Healthcare News

E-Commerce Could Save Billions Across Healthcare Supply Chain
An Andersen study on the future value of e-commerce in the healthcare industry found that e-commerce could bring 2 to 10 percent total benefit, or up to $6 billion in value, to participants across the supply chain. June 27, 2001

Physicians' Web Sites, eHealth Plans Mark Future of Healthcare
Like many industries, the Internet is leaving its mark on the healthcare trade. According to Jupiter Research, the Web sites of individual physicians may spell the end for commercial health sites, while Forrester Research predicts that eHealth plans will forever change health insurance. February 21, 2001

Drug Companies Fail to Harness Internet's Marketing Potential
The Internet is the most cost-effective channel for creating consumer demand for prescription medications, according to Cyber Dialogue, but it isn't being used to its maximum potential. February 28, 2001

E-Commerce Could Save Billions Across Healthcare Supply Chain

An Andersen study on the future value of e-commerce in the healthcare industry found that, in a fully mature environment, e-commerce could bring 2 to 10 percent total benefit, or up to $6 billion in value, to participants across the supply chain.

The study, conducted by Andersen's pharmaceutical, biomedical and health services (PBH) supply chain practice, measured both the tangible and intangible values of e-commerce in the healthcare supply chain of the future. Among the areas studies were product procurement, order management, operational efficiency, invoice processing, systems integration and contract management. The potential 2 to 10 percent total benefit is reached by combining a potential 1 to 2 percent benefit for providers, and a 1 percent to 8 percent benefit for suppliers.

The biggest potential benefit of e-commerce for providers involves eliminating overpayments and reducing rework and manual processes. The benefit for suppliers lies in freeing sales representatives from administrative tasks, enabling them more time to sell, providing access to real-time sales information, allowing for better management of fill-rates and operational processes and reducing the level of effort for labor-intensive administrative processes including contracts, rebates and eligibility.

Other findings of the study include:

 In medical and surgical supplies, providers overpay suppliers    from   2 percent to 7 percent based on the available contract    price

 Different facilities on the same health system pay a different price    40 percent of the time, while price differentials are, on average,    in the 1 percent to 2 percent range

  Of the eligible provider transactions that are or could be    conducted through e-commerce, 31 percent are actually    conducted through e-commerce

  For manufacturers, sales representatives spend an estimated 25    percent to 49 percent of their time on administrative issues that    detract from actual selling efforts. Only 14 percent of medical    surgical distributors' sales representative time is spent selling    products or educating customers

  Among hospitals, an estimated 40 percent of a purchaser's time    and 68 percent of an accounts payable worker's time is spent on    manual processing and re-work. And, 52 percent of all re-work    could be eliminated through e-commerce

  Real-time visibility of sales transactions would allow suppliers to    better fill orders and manage operations.

"This study quantifies the future state of the healthcare industry through the use of e-commerce," said Ramona Lacy, partner with Andersen's PBH supply chain practice. "It will be a roadmap for all parties involved in the supply chain."
The study combined an activity-based costing method and interview process to estimate future benefit potential. On-site analyses were conducted at multiple supply chain sites, including providers, direct and indirect manufacturers, distributors and pharmacy wholesalers. The study, which began in November 2000, was sponsored by Novation, LLC and Neoforma.com, Inc.

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Physicians' Web Sites, eHealth Plans Mark Future of Healthcare


Medical doctor Web sites are the crucial catalyst to unlocking the $9 billion dollar market in health transactions by 2005, according to Jupiter Research.

Unlike commercial health sites, which consumers do not trust for health management activities, Jupiter analysts believe physician Web sites can provide a venue for delivering trusted content as well as interactive physician-patient capabilities, such as appointment scheduling, prescription renewal requests and secure electronic dialogue. Right now, commercial sites may be getting traffic because there are no alternatives.

