healthcare e-commerce opportunities - akamai · 2019-03-04 · consumer e-commerce and digital...

OPPORTUNITIESHEALTHCARE E-COMMERCE

Data and Analysis for Building and Growing a Business In

Digital and Mobile Healthcare

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INTERNET HEALTHMANAGEMENT

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HEALTHCARE E-COMMERCE OPPORTUNITIES

Consumers as patients also are spending more on medical supplies and drugs. For 2015—the latest year for which full statistics are available from the U.S. Department of Health and Human Services—consumer retail spending for durable medical equipment—a category that includes such items as eyeglasses and hearing aids—reached $48.5 billion, up about 4% from the prior year. Consumer spending for other nondurable medical products including over-the-counter medicines, medical instruments, and surgical dressings, also grew 3.7% to $59.0 billion in 2015, and prescription drug spending grew year over year 9% to $324.6 billion, says the federal government.

That healthcare product, services and prescription spending is opening new opportunities for big pharmacy retail chains such as Walgreens and CVS

The potential annual market for e-commerce and web services technology in healthcare is about $32 billion, per an estimate from Goldman Sachs. That’s five times more than the $6 billion online retailers spend annually on all forms of e-commerce technology and services, says Forrester Research.

Risk and reward in healthcare e-commerce

EXECUTIVE SUMMARY

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INTERNET HEALTHMANAGEMENTEXECUTIVE SUMMARY | HEALTHCARE E-COMMERCE OPPORTUNITIES


Health. Even Amazon.com Inc., whose healthcare revenue comes mainly from its Amazon Web Services cloud computing unit, reportedly is looking at expanding into prescription selling and delivery, electronic health records and telehealth. Healthcare also is opening new niche markets for web retailers such as PillPack.com, FSAStore.com, Orthoticshop.com, CapsuleCares.com and others.

This digital evolution in healthcare presents multiple risk and reward opportunities for healthcare providers, says BRP healthcare consulting vice president Don Gleason. Creating and sustaining a viable business in digital healthcare, requires organizations to create and execute a detailed strategy that includes proper market research and due diligence. “Healthcare is a very regulated market where any company expanding e-commerce and online capabilities needs to have a complete understanding of their customers and online information regulations,” Gleason says. “From the beginning, your strategy and focus need to be right.”

Many online retailers and e-commerce technology vendors fail when attempting to expand their presence into healthcare by trying to go it alone. The need to understand unique data requirements, privacy and security regulations, and customer segmentation strategies makes healthcare different from other e-commerce and web services markets, Gleason says.

The U.S. healthcare system is a $3.2 trillion market that breaks down into many segments, including hospitals and health systems, insurance companies, physician groups, drug makers and pharmacies.

To succeed a retailer or vendor needs to know the healthcare customer it is targeting and to deliver products and services that will be unique.

Here are some examples of companies expanding in healthcare.

Walgreens and CVS are taking their substantial e-commerce operations and transforming them into digital healthcare delivery platforms that offer consumers a variety of services, including seeing a doctor online.

Orthoticshop.com is on track to grow online sales 30% this year and FSAStore.com has achieved a compound annual growth rate of 80% over five years by becoming leading niche merchants in their respective specific segments.

Salesforce.com and Akamai Technologies are leveraging the customer relationship management and content development technologies and services they developed for retailers and other consumer facing markets successfully into healthcare.

A recent survey of e-commerce vendors by Internet Retailer found 68% of respondents consider getting into the healthcare market a “very important” or “important” priority. The survey, which garnered a detailed response from 29 e-commerce technology product and services companies, also found that 54% of those vendors not in the market plan within the next six months to begin selling their products and services to healthcare organizations, such as hospitals, doctor groups and insurers.

This report explores the market opportunities, challenges and rewards in healthcare e-commerce and seeks to inform online retailers and vendors how they can succeed with their own initiatives and strategies.

Mark Brohan Editor and Publisher, InternetHealthManagement.com


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HEALTHCARE E-COMMERCE OPPORTUNITIES

ContentsOVERVIEW

An Rx for specialized e-commerce . . . . . . . . . . 6SPECIAL FOCUS20% of Walgreen app users are 55 and older . . . . . . . . . . 19

SPECIAL FOCUSCVS Health and Cleveland Clinic expand their relationship . . 21

SPECIAL FOCUSHenry Schein relaunches a medical site in its e-commerce group . . . . . . . . . . . . . . . . . . . . . . . . . 24

AMAZON

Amazon isn’t targeting healthcare— it’s already here and growing . . . . . . . . . . . . . . 27

VENDORS

A larger dose of e-commerce . . . . . . . . . . . . .34

SURVEY

Identifying opportunity in healthcare e-commerce . . . . . . . . . . . . . . . . .44

SPONSORED SPOTLIGHT

Akamai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11


OVERVIEW


6© Copyright 2017 Vertical Web Media LLC. All rights reserved.

To hit those numbers, Orthoticshop.com is redesigning its website and adding more merchandise. “Now is a good time to be in healthcare,” Behnke says. “Consumers are using the web to do a lot more managing of their own healthcare, and that’s good for us because they go online for someone who sells orthotics and they find us.”

The U.S. healthcare system is a $3.2 trillion industry and accounts for about 17.2% of the country’s gross national product of $18.56 trillion in 2016.

An Rx for specialized e-commerce

More healthcare merchants are finding success by identifying a niche and sticking with it.

BY MARK BROHAN

Overall healthcare costs are rising, and the healthcare industry is consolidating. But for Orthoticshop.com, a niche online retailer in healthcare, business is good. In business since 2005, Orthoticshop.com is on track to sell $13 million online this year, up 30% from about $10 million in 2016, says founder Matt Behnke.

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OVERVIEW | HEALTHCARE E-COMMERCE OPPORTUNITIES



Durable medical equipment spending reached

$48.5 billionYear-

over-year growth

4.0%

Year- over-year

growth

3.7%Year-

over-year growth

9.0%

Nondurable medical product

spending grew to

$59.0 billion

Prescription drug spending soared to

$324.6 billion

Consumers also are spending more out of pocket—and over the counter—on medical, health and wellness products and services in a variety of segments.

For 2015—the latest year available for full statistics from the U.S. Department of Health and Human Services—consumer retail spending for durable medical equipment—a category that includes items such as eyeglasses and hearing aids—reached $48.5 billion, up about 4% from the prior year. Consumer spending for other nondurable medical products including over-the-counter medicines, medical instruments, and surgical dressings, also grew 3.7% to $59.0 billion in 2015 and prescription drug spending grew year over year 9% to $324.6 billion, says the federal government.

Data on how much consumers are spending online specifically on medical, health and wellness products or services is hard to come by but there are some clues. The 60 online health/beauty retailers ranked in Internet Retailer’s 2017 Top 1000, which ranks web merchants on their annual web sales, grew collectively year over year 18.3% to $9.17 billion. In comparison, the U.S. e-commerce market grew 15.6% last year to $395 billion.

