Ehealth is growing, but market size still unknown

MONTREAL — In recent years, Canadians have gained the ability to keep track of data contributing to their health — from steps walked to their heart rate to calories burned — in a way that would have been impossible before the emergence of fitness trackers and smartphone apps. Their doctors and health institutions are also adopting new technologies, through initiatives like electronic medical records (EMRs) and home health monitoring, as the field of ehealth expands. “Everybody has a health story,” and it’s an issue that’s relevant to every Canadian, said Paul Lepage, head of Telus Corp.’s health division, during an interview at the company’s Montreal headquarters earlier this year. “It’s not just a question of are you into hockey … football.” Unlike its competitors, who chose to invest in media and sports properties, Telus turned to ehealth, in a move Lepage said began around 15 years ago and ramped up with the purchase of electronic health care and medical records company Emergis in 2008. “I think if we build a really sustainable, integrated health ecosystem, it’s going to be harder to be disintermediated in that world versus what you would see in the content world,” Lepage said. Ehealth is, he said, “a very sustainable play.” Canadians are increasingly focused on wellness, especially with the emergence of fitness devices and apps, Lepage said. “People are more conscious of their health care and are more interested in managing their health care, so you’ve got this push on wellness and you’ve got a continued focus on illness,” he noted, adding that part of the reason for that is the aging of the Canadian population, a demographic shift that “is going to continue to increase.” “The reality is we have more people that are over 65 than we have people that are below 15,” he noted. At the same time, those involved in health care are “now starting to figure out that they have to put the patient or the consumer at the centre of everything that they’re doing,” in the same way other service industries have done. In mid-July, Telus put out a series of ehealth announcements—including that it would acquire EMR company Nightingale Informatix Corp., expand home health monitoring in Yukon, and continue collaborating with the Northwest Territories government on rolling our EMRs. It also released a study it commissioned that found the majority of Canadians want to turn to technology to navigate their health care. Telus has focused its ehealth attention on three areas, Lepage said, health enterprise, which is focused on “selling to health authorities,” like provinces; “payers,” like insurance companies or workers’ compensation boards; and providers, like pharmacies and doctors, Lepage said. “The rest of the package is how do we reach consumers through either the health authorities that either want to roll our health records, like we’re doing in Alberta… or reaching the consumers through an application like Pharma Space, where ultimately the pharmacy is getting their consumers or patients to access that application, or we’re reaching the consumers directly through retail, where we’re saying to them ‘here’s your focus on wearables and all those things',” he said. “And what you’re going to see is, as time goes on, a tighter and tighter integration of those three components, across EMR, pharmacy management software, wearables, wellness, and those aspects.” Health care spending in Canada totals more than $200 billion, and “we see, frankly, a huge opportunity to go and get a portion of that,” Lepage said. How big that slice will be is hard to determine. Telus, for instance, doesn’t break out its ehealth revenues and only reports them as part of the company’s wireline revenues. Even the size of the ehealth market in general can’t really be determined, experts said. Deloitte Touche Tohmatsu Ltd. consultant Duncan Stewart said in a phone interview the numbers he’s seen indicate that it’s a relatively small market. Given how big the cost of health in general is, he added, what’s remarkable about ehealth numbers “isn’t how big they are, it’s that they aren’t larger.” While there has been “tremendous spending” on electronic health records, for instance, “it’s such a complex issue with so many concerns around security and privacy that even there … things have gone significantly more slowly than we would have thought a few years ago.” Many estimates of ehealth include fitness bands or other wearables, but medical professionals consider those devices “medically useless,” Stewart said. He added that though he has had difficulty finding good data on items like medical grade blood glucose monitors, the data that is available “seems to suggest this is a sub-billion-dollar market worldwide.” However, he expects that to change in the next three to 10 years, given that companies have been talking about getting approvals in the United States from its Food and Drug Administration to certify devices as “proper, medically approved devices,” which will grow the market. When it comes to the ehealth market in Canada as a whole, the size remains unknown partly because it’s hard to determine what counts as ehealth. Stewart gave the example of a clinic that sends a file of a lung scan from one city to another over a fibre cable, so that a specialist can look at it, or of an individual using data on an app to renew their prescription. “You know, it starts getting blurry because we use technology for so many different things,” he said. One of the ways carriers can benefit from ehealth is through increased bandwidth usage, though the vast majority of such activities—like filling out a form with symptoms, or a glucose monitor—use very little data. “There aren’t a lot of ehealth applications where the consumers, where the mass market … would in fact be using significantly more data as a result of ehealth,” Stewart said. “Watching one Netflix show on my smartphone is probably more data than I could send for ehealth in my life.” However, selling bundled services has the potential for more profit, he said, giving the example of selling, setting up and managing locator bracelets for a nursing home for dementia patients. “Although it wouldn’t use a whole lot of data, I might be able to make some money by making it as a complete product offering,” he said. “And when I talk to carriers around the world, that’s exactly where they’re thinking. They don’t want to be, quote unquote, ‘just a dumb pipe.’ They want to be out there and offering services that allow them to provide value in addition to just the data.” Norm Archer, professor emeritus at McMaster University and co-ordinator of the school’s master of science in ehealth program, agreed that it’s hard to estimate the size of the Canadian ehealth market. “When a telecommunications company is involved, when those people actually use telecommunications for health care applications, the … companies don’t necessarily know that’s what it’s being used for,” he said. “There’s definitely a growing demand in this area,” he said, adding that the “home care market is the area of growth right now.” Wearable technologies are growing, too, Archer said, though he agreed with Stewart that many of the devices out there are “junk” and haven’t been tested properly. “Nobody knows whether they work or not. But eventually that will settle out and 10 years from now, people will think nothing of wearing devices around them that keep track of their heart rates and blood pressure and all that kind of stuff.” That especially includes people who are middle-aged and older, as well as athletes, he added. Archer said ehealth has reached the middle of its growth cycle. Stewart agreed, saying that “I don’t want to say we’re in the first inning, but we’re certainly not standing up and singing ‘take me out to the ball game’ anytime soon either.” Telus’ Lepage said that, ideally, the company would be able to able to, when it comes to services like home health monitoring or EMRs, provide everything from software, devices and Internet service and WiFi, and store the data in its data centre. “In a perfect world, it would be offered like that. So the reality is, Lepage said, if you’re dealing with the public sector, you’re going through tenders,” which can involve dealing with other vendors and suppliers. “But yes, that’s the pitch. The pitch is really one of going in there and selling them on some of those key capabilities, and then building on those capabilities and then upselling and cross-selling them on additional capabilities,” he said. “When we go and sell our EMR, we try to package our high-speed Internet, we’ll try to package wireless backup, we’ll package a series of services to those clinics to ensure that they’ve got the best, the most compelling experiences possible, the highest level of reliability, security, etc.” David Heger, a U.S.-based telecom analyst with Edward Jones, said in a phone interview that “Telus, in particular, has kind of staked a claim on the ehealth market.” “Although it’s not a super fast-growing business, I think it certainly has helped offset the declines in traditional wireline telephone service.” Whereas competitors, such as BCE Inc., have “struggled to keep wireline revenue stable, for Telus, I think the ehealth has kind of helped in terms of showing growth in the wireline side of the business.” He said in comparison to a sector like media, ehealth has “perhaps a more steady growth outlook.” “It certainly seems to be a growing business where media has been much more challenging in recent years,” he said. “In some ways it seem to be a more consistent business than what media has been” for its competitors. — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Charelle Evelyn at cevelyn@thewirereport.ca

Ehealth is growing, but market size still unknown

News | August 3, 2016

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