical records company Emergis in 2008, rebranding it as Telus Health, and in a February 2014 release said it had become Canada’s largest electronic medical records provider after purchasing the medical records business of MD Practice Software. Telus CEO Darren Entwistle, speaking at a sales conference in 2012, pointed to advances in tele-health and real-time health analytics as drivers of both revenue growth and positive changes in health outcomes for Canadians. Entwistle said the business of delivering health-care data and the company’s telecommunications business were essentially the same. “We’re charged with the efficient and effective movement and storage of information across multiple platforms, devices and constituencies ,” Entwistle said in his remarks, which have been posted on YouTube. In March, after Telus purchased another medical-records company, Telus Health president Paul Lepage said in a statement that the company believes “connecting health-care providers and patients is a natural extension of our core business of connecting millions of Canadians with the people and information that matters most to them.” Telecom companies such as Telus have had to seek other markets as growth in the TV-service, wireless and Internet businesses has slowed. Number compiled by The Wire Report of major publicly traded companies in March of their last fiscal years showed that growth has been decreasing in all three areas since 2010, with 2013 being the first year in which the number of television subscribers fell. In wireless, where Telus gets about half of its revenue, according to company filings, the company saw subscriber growth of 1.8 per cent, the largest among the big three carriers but down from 5.3 per cent in 2011. On Monday, Scotiabank analyst Jeff Fan said both Telus and Rogers Communications Inc. will continue to see slow growth in wireless subscribers following price rises implemented over the past nine months. 3Macs analyst Troy Crandall said in a phone interview on Wednesday that Telus Health showed how telecom companies can use health-care technology to widen their subscriber base for their other offerings. “It's a logical synergistic add-on to their existing business and it helps them to get deeper penetration in the enterprise,” he said. “If you take the e-health solutions, why wouldn't you take all of the other solutions they provide? They all go through the same pipe." "The type of service that Telus provides is essentially secure networking infrastructure, so it actually makes pretty good sense when providing these e-health solutions as well," he added. Grant said security is major selling point given the privacy issues surrounding health care data, and is even more important in that area than in straight-up telecom services. “The risks for error are far more than they are in the telephone business,” he said. “Where someone might dispute a bill for $1,000 or some amount, it’s rather different than toying with health records or losing them or giving access to them to inappropriate people.” Canada spends $109 billion a year on hospitals, doctors, and other health care providers, according to the latest data from Statistics Canada. Total health-care spending reached $200 billion, 11.1 per cent of GDP, in 2011, according to data from the Organization for Economic Co-operation and Development. BlackBerry and Telus are making investments in the health data market, but Rogers and BCE Inc. seem to have so far stayed away. Grant compared Telus’ health care investment with Rogers’ investment in the NHL, exclusive rights to which the company spent $5.2 billion on for a 12-year contract. “When the Rogers grand experiment with NHL everywhere is over, Telus will have seized the leadership in a large sector of the economy,” Grant said. Richard Alvarez, CEO of Canada Health Infoway, a federally funded independent agency with a mandate to increase adoption of electronic health records, said in a phone interview on Thursday that digital health could be worth up to $10 billion to telecom companies in the coming years. "A lot of these other sectors have now topped out in terms of the use of some of the digital tools, whereas health care needs efficiencies, needs innovation," he said. "These companies are seeing this opportunity and starting to invest in it. If they get Canadians hooked on these things and provide wireless and other services, that pays dividends in terms of their back office and their core business." Michael Hunt, director of health spending and strategic initiatives at the Canadian Institute of Health Information, said the “old, traditional” ways of dealing with health care data are evolving, and the consumers will soon demand that providers and companies pick up the pace as benefits begin to emerge. “There's increasing amounts of data available, and it's being managed in new ways,” he said in a phone interview on Thursday. “The wheels of change spin slowly, particularly in health care.” In the reams of health data his agency monitors, Hunt said, the changes were so far still negligible in terms of their impact. "There's no question there's potential for efficiency," he said. “We’ve made some investments, but we certainly haven’t seen the rewards there’s the potential to have from delivering services in different ways. That potential is huge.” — With reporting by Peter Henderson at phenderson@thewirereport.caand editing by Anja Karadeglija at akarad@thewirereport.ca

Telecom industry looking for growth in health care

News | April 17, 2014

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