In a growing market, more web merchants are targeting certain healthcare niches as consumers manage more of their healthcare online. They’re also

Consumers are buying more medical products . HHS 2015 data points:


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INTERNET HEALTHMANAGEMENTOVERVIEW | HEALTHCARE E-COMMERCE OPPORTUNITIES


43%

Orthoticshop .com will increase its available SKUs by

in 2017, from 140,000 to 200,000 .

increasingly using the web to research and buy health and wellness products—as well as track their overall health online, says Amy Madonia, founder and principal of Madonia Consulting, a New York business-to-consumer e-commerce and digital marketing consulting firm.

“The healthcare industry is digitizing rapidly and the customer is getting comfortable with going online for their healthcare needs by doing research on symptoms or specific doctors, paying bills and buying products and generally getting more educated about their options,” Madonia says. “There is an opportunity for niche web merchants in healthcare to succeed.”

A decade of learningOrthoticshop has spent more than a decade growing into—and learning—its niche. Orthoticshop began selling online with a selection of men’s, women’s and youth orthotics shoes. But over time Behnke has added more orthotic-specific product lines, such as socks and insoles, as well as other specialty merchandise such as gel-filled sleeves to relieve foot pain from bunions.

This year the number of available SKUs on Orthoticshop will grow nearly 43% to 200,000 from 140,000 as the online retailer adds more specialty brands and suppliers.

The core Orthoticshop customer is age 45 and up and spends, on average, $75 per purchase. Originally customers came to Orthoticshop.com to buy shoes, but over time core customers began asking for additional products, Behnke says.


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New shoppers coming from Google after searching for terms such as “orthotics” often are looking for more than just shoes when they click on the link to Orthoticshop.com’s home page, he says.

Buying anything orthotic—especially shoes—is a very personalized purchase because they’re looking to relieve specific types of pain from conditions that range from bunions, callouses or hammer toe to diabetes, Behnke says. At the same time, orthotic shoppers also want to buy fashionable and contemporary footwear.

Product king and subject matter expertKey to Orthoticshop’s success has been establishing its site as a provider of orthopedic-related content on such topics as common reasons for heel pain and how it can be treated.

Orthoticshop in February launched a redesigned website that it worked with e-commerce technology vendor X-Cart to develop. The revamped Orthoticshop.com features a responsive design and product reviews, as well as an improved site search. “The redesign gives us bandwidth to add more content and products to keep growing,” Behnke says.

When Orthoticshop.com launched a dozen years ago customers with aching feet became the retailer’s first repeat customers. Now loyal customers are middle age and older and they want new ways to shop online—including paying for orthotic products using their healthcare savings or flexible savings accounts.

“There’s a lot more healthcare happening online with consumers these days,” Behnke says. “We are the beneficiaries of that.”

‘There’s a lot more healthcare happening online with consumers these days .

We are the beneficiaries of that .’—MATT BEHNKE, FOUNDER, ORTHOTICSHOP.COM


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Orthoticshop saw a niche for serving a certain type of consumer looking for a specific type of healthcare good or service online and developed the business and marketing strategy—and acquired the products—to go after very focused groups of shoppers.

That’s a strategy many other big and small established retailers are adopting. For example, FSAStore.com sells 4,000 healthcare products consumers can purchase using their pretax flexible spending account or Health Savings Account dollars. Health Savings Accounts, or HSAs, are individual savings accounts that allow consumers to set aside tax-free dollars to purchase medical products and services.

The 7-year-old FSAStore.com has grown at a compound annual growth rate of more than 80% over the past five years, the retailer says. A large part of FSAStore’s success has stemmed from the revenue-sharing deals the retailer has with the flexible spending account managers at more than 200 major employers, including payroll services and human resources management company ADP LLC, says CEO Jeremy Miller.

Under the arrangements, flexible spending account managers incorporate FSAStore.com into the company’s employee benefits programs and, in return, the company receives an undisclosed percentage of the money employees spend on the site.

In the past year FSAStore has added new features and functions to become more mobile-friendly, attract a larger audience of employers and become a bigger provider of content on healthcare savings accounts. In October, FSAStore.com launched an updated learning center featuring educational tools that enable site users and visitors to understand FSA benefits. Tools include frequently asked questions, articles, videos and a savings account calculator families can use to estimate how much money to put into an account.

FSAStore.com has achieved an

compound annual growth rate over the past five years.

80%


SPONSORED SPOTLIGHT

Creating a healthy flowHow hospitals can provide faster and more secure access to electronic data

The lifeblood of today’s healthcare industry is data. Just as blood courses through the human body to keep it healthy and functioning, data that flows through elec-

tronic networks at hospitals and health systems is crucial for clinicians to properly diagnose sickness or disease and provide adequate care.

In a healthcare system that’s increasingly consumer focused, patients also want more convenient ways to access data to better manage their health and wellness, commu-nicate with their doctors, and conduct online transactions such as scheduling office visits, checking lab results, or renewing prescriptions.

But compared to industries like banking and retailing—which are much more electronically connected to consumers—healthcare largely remains behind the curve. But it’s not for want of data. As much as 30% of the world’s stored computer data is generated by the healthcare indus-try, according to an estimate from McKinsey & Co. And just one patient electronic medical record contains 80 megabytes of data—the equivalent of two entire encyclopedia volumes.

But this healthcare data isn’t universally integrated, and many healthcare websites have yet to adopt technologies that could allow faster access to patient data. Services that can help healthcare organizations—especially hospitals and health systems—deliver data faster and more securely include: Content delivery networks (CDNs) Application load balancing Web application acceleration Cloud security solutions “The healthcare industry is going digital, but healthcare

also faces big challenges in getting there,” says Ari Weil, a strategic product and marketing leader at Akamai, a leading provider of CDNs and cloud security solutions. “As healthcare becomes more consumer-centric, organiza-tions will need faster and more consistent network services to maintain trust while keeping up with patient, provider, payer, and employer expectations.”

Banks and retail companies consistently use cloud security solutions to gain and retain the certifications and attestations of compliance that establish trust with their customers. They also take advantage of content delivery networks to speed delivery of digital content via websites, mobile applications, and APIs to their consumers. Business customers are also increasingly integrating cloud-based application load-balancing and acceleration technologies to maximize website and mobile application performance

and availability. This enables them to maintain the highest quality of service for their customers.

Healthcare organizations now have the same opportunity to take advantage of such cloud-based services.

For example, content delivery networks, when used in con-junction with load-balancing and network-monitoring tools, can help a hospital better connect workers, partners, clinicians, and patients to a web-enabled enterprise. This can provide staff and patients with faster, more secure, and more consistent access to vital electronic data like medical records. “In a hospital, availability is of paramount importance, and the performance of digital applications in areas including cardiology, neurology, pediatrics, and trauma is essential, with little to no room for error,” Weil says. “Everyone connected to the web-enabled enterprise expects instant, secure, reliable access.”

A pharmaceutical or life sciences company also can use a content delivery network with application load balancing and monitoring tools to speed up the exchange of large volumes of data, which could include hundreds of thousands of research findings, medical images, or clinical trial data.

Many health systems still have reams of data locked away in older legacy systems used to support clinical, financial, administrative, and supply chain operations. But such systems can be costly and time-consuming to maintain.

The move to newer cloud-based enterprise network services gives healthcare organizations the chance to reinvent how they maintain data—and offer faster, flexible, and more secure access to electronic information.