"Despite the enormous potential of the Internet to transform healthcare, to date, this promise has largely gone unrealized. Although commercial health sites are winning in the Media Metrix online health rankings, this is really a hollow victory -- they are for all intents and purposes the only game in town right now," said Claudine Singer, Jupiter senior analyst and research director. "Medical doctor Web sites will be the catalysts for furthering digital adoption in the online health sector. They will drive physicians to interact with patients, forcing integration into their professional workflow, and will also provide a platform for patients to use the Internet for meaningful health activities."

A Jupiter Consumer Survey found that 63 percent of consumers would switch to a doctor with a Web site that offered credible content, appointment scheduling capabilities, or secure communication channels. According to Cozint Interactive, 40 percent of physicians have a Web presence, but their sites lack the functional depth to serve consumer needs today.

Cozint also found that nearly half of physicians express interest in conducting e-mail dialogue with patients, despite the risks of potential liability and the potential for plenty of unreimbursable activity. Jupiter expects this number to grow as more doctors find that consumers are concerned with using medical doctor Web sites primarily to obtain trusted information and schedule appointments, rather than interact directly with doctors.

Although online health-related transactions only made up only 1 percent of all electronic health transactions in 2000, Jupiter predicts the figure will reach 29 percent by 2005. Jupiter expects the online component of transactions will soar, particularly after 2003 when the Health Insurance Portability and Accountability Act (HIPAA) takes effect.

When accessing and using health information online, consumers said they are most frustrated with irrelevant hits (46 percent) and content credibility (36 percent). More than 40 percent of consumers surveyed are so concerned with their privacy that they would not submit personal information at a commercial site. According to Jupiter, this means that commercial sites will never provide a platform for health management and are likely to be viewed as little more than an electronic library housing suspect information.

Initially, Jupiter expects consumers will value the medical doctor Web site for data and convenience: make appointment requests (51 percent of consumers), request prescription refills or renewal (48 percent) and see lab results (38 percent). As consumers become more involved in leveraging their medical doctor Web site for health management, however, disease management becomes a more valuable online opportunity: 34 percent of online consumers with a chronic condition say they are willing to engage in such a management program on their physician's site.

"There is an untapped opportunity for technology companies to revolutionize the online health industry by providing centralized solutions to power individual 'electronic shingles,' or front-ends of physician Web sites," Singer said. "While winners will be few and far between, those who act fast and act now are well positioned to reach back deeply into the digital health value chain."

Singer also believes that medical doctor Web sites bring tremendous benefits to all major healthcare players, such as pharmaceutical companies and health medical organizations (HMOs), which will benefit from better drug compliance and disease management possibilities.

The Internet may also revolutionize health insurance, according to a report by Forrester Research, which predicts that emerging eHealth plans will unleash a trend of consumerism in the medical market in 2001, increasing employee accountability and taking share and profits from HMOs.

Forrester said that skyrocketing premiums are forcing employers and consumers to look for an alternative to conventional insurance, and eHealth plans, which give the consumer the tools to choose personalized benefits, the course of care that should be sought, and which provider to consult, should be one such alternative.

"It will give consumers the means to take greater control of personal health decisions," said Forrester senior analyst Bradford Holmes. "It can provide different options with economic consequences when normally there aren't a lot of choices."

With multiple eHealth plan introductions in 2001 and 24 percent of employers likely to offer employees an eHealth plan by 2002, consumers will increasingly have an eHealth plan choice. According to Forrester, products and markets will evolve in three phases over the next five years: the era of choice, the era of motive, and the era of markets. In the era of choice (2001 to 2002), eHealth plans will emphasize personalized benefits options at enrollment because offering more choice is easy and incremental. Consumers will be able to adjust their copayments or increase their deductible to decrease their monthly contribution. In the era of motive (2003 to 2004), eHealth plans will focus on incorporating and employing a medical spending account and providing decision support for consumers' use of healthcare services. In the era of markets (2005 and after), providers will compete for patients, and eHealth plans will have the price and quality transparency they need to populate their eMarketplaces of providers.