“Businesses in the healthcare space have access to proven technology and services that have transformed busi-nesses in other heavily regulated industries—ones that rely on establishing trust with their partners and consumers,” Weil says. “Enterprise cloud solutions have the power to drive digital transformation by providing complete control over how a healthcare organization’s services are designed, built, operated, and secured.”

Sponsored by:

http://www.akamai.com/healthcare

Fast, seamless access to medical data isn’t just a convenience for healthcare providers and patients — it may determine the level of care your organization can deliver.Optimize your organization’s web experiences and applications with Akamai’s cloud-based delivery services, so you can deliver data and rich experiences quickly and securely.

EMPOWER PATIENT EXPERIENCES ACROSS YOUR DIGITAL ECOSYSTEM WITH THE CLOUD.

To learn more visit Akamai.com/healthcare


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Big box pharmacies specializeWhile 38 of the health and beauty web retailers ranked in the Internet Retailer Top 1000 are smaller merchants with annual internet sales under $91.6 million, bigger online healthcare retailers such as CVS Health and Walgreen Co. are also becoming more specialized to serve distinct customer segments—especially mobile consumers who want fast access to healthcare. In May 2016 in Hawaii, CVS introduced a digital tool that allows patients to view wait times at most locations and hold a place in line using their smartphone, computer or tablet.

To use the digital tool, patients start by viewing current wait times online at the clinic they’d like to visit. They then enter the reason for their visit and provide an email address or phone number in MinuteClinic’s secure system to receive a confirmation code and reminder messages via email or text. Patients are given an estimated time to arrive at the clinic. Once at the selected clinic, they sign in at the kiosk and enter their confirmation code. They are then ready to be seen as soon as the practitioner is available based on the order in which the confirmation was received. The service is now available at all clinics.

CVS is committed to digital and mobile healthcare, says Brian Tilzer, CVS Health senior vice president and chief digital officer. More than 19 million customers have downloaded the CVS mobile app, which among other features lets customers store their payment information and then check out with their smartphone at the pharmacy or in the checkout line.

More than 41 million customers also are enrolled in the drugstore chain’s pharmacy text messaging program, a mobile tool that provides users with medication refill reminders and enables easy prescription refills.

19 MILLIONcustomers have downloaded the CVS mobile app.

41 MILLIONcustomers are

enrolled in the CVS pharmacy text

messaging program.

‘Mobile devices have completely changed the way we manage our lives—and that includes how we manage our health .’

—BRIAN TILZER, SENIOR VICE PRESIDENT AND CHIEF DIGITAL OFFICER, CVS HEALTH


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CVS is introducing “discovery zones” that group products such as natural health and beauty on store shelves.

“Mobile devices have completely changed the way we manage our lives—and that includes how we manage our health, so that’s why we’ve made significant investments in digital over the past few years, including opening a digital innovation lab dedicated to advancing the role digital technologies play in our customers’ lives,” Tilzer says. The retailer focuses on developing new tools that help customers find easier and better ways to manage their health wherever they are.

CVS, which operates about 9,700 stores, in May announced plans for major changes to as many as 70 new and existing stores this year, with plans to expand the program to several hundred more in 2018.

In select stores CVS says its “new, health-focused formats” have 100 more square feet dedicated to health, beauty and healthier food products. The new products include a broader selection of vitamins and supplements, more natural ingredient health and beauty products, and food products that are gluten-free, sugar-free and organic, among other health-related criteria. Each revamped store also features what CVS calls a “discovery zone” that groups products such as natural health and beauty on store shelves so customers can find specific merchandise more easily, the retailer says.

While the products CVS will offer in its newly designed stores will not be available online, CVS continues to roll out e-commerce initiatives that tie e-commerce and stores closer together, Tilzer says.

For instance, CVS Health in October expanded a pilot project for mobile payment for prescriptions by rolling it out nationally. And in April 2016, the retailer added CVS Pay to its pharmacy mobile app. CVS Pay enables customers to refill prescriptions, manage prescriptions and pick up and pay for prescriptions, all within an Apple or Android app. CVS Pay also lets customers use the mobile app to check out in a CVS drug store and to pick up and pay for a prescription from a drive-through lane.

CVS is also rolling out to its stores a way for customers to more quickly reorder for curb-side pickup. The CVS Express program was launched in April


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2016 and lets customers using the CVS app order items online and pick them up at a nearby CVS store in less than an hour. The newest upgrade lets users see a list of items from past purchases and reorder those products without having to create an entirely new shopping cart.

Broader digital healthcare business Walgreens also is working to transform the company’s e-commerce strategy into a broader digital healthcare business plan as an online retailer and a web-based delivery platform of medical services, says Greg Orr, vice president of digital health.

Walgreens’ digital healthcare program already includes many of the types of walk-in services patients can schedule at their primary doctor’s office, a walk-in clinic or an urgent care center. Now Walgreens is moving into more advanced digital healthcare offerings that build off of the first wave of consumer-driven digital healthcare that focused on the types of straightforward care patients typically see their doctor about, such as a strained muscle, cold or flu and other conditions.

The next round of digital offerings will focus on more specialized applications such as seeing a dermatologist online or, for chronic disease management, an integrated care approach to managing more serious conditions that includes screenings, checkups, monitoring and coordinating treatment and patient education from a number of diverse healthcare organizations, Orr says.

For example, Walgreens in September 2016 added a program that enables consumers to see a dermatologist online. Walgreens is working with DermatologistOnCall, a specialty telehealth program operated by Iagnosis, to offer the online dermatologist.

With DermatologistOnCall, users can schedule an appointment and consult with a certified dermatologist for more than 3,000 medical conditions affecting the skin, hair and nails, typically within 24 hours of the patient

3,000Medical conditions affecting the skin, hair and nails that can be diagnosed online by DermatologistOnCall.


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submitting a preferred time to see a provider. Patients who create an online profile may upload photos of their skin condition via the DermatologistOnCall platform, receive answers to medical questions and select to receive care from a provider licensed in their state. The cost per online consultation is $59.

The digital service can be accessed through Walgreens.com and the Walgreens app. DermatologistOnCall providers also have the ability to write prescriptions that patients have processed through Walgreens.com and schedule for pickup at a nearby Walgreens pharmacy.

In addition to DermatologistOnCall, Walgreens also features information about common skin conditions such as acne and eczema on Walgreens.com and in its app through a content agreement Walgreens has with WebMD.com. Basic skincare and product recommendations also are available through the Walgreens pharmacy chat feature, which offers live online chat conversations with members of Walgreens pharmacy staff.

Walgreens aims to offer patients a single source for digital healthcare services, the chain says. “Specific digital offerings can bridge a lot of areas in healthcare, which is very segmented,” Orr says.

Consumers want digital health toolsHealthcare e-commerce companies are targeting specific groups of consumers and patients overall as a growth opportunity because consumers in general are using the web more to manage—and pay for—more of their healthcare, says Frances Dare, managing director of virtual health services at Accenture, a consultancy. For example, more than 12 million consumers research and buy their insurance online through Healthcare.gov, the health insurance e-commerce system operated by the Centers for Medicare and Medicaid Services, a part of the U.S. Department of Health and Human Services.

A recent Accenture survey of about 1,600 consumers also finds that 78% of consumers would be interested in receiving healthcare virtually some or most of the time—and that includes researching and buying more healthcare goods and services online. ”Technology-enabled services will be equally

78%Consumers who would be interested in receiving healthcare virtually some or most of the time.

Source: Accenture


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Consumer spending on prescription drugs(at chain or independent phar-macies or other retail channels)

2015 2016

$307.1 BILLION

$322.7 BILLION

important as traditional in-person services, allowing the modern patient to choose when and how they receive health and care services,” Dare says.

In particular, more niche web merchants are launching to provide more ways for consumers to buy and fill their prescriptions online. In 2016 consumers spent an estimated $322.7 billion on prescription drugs at a chain or independent pharmacy or other retail channels, including by mail order or online, says healthcare research market research firm Quintiles IMS Inc. That’s up 5.1% from $307.1 billion in 2015, according to Quintile IMS.

While there are no hard numbers on how many prescriptions consumers are buying and selling online, online pharmacies such as PillPack Inc. and Capsule Corp. are rolling out digital services they contend will make filling prescriptions online quicker and easier.

For example, since co-founder, CEO and pharmacist T.J. Parker launched PillPack in 2013, the company has raised $93 million in funding to build a digital pharmacy base that now operates in 49 states.

PillPack manages multiple prescription medications for customers by pre-sorting, packaging and delivering the drugs—all with a 24/7 pharmacy staff that can be contacted either online or via phone. Every two weeks, customers receive a personalized roll of pre-sorted medications, along with a recyclable dispenser and any other medications that cannot be placed into packets, like liquids and inhalers. Each shipment includes a medication label that explains what each pill is and how it should be taken.

In addition to pre-sorting medications, PillPack coordinates refills and guarantees the shipment of all medications on time. Online tools allow customers to track their shipments, refills and co-pays. Customers can e-mail or call a PillPack pharmacist any time to ask questions.

PillPack employs about 200 workers between its New Hampshire fulfillment center and its engineering, design, and marketing office in Somerville, Mass. And it plans to add 300 employees at its western fulfillment hub in Salt Lake City over the next few years.

PillPack is also adding more insurers to its business base. In February, Aetna Inc., which provides prescription benefits to 15.2 million Medicare

Source: Quintiles IMS Inc.


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and commercial plan members, added PillPack to its national network of preferred pharmacies. Members of Aetna’s Medicare Advantage Prescription Drug plans and of standalone Part D prescription drug plans can use PillPack while paying Aetna’s preferred pricing for prescription drugs, Aetna says. Existing PillPack customers who are Aetna Medicare members will automatically receive these lower co-pays—in some cases $1 in some plans—as part of their Aetna benefits, the insurer says.

In New York, another digital pharmacy startup—CapsuleCares.com—is attempting to build a lasting e-commerce business. The company launched in May 2015 with former investment banker Eric Kinariwala as the CEO and Sonia Patel, a pharmacist, as the chief pharmacist.

Capsule won’t disclose details about its first year in business, including web sales, prescription orders or how many doctors the online pharmacy is working with. But in New York, a state with 4,300 licensed pharmacies located in independent pharmacies, hospitals, clinics, chain drugstores, discount and warehouse retail outlets and grocery stores, Capsule is promising consumers it will deliver prescriptions in about two hours for free to customers living in Manhattan and the other boroughs.

Capsule has its own courier network of employees that undergo background checks and have passed a commercial bicyclist safety course and undergo HIPAA security training for patient privacy, the company says.

Capsule says it wants to use the web to make fulfilling prescriptions faster and easier for consumers—the company claims its e-commerce and prescription management system can switch over a prescription from an existing pharmacy in about 30 seconds. The latest version of Capsule’s Apple app also lets users switch between saved addresses and credit cards at checkout.

For now Capsule will look to grow its business and add more payers, doctors and other providers to its network, Kinariwala says. “Pharmacies are the front line of healthcare but there are inefficiencies,” he says. “We will build a better digital ecosystem.”

Building a niche web retail business in healthcare isn’t easy, but attracting and retaining customers for the long run is improved the more specialized an e-commerce site can be, Orthoticshop’s Behnke says.

More than two-thirds of all shoppers at Orthonicshop.com are repeat customers, Behnke says. “We had two bigger competitors come and go and we are still here and doing fine,” he says. “Our customers told us to become specialists and that’s what we did.”


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Older consumers are often viewed as less appealing targets for digital and mobile healthcare programs because of presumed lack of interest in digital technology and low use of smartphones and the web. Some studies show older patients often prefer dealing with healthcare providers by traditional phone and mail.

But retail pharmacy chain and healthcare delivery services company Walgreens says nearly 20% of the consumers that use its app are 55 and older. Walgreens didn’t break out specific numbers, such as the total number of downloads or details of use by age group, but 37% of all Walgreen customers over 55 also use the pharmacy chain’s mobile pharmacy tools, the retailer says.

Those tools include TouchID, a fingerprint identity sensor for Apple phones and tablets, secure automatic log-ins, simplified menus and daily pill reminders. Other features include an optimized site design that lets older consumers choose bigger fonts when using the Walgreens app and the pharmacy chain’s Balance Reward customer loyalty program that rewards members with points if they use the Walgreens app to track walking, weight, blood pressure and other health and wellness metrics.

20% of Walgreen app users are 55 and older

SPECIAL FOCUS


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“One of the things we repeatedly hear is that customers really value their connections with individual pharmacists and staff,” says Walgreens divisional vice president for loyalty Mindy Heintskill. “We wanted to replicate that connection digitally, so customers can get a high-value, personalized experience even when they can’t make it into a store.”

The number of older consumers using its app is double the pharmacy industry average, which Forrester Research notes is 9% to 10%, Walgreens says.

“You know you’ve got a differentiator in the marketplace with this kind of traction,” Heintskill says.

Other web features popular with older consumers are pharmacy chats, which enable app users to communicate via live chat with a Walgreens pharmacist or technician. They can also print a transcript of the chat or receive it in an email, and refill by scan—an app feature that lets the consumer scan a prescription label and pick up the refill at a store.

“We created Pharmacy Chat, which enables customers to have access to trusted experts through our site or mobile app anytime of the day or night, wherever they are,” Heintskill says. “We’ve also seen opportunities for tools like individual pill reminders and prescription alerts to help our customers simplify their daily lives.”

Older consumers, new tricks 10%

20% 37%

Pharmacy industry average for app usage among consumers age 55 and older.

Walgreens app users who are 55 and older.

Walgreens customers over 55 who use the chain’s mobile pharmacy tools.

Sources: Walgreens, Forrester Research


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CVS Health and Cleveland Clinic have expanded their eight-year-old clinical affiliation agreement in ways that broaden and streamline electronic communication between healthcare providers in both organizations.

With patient consent, CVS Health and Cleveland Clinic will share messages and alerts about such things as prescription information, visit summaries, diagnoses and treatment protocols, directly between the treating physicians, CVS Pharmacy and MinuteClinic, via electronic health records (EHR) systems. CVS Pharmacy is the retail pharmacy division of CVS Health, while MinuteClinic, also a CVS unit, operates more than 1,100 walk-in medical clinics, mainly in CVS stores.

CVS Health and Cleveland Clinic also will share standard protocols and quality metrics and review population health data through integrated, secured systems. Patients will continue to use a secure portal account to access their information.