"eHealth plans are rolling out in force, and with employers' and consumers' interests piqued, insurers must respond or fall behind," Holmes said. "They need to react defensively to the threat that start-up eHealth plans will attract younger members, and adjust for expected adverse selection by increasing pricing to account for the older members who remain in their plan. Then, they must proactively chart their eHealth plan strategies, based on a review of their skills and assets."

Drug Companies Fail to Harness Internet's Marketing Potential

The Internet is the most cost-effective channel for creating consumer demand for prescription medications, according to Cyber Dialogue, but it isn't being used to its maximum potential.

In the first half of 2000, pharmaceutical companies spent an estimated $833 million on television consumer advertising, $460 million on print campaigns and $47 million on Internet marketing, according to IMS Health. Using these figures, Cyber Dialogue estimates that it cost pharmaceutical companies an estimated $54 per single specific drug request driven by the Internet, compared to $152 for television advertising and $318 for print advertising.

But the goals of pharmaceutical e-marketing initiatives should be extended beyond awareness for a specific product or company. Cyber Dialogue recommends that marketing strategy should include online programs that complement offline initiatives and are designed to increase demand, improve compliance and promote patient success. With online initiatives in place, the analysis of opt-in online data (collected and utilized in accordance with the strictest privacy and ethical standards) will enable pharmaceutical companies to maximize the return on investment (ROI) for their direct-to-consumer (DTC) Web sites while also improving the quality of life for site visitors.

Cyber Dialogue also emphasizes, however, that the Web should not be used as an isolated tool, nor should companies abandon the print and broadcast media channels that are essential to brand building.

"For the first time, pharmaceutical companies can use the Internet to spearhead a customer-focused, data-driven marketing strategy to augment their traditional consumer marketing programs," said Mark Bard, a director in Cyber Dialogue's Health Practice. "The key factor to sustainable success, however, lies in the integration of e-marketing with existing marketing programs."

Pharmaceutical companies can use the data collected from consumers with their permission to understand their customers, provide feedback to refine their programs and serve long-term marketing strategies. A DTC Web site that offers online condition management can eventually deliver services such as personalized product messages, support information, patient education and even monitoring tools that enable online communication between a patient and physician. If done effectively, consumers may even feel more comfortable interacting with pharmaceutical companies because of the value they'll receive in return.

"We already know that many patients are improving their compliance after simply reading disease information online," Bard said. "A DTC product Web site that offers a complete customer care platform will quickly prove its ROI because of its appeal to valuable segments of online consumers who want substantially more than brochureware for a given prescription drug."

Advertisements across any channel keep consumers informed of available drugs, according The NPD Group. A survey of 12,000 individuals by NPD's PharmTrends unit found that 51 percent say ads keep them informed of available drugs. The survey also found that drug advertising helps them take more control of their personal health care, and drug ads motivate them to request specific drug brands of their physicians.

"When it comes to health care, consumers are telling us that they want to be more informed of their treatment alternatives," said Fariba Zamaniyan, senior account manager of NPD PharmTrends. "This is evidenced by their positive response to prescription-branded drug ads. But the key to success for prescription drug advertising is whether or not the ads prompt doctor visits, generate prescription fulfillment for that drug and improve patients' likelihood to comply with their recommended drug therapy."

NPD's study indicates that consumers aren't flocking to their doctor's office because of a prescription drug they became aware of through advertising. Only 11 percent of the consumers interviewed report they were actually prompted to make a doctor's appointment to inquire about the prescription drug they saw advertised. Not surprisingly, two-thirds of consumers who were prompted to visit their doctor because of a prescription drug advertisement had prescription drug insurance.

Other findings from NPD's research include:

  Nearly one-quarter of the respondents asked their doctors about    specific prescription drugs they learned about through DTC ads.

  38 percent of consumers interviewed feel that there is too much    advertising for prescription drug products.

  One-third said that the advertisements are too confusing and that    they would not like to see more prescription drug advertising in    the future.

  Certain categories have higher ad recall among consumers.    Nearly three-quarters of the patients on a prescription allergy    medication recalled an advertisement for their drug.

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