CVS Health and Cleveland Clinic expand their relationship

SPECIAL FOCUS


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The new arrangement expands a clinical collaboration between Cleveland Clinic and MinuteClinic, the walk-in clinics operated by CVS Health, which began in 2009. Under that arrangement, Cleveland Clinic provides clinical consultation to nurse practitioners at 32 MinuteClinic locations in Northeast Ohio and 15 in Florida.

Louis J. Capponi, chief medical information officer at Cleveland Clinic, says all information transferred between electronic health information systems will be done in a manner compliant with the Health Insurance Portability and Accountability Act (HIPAA), which governs medical data privacy and security.

“Cleveland Clinic puts patients first and as such we take patients’ privacy and the security of their health information very seriously,” Capponi says. “Cleveland Clinic ensures the security of its patients’ health information by complying with all applicable laws and regulations, including but not limited to, the HIPAA Privacy and Security Rules. We have policies and procedures for our caregivers to ensure compliance, and we provide ongoing education.”

As part of the expanded relationship, CVS Health has joined Cleveland Clinic’s Quality Alliance, a network of healthcare providers that collaborate on quality measures that focus on chronic disease management.

CVS Pharmacy operates about 9,700 stores. In April CVS announced plans for major changes to as many as 70 new and existing stores this year, with plans to expand the program to several hundred more in 2018.

The affiliation between Cleveland Clininc and CVS Health is part of a larger digital push by CVS, which includes its CVS Pharmacy app.


23



CVS has put a lot of resources into electronic communications and e-commerce over the past few years. In October, for example, CVS Health expanded a pilot project for mobile payment for prescriptions by rolling it out nationally.

In April 2016, CVS added CVS Pay to its pharmacy mobile app. CVS Pay enables customers to refill prescriptions, manage prescriptions and pick up and pay for prescriptions, all within an Apple or Android app. CVS Pays also lets customers use the mobile app to check out in a CVS drug store and to pick up and pay for a prescription from a drive-through lane.

More than 19 million customers have downloaded the CVS mobile app, which among other features lets customers store their payment information and then check out with their smartphone at the pharmacy or in the checkout line. More than 41 million customers also are enrolled in the drugstore chain’s pharmacy text messaging program, a mobile tool that provides users with medication refill reminders and enables easy prescription refills.

Another upgrade CVS is rolling out to its stores allows customers to more quickly reorder for curbside pickup. The CVS Express program was launched in April 2016 and lets customers using the CVS app order items online and pick them up at a nearby CVS store in less than an hour. The newest upgrade lets users see a list of items from past purchases and reorder those products without having to create an entirely new shopping cart.

Cleveland Clinic is the top-ranked institution in Internet Health Management’s recently introduced Digital Hospital 500. CVS is No. 106 in the Internet Retailer Top 1000, which ranks North American retailers by their online sales.

The CVS Express program lets customers using the CVS app order

items online and pick them up at a nearby CVS store in less than an hour.


24



Henry Schein Inc. is a distributor of more than 120,000 products as well as business management software and services to medical offices, clinics and laboratories. And now it has redesigned e-commerce sites for all of those customers.

The distributor, which reported $11.6 billion in 2016 sales, relaunched its e-commerce site for Henry Schein Medical, a site where physicians and their support personnel can order such products and services as medical supplies and equipment, pharmaceuticals and office supplies. The site, HenrySchein.com/us-en/medical/, also provides software and professional services for managing such operations as finances, marketing and medical waste removal.

“The new medical website is part of Henry Schein’s digital transformation and represents our commitment to create an exceptional customer

Henry Schein relaunches a medical site in its e-commerce group

SPECIAL FOCUS


25



experience for health practitioners,” says Bridget A. Ross, president, Henry Schein’s Global Medical Group.

The publicly traded company doesn’t break out e-commerce sales, but it has said in recent financial statements that online competition was forcing to it operate more efficiently. The redesign of its five e-commerce sites, while providing for improved self-service ordering by customers, has coincided with recent efforts to cut operating costs. Last year it eliminated about 900 employee positions, or about 2% to 3% of its workforce, it said in its quarterly financial statement for the period ended April 1, 2017.

Henry Schein Medical is the fifth e-commerce site the Melville, N.Y.-based company has redesigned since February. The others are Henry Schein Dental, Zahn Dental Laboratories, Henry Schein Animal Health and Henry Schein Special Markets. Henry Schein did not immediately return a request for information about the e-commerce technology it has developed its sites on, though the company refers in its financial statements to its “proprietary” e-commerce technology.

The redesigned sites include such features as a new site search function that lets customers search by product-specific attributes, including size, color and manufacturer; and compare up to five products side by side.


AMAZON



But the biggest question isn’t when Amazon.com will enter digital and mobile healthcare, say healthcare and e-commerce analysts that cover Amazon. The bigger question is just how far and in what directions Amazon will take its already substantial investments in healthcare.

In a series of stories, the latest of which ran in late July, CNBC reported that Amazon.com has quietly assembled a research and development staff named 1492 and is looking at developing a slew of digital healthcare applications that may include electronic health records designed for easy sharing and telemedicine applications that digitally connect patients and doctors. In

Amazon isn’t targeting healthcare—it’s already here and growing

Since CNBC broadcast a story citing unnamed sources as saying Amazon.com had a team code named “1492” working in secret on healthcare, there has been wide speculation that the world’s biggest online retailer has big ambitions for digital healthcare.

28

INTERNET HEALTHMANAGEMENTAMAZON | HEALTHCARE E-COMMERCE OPPORTUNITIES


May, CNBC reported that Amazon.com also was developing possible plans to get into the online pharmacy business, which would put the leading online retailer in direct competition with the likes of Walgreen Co. and CVS Health Corp. or new startups such as PillPack.com.

Amazon hasn’t said anything publicly about what it may do in digital healthcare—Amazon has yet to respond to an interview request from Internet Health Management. But Amazon is already in healthcare in a big way, and analysts that watch Amazon predict the company’s next move into healthcare will involve its Amazon Web Services cloud computing unit and its Amazon Business business-to-business marketplace.

“From an e-commerce perspective, I think it’s more likely that Amazon would partner with another merchant to offer prescription services because it’s a highly regulated industry with a lot of specialization required,” says analyst Colin Sebastian of investment firm Robert W. Baird & Co. “I think the company is more focused on product categories such as grocery, home and apparel, but I suspect as they do more B2B commerce, you will also see Amazon offer increasing selection in healthcare products for businesses.”

Amazon’s biggest move into healthcare thus far has been through Amazon Web Services, its highly successful business unit that offers other companies and government agencies data storage and computing capacity. Since 2014 Amazon Web Services has provided cloud computing and network support services to Healthcare.gov, the health insurance e-commerce network operated by the Centers for Medicare and Medicaid Services, a division of the U.S. Department of Health and Human Services. Under a multiyear contract Amazon Web Services has with the Centers for Medicare and Medicaid Services, Amazon has built several e-commerce programs that have enabled millions of consumers to comparison shop and purchase health insurance on Healthcare.gov. Those tools include building an identity management system,

‘I suspect as they do more B2B commerce, you will also see

Amazon offer increasing selection in healthcare products for businesses .’

—COLIN SEBASTIAN, ANALYST, ROBERT W. BAIRD & CO.


29



9%Portion of Amazon’s total revenue that comes from Amazon Web Services.AWS provides services for healthcare sites such as:Healthcare.govCleveland Clinic

Intermountain HealthcareOscar Healthcare

a feature for comparing insurance plans, and a tool to determine eligibility for specific plans based on a consumer’s income and other variables.

Amazon Web Services, which generated revenue of $12.21 billion in 2016, or 9% of Amazon’s total revenue of $135.98 billion, has nearly three dozen publicly named big healthcare clients. They include big health systems such as Cleveland Clinic and Intermountain Healthcare, and health insurers such as Oscar Healthcare. For the Cleveland Clinic, Amazon Web Services helped to develop the Healthy Brains Initiative, which gives patients and neurologists a way to enter and analyze information about conditions and activities that affect brain health. For Intermountain, Amazon Web Services worked with oncologists across the U.S. to deliver precision medicine to cancer patients, while Oscar uses AWS to run its insurance platform, customer databases, and analytics program.

Amazon Web Services is teaching the parent company how to sell to healthcare institutions, says Dan Housman, a director with Deloitte in Boston and chief technology officer at ConvergeHEALTH by Deloitte, which applies new technologies such as mobile, geospatial, wearable/sensors, cognitive computing and predictive modeling applications to healthcare.

“Historically the enterprise or back-end side of the business has not been Amazon’s thing, since they historically come at a market from the consumer side,” Housman says. “What Amazon Web Services is helping Amazon to develop is selling to healthcare from the ‘inside out,’ or learning how to sell to a big healthcare organization with a big infrastructure for information technology.”

Amazon doesn’t break out any public healthcare metrics. But analysts that cover Amazon say there are multiple signs that Amazon has a bigger


30



appetite for more healthcare business. One indicator is the “help wanted” sign: Amazon is looking to hire a wide array of employees with healthcare expertise—or skills that can be leveraged for the healthcare market.

Amazon.com currently has 259 available openings for various healthcare jobs. Those jobs include positions for engineers and programmers with skills in healthcare cloud computing, network systems, network security and artificial intelligence, among others. There also are job openings for marketing and sales specialists that can sell marketplace services to business-to-business healthcare supply chain and procurement executives.

Amazon also is a factor in healthcare by virtue of the many health-related products it sells on Amazon.com. A search on the term “healthcare” returns about 326,000 results across about 30 product categories. Amazon also has the ability to introduce customers, including such healthcare providers as doctors, to its new communication tools, such as Alexa and Amazon Echo. Alexa, Amazon’s virtual personal assistant technology that responds to voice commands, has been around for about two years and is getting smarter and more sophisticated in responding to health-related requests, says Ashraf Shehata, a partner in the Global Healthcare Center of Excellence at KPMG US.

For example, hospitals including Massachusetts General Hospital and Boston Children’s Hospital are experimenting with ways to use Alexa to help surgeons in the operating room with complying with safety checklist before a procedure, or for developing Alexa apps that will provide instructions patients can use at home.

In March healthcare content provider WebMD and Amazon announced a technology and marketing program that enables users of Amazon Echo, Echo Dot and Amazon Fire TV to gain access to WebMD’s library of healthcare

Healthcare jobs available at Amazon.com. Positions

include engineers and programmers with skills in healthcare

cloud computing, network systems,

network security and artificial intelligence


31



content, ask questions about conditions , treatments, drugs and other topics such as symptoms and get answers. Those answers also can be sent to a user via an Alexa app.

Because Amazon already has such diversity and depth in healthcare, the company could potentially play a much broader role in healthcare delivery, Shehata says. “Amazon has a long history of disrupting consumer industries and healthcare is becoming much more consumer-driven,” Shehata says.

But to move further into healthcare, Amazon will need to learn the ins and out of a highly fragmented and heavily regulated industry where technology adoption tends to be relatively slow, says Jason Gorevic, CEO Teladoc Inc., a large publicly trader provider of telehealth and other virtual medicine delivery services.

“They (Amazon) are not the first large technology-oriented company to potentially be interested or express interest in this space,” Gorevic, told analysts on the company’s recent second quarter earnings call. “As you know, Google tried to enter this area and Verizon tried to enter this area, and it is, as I think we’ve demonstrated, not as easy as it looks.”

Amazon will go deeper into healthcare but it will take the online retailer time and substantial resources to build a big base, he told analysts. “I would expect them to get into areas where they have clear capabilities to leverage their logistics and distribution capabilities, for example, with a pharmaceutical distribution and/or medical supply distribution,” Gorevic told analysts based on a transcript from SeekingAlpha.com. “The remote delivery of care, building doctor networks, dealing with the 50-state regulatory environment is pretty far afield from what they do, and even if they do decide to get into this space, it’s going to be many years before they have any real footprint.”

‘Google tried to enter this area and Verizon tried to enter this area, and it is not as easy as it looks .’

—JASON GOREVIC, CEO TELADOC INC.


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PROTECT MEDICAL DATA, STAY COMPLIANT, AND BUILD TRUST.AKAMAI MAKES IT ALL EASIER.

To learn more visit Akamai.com/healthcare


VENDORS



Forrester Research Inc. estimates that retailers of all sizes spend about $6.1 billion annually on e-commerce products and services. In comparison, healthcare organizations—including hospitals, health insurance companies, doctors, laboratories, pharmacies and drug makers—are expected to spend $32 billion annually on digital healthcare technology and related services by 2021, according to investment banker Goldman Sachs. They are spending about $10 billion now, or about 10% of the estimated $100 billion healthcare spends annually on information technology, says Goldman Sachs.

A larger dose of e-commerce

BY MARK BROHAN

For many e-commerce service companies, healthcare might well be described as the holy grail of industry markets. After all, by sheer size and diversity, the market for digital healthcare, which includes e-commerce, mobile, database and customer service and customer relationship management among others, is estimated to be about five times bigger than the market for business-to-consumer e-commerce services.

Despite complex challenges, more e-commerce and web services vendors want in on healthcare.

35

INTERNET HEALTHMANAGEMENTVENDORS | HEALTHCARE E-COMMERCE OPPORTUNITIES


The digital healthcare market is certainly drawing interest and cash from investors. Investors pumped $2.7 billion into digital healthcare in the second quarter, up by nearly 60% from $1.7 billion in the second quarter of 2016, says Mercom Capital, a healthcare technology research firm.

But it takes careful planning, plenty of resources, and patience to deal with entrenched ways of doing business and lots of red tape to make a successful run at the digital and healthcare e-commerce market, note e-commerce analysts. And not every startup or established company gets everything right the first time out.

“Getting into healthcare is not for the faint hearted,” says Gene Alvarez, managing vice president and analyst at Gartner Inc. “It’s a big, fragmented and heavily regulated industry that takes time, money and a really well thought out strategy to pull off a new technology product or service.”

Many vendors that established a successful customer base in online retailing have already expanded into the healthcare market and are looking to grow. That includes such vendors as Akamai Technologies Inc., a developer of content delivery networks, cloud computing and web security products and services; website design and development firm Americaneagle.com; e-commerce platform provider Magento; Salesforce.com Inc., a developer of customer relationship management and related products and services , retail management consulting firm BRP and e-mail services vendor MoreVisibility.

A recent survey of e-commerce vendors by Internet Retailer found 68% of vendor respondents considered getting into the healthcare market a “very important” or “important” priority. The survey, which garnered a detailed response from 29 e-commerce technology product and services companies, also found that 54% of e-commerce vendors have plans to begin selling their products and services to healthcare organizations such as hospitals, doctor groups and insurers within the next six months.

Spending money to make moneyDigital healthcare investments

Q2 2016 Q2 2017

$1 .7 billion $2 .7 billionSource: Mercom Capital


36



72% of e-commerce vendors also said the primary reason for getting into healthcare is to develop a new revenue stream. Some of the biggest names in consumer brand manufacturing, internet services and online retailing are ramping up their healthcare businesses. For example Apple Inc. has three software services, including CareKit, ResearchKit and HealthKit, for the healthcare market aimed at making it quicker and easier for mobile technology developers and consumers to collect and share healthcare data such as steps and heart rate. HealthKit is designed to make it easy for consumers to collect and then share health information with academic hospitals. Meanwhile, Mount Sinai in New York uses ResearchKit to gather and share medical research for clinical trials and CareKit builds mobile apps that enable patients to manage their health and medical conditions and share the data with physicians.

Amazon, Apple and Google like healthcareGoogle and Amazon.com Inc., the largest online retailer, also are developing more products and strategies aimed at healthcare. In August Google acquired Senosis Health, a Seattle startup that develops apps for monitoring a newborn for jaundice, lung function and blood hemoglobin by using the smartphone’s camera and microphone. Amazon’s biggest move into healthcare thus far has been through Amazon Web Services, its highly successful business unit that offers other companies and government agencies data storage and computing capacity. Since 2014 Amazon Web Services has provided cloud computing and network support services to Healthcare.gov, the health insurance e-commerce network operated by the Centers for Medicare and Medicaid Services, a division of the U.S. Department of Health and Human Services.

Amazon may also be planning a bigger move into healthcare. In a series of stories, the latest of which ran in late July, CNBC reported that Amazon.com has quietly assembled a research and development staff named 1492 and is working on developing a slew of digital healthcare applications that may include electronic health records designed for easy sharing and telemedicine applications that digitally connect patients and doctors. In May, CNBC

‘Getting into healthcare is not for the faint hearted. It’s a big, fragmented and heavily regulated industry that takes time, money and a really well thought out strategy to pull off a new technology product or service .’

—Gene Alvarez, managing vice president and analyst at Gartner Inc.


37



reported that Amazon also was developing possible plans to get into the online pharmacy business, which would put the leading online retailer in direct competition with the likes of Walgreen Co. and CVS Health Corp. or startups such as Pillpack.com.

Amazon hasn’t publicly stated what it may do in digital healthcare. But even a big company like Amazon must evaluate the risks and rewards of potentially significant new revenue from healthcare e-commerce, says Dan Housman, a director with Deloitte in Boston and chief technology officer at ConvergeHEALTH by Deloitte, which applies new technologies such as mobile, geospatial, wearable/sensors, cognitive computing and predictive modeling applications to healthcare.

“There are very significant barriers to entry and they range from learning to operate in a highly regulated industry, having to comply with patient privacy laws and knowing which healthcare segment to sell to,” Housman says. “It’s a very complex process to introduce a new technology or service into healthcare.”

Putting skin in the game54% of e-commerce vendors target hospitals and health systems as their primary new business prospect in healthcare, followed by insurance companies and physician groups at 21%, respectively, the Internet Retailer survey found.

54% of respondents also said that learning the complicated and segmented healthcare market was their top challenge. That outpaces the 38% who cited the difficulty in dealing with red tape and government regulations. 38% also named adapting their company’s e-commerce product or service for healthcare as a challenge.

Difficult prognosisTop challenges for healthcare e-commerce vendors

Source: Internet Retailer Survey

Complicated and segmented

healthcare market

54%

Red tape and government regulations

38%

Adapting company’s

product or service

38%


38



Akamai, a provider of content delivery network services to 338 Top 1000 retailers crossed into healthcare by signing its first customers about five years ago among pharmaceutical and life sciences companies. “The market was different but the need was the same because these healthcare companies wanted and needed more than just basic connectivity,” says Ari Weil, Akamai strategic product and marketing leader.

While Akamai, which generated total revenue of $2.34 billion in 2016, doesn’t breakout healthcare revenue, Weil says healthcare is one of the company’s largest emerging vertical markets. Akamai is developing a steady stream of healthcare customers that include nine global pharmaceutical companies, more than 20 medical device manufacturers and large hospitals such as St. Jude Children’s Research Hospital. St. Jude’s uses Akamai to maintain its domain name servers, for network storage space to store files and documents, and for firewall protection services for its website that attracts 12.1 million visitors per year including 7.6 million mobile visitors.

Five years of business development in healthcare has taught Akamai how to build market share by identifying and helping healthcare companies solve specific problems, Weil says. For example, it helped Practice Fusion, a cloud-based electronic health records vendor based in San Francisco, improve its network traffic management for an electronic records network used by more than 30,000 medical practices and 5 million patients per month.

Physicians and medical professionals use the electronic health records system for patient charting, writing electronic prescriptions, ordering laboratory tests, appointment management and making referrals. The system’s lab, imaging and billing modules integrate with a network of third-party pharmacies, laboratories, medical imaging centers and medical billing services. Patients also access their personal health records, including prescriptions, diagnoses and test results, and can search for a physician by location and specialty as well as request an appointment online via the Practice Fusion system.

‘The market was different but the need was the same because these healthcare companies wanted and needed more than just basic connectivity .’

—Ari Weil, strategic product and marketing leader, Akamai


39



But Practice Fusion needed to better handle traffic surges, particularly in the early to late morning when doctors and nurses did the bulk of their electronic records work. Practice Fusion hired Akamai because the company had a good reputation in other industries and helped to install software and services that expedited network performance and better supported traffic from mobile devices, says John Hluboky, Practice Fusion senior vice president of technical operations. “Akamai had an industry reputation and previous experience,” he says.

The consumer is kingMore consumers are looking to take more control of their healthcare decisions, which is opening up an opportunity for mobile health companies to provide quick and easy access to healthcare services, according to a new report by consulting and research firm Accenture.

Accenture calls such services on-demand health. These services provide consumers with mobile health platforms and apps that allow them to use their web-enabled smartphone or tablet to schedule and conduct doctor visits or manage their health and wellness outside of a hospital or provider office. In 2015, U.S. consumers spent $12.5 billion on all types of on-demand services. Most of that spending, $7.8 billion, went to transportation services like Uber that let consumers request rides through mobile apps and bill the cost of the ride to a credit card.

But healthcare is among the fastest-growing types of on-demand services, Accenture says. In 2015, U.S. consumers spent an estimated $639 million on scheduling and conducting digital doctor visits, Accenture says. This year spending on digital provider, or telehealth sessions that take place on a mobile device could exceed $1 billion, the report says. “Accelerating forces will continue to transform the industry, speeding the transition from

$639 millionSpending on scheduling and conducting digital

doctor visits by U.S. consumers in 2015Source: Accenture


40



healthcare to life care,” says Kaveh Safavdi, Accenture senior managing director for global health. “There’s an enormous opportunity for companies to offer fast, convenient and customized user experiences that ultimately improve the patient’s experience and outcome.”

Many e-commerce vendors have the established software and service products healthcare organizations need to offer patients and consumers more self-service web tools to manage their health, wellness and health business online, says Ashraf Shehata, a partner in the Global Healthcare Center of Excellence at KPMG US.

But selling e-commerce technology and services in healthcare is far different than selling to retailers and financial services companies, he says. For instance, many healthcare chief information executives are spending money and staff time maintaining older and on or poorly integrated legacy systems. “They are still focused on maintaining what’s inside the four walls,” Shehata says.

Many healthcare organizations also are used to information technology project implementations and timelines based on a five- to seven-year circle and may not be used to fast track web technology projects that often use a two- to four-year planning and implementation cycle. “Consumers want and expect more web access across healthcare but healthcare is way behind compared to other industries and there is resistance to change,” Shehata says.

One way e-commerce vendors can expand their base in healthcare is to leverage their products in integrated and flexible ways that can help healthcare organizations and hospitals automate multiple tasks at once.

For instance, customer relationship platform provider Salesforce is betting a bevy of new tools for its Health Cloud platform, and an expanding list of application development partners, will equip healthcare providers with the technology needed to put the patient relationship at the center of care delivery.

‘Consumers want and expect more web access across healthcare but healthcare is way behind compared to other industries and there is resistance to change .’

—Ashraf Shehata, partner in the Global Healthcare Center of Excellence at KPMG US


41



A newcomer to digital healthcare technology—Salesforce rolled out Health Cloud in 2016—Salesforce made the enhancements in response to the many challenges facing providers in the current healthcare landscape, such as identifying their most at-risk patients and engaging with them in more personalized ways, the company says.

Pricing for Salesforce Health Cloud starts at $150 per user, per month, the company says. Among the early customers using Health Cloud is Easter Seals Bay Area in San Francisco.

The enhancements are intended to help providers improve practice management and develop better one-to-one patient relationships that pave the way to a higher quality of care.

“In healthcare, the potential of CRM remains untapped,” says Joshua Newman, chief medical officer at Salesforce. “While individuals have always cared about patients, the organization and its systems have neglected the patient experience. This has bred disconnected care and disjointed relationships, and made effective collaboration difficult.”

By adding customer relationship management tools for Health Cloud, physicians can understand the person behind the patient, while achieving meaningful clinical and administrative outcomes, Newman says.

With insurance carriers moving toward outcome-based reimbursements, the need for providers to view risk across their patient populations to proactively deliver preventive care before a patient lands in the emergency room or hospital is growing exponentially, Newman says.

Health Cloud’s risk stratification app uses analytics to calculate risk scores for each patient based on the Centers for Medicare and Medicaid Services hierarchical condition category mode, the company says. “Providers can view

Doctors can identify their most at-risk patients and engage with them in more personalized ways with the Salesforce Health Cloud: Risk Stratification app.


42



risk across their patient population in customizable dashboards to provide targeted preventative care to the patients who need it the most, while gaining new insights into the populations they serve,” Newman says.

The ability to gauge patient risk will make it easier for providers to segment patient populations and target them for outreach. A provider using Health Cloud’s segmentation feature, for example, can identify patients 65 or older with diabetes, or patients who have been discharged from knee surgery in the last 30 days, and send follow-up appointment reminders, surveys or educational materials to those patient populations.

While improving the quality of care and patient relationships are priorities for providers, medical practices, like any business, still need to attract new customers in order to grow. Health Cloud’s lead-to-patient app can be integrated with other Salesforce applications, as well as electronic health records, data warehouse and patient registration systems, or call centers. Once patient data is entered in Health Cloud, providers can use it to create unique care plans and map patient relationships, Newman says.

“Hospitals are learning to treat their patients as customers and healthcare is a referral business,” Newman says. “That’s how CRM technology can be leveraged for additional uses.”

Despite the healthcare market’s complexities, more e-commerce technology and services providers will look to the space as a potential big new market. For example, 48% of respondents to the Internet Retailer survey said they view healthcare as a market comparable to retail for their web or e-commerce product or service.

But in making the move to healthcare, consistency is the top goal before many others for most e-commerce vendors, Alvarez says. “In retail if a delivery is missed it isn’t life or death,” he says. “In healthcare it is life and death. If a patient is depending on a vendor system to deliver oxygen to a patient who needs it, that system always has to work or someone’s in trouble.”

‘In retail if a delivery is missed it isn’t life or death . In healthcare it is life and death . If a patient is depending on a vendor system to deliver oxygen to a patient who needs it, that system always has to work or someone’s in trouble .’

—Gene Alvarez, managing vice president and analyst at Gartner Inc.


SURVEY


44

INTERNET HEALTHMANAGEMENTSURVEY | HEALTHCARE E-COMMERCE OPPORTUNITIES


Less than 6 months

53.8%

6 months to 1 year

23.1%

1 to 2 years

23.1%

Yes 42.9%

Yes 81.3%

Yes 42.9%

No

Identifying opportunity in healthcare e-commerceAre you currently selling your e-commerce product or service to the healthcare industry?

How long have you been selling to the healthcare industry?

Do you plan to sell your e-commerce product or service

to the healthcare industry?

When do you expect to begin selling to the healthcare market?

No 5 7.1 %

Less than 2 years

2-3 years

3-5 years

More than 5 years

0% 25.0% 25.0% 50.0%

1 8.8 %


45



How important a strategic priority is selling your e-commerce product or service in healthcare?

Who are you targeting as your top customers in healthcare?

What are your primary reasons for selling or planning to sell your e-commerce product or service in healthcare?

Multiple responses allowed


Somewhat important

Important

Very important

32%

32%

36%

Healthcare organizations are

approaching us to use our technology product

or service

32%

We have expertise selling to the

healthcare market

36%

Healthcare is a market comparable to

retail for our web or e-commerce product

or service

48%

Opportunity for significant new revenue stream

72%

Hospitals, health

systems or health networks

Medical device man-ufacturers

Pharma-ceutical

companies and

pharmacies

Medical equip-

ment and supplies

retailers and wholesalers

Biotech-nology and life science companies

Insurance companies

Physician group

practices

Laboratories Employers

54.2%

25.0%33.3%

20.8%

41.7%

20.8%

33.3%

12.5%4.2%


46



Learning a complicated and segmented new market

54.2%

Red tape and government regulations

37.5%

Adopting our e-commerce product

or service for healthcare37.5%

Finding employees with healthcare

experience

20.8%

Industry consolidation

resulting in fewer companies

12.5%Dealing with

longer project timelines and

deadlines

12.5%

Uncertainty over healthcare

reform8.3%

Finding expansion

funding4.2%

What kind of executives are you targeting?

What are the biggest challenges you face selling to the healthcare market?

Will you increase your marketing and advertising budget to target more healthcare customers?



Chief Marketing Officer/SVP/ EVP/Director of marketing 56.5%

CEO/ President 52.2%

Chief Operations Officer/Chief Financial Officer/Other operations title 43.5%

Chief Information Officer/ Information technology executive 30.4%

Yes50%

No50%

Source: Internet Health Management July 2017 survey. Respondents included detailed results from 29 e-commerce technology product and services companies. For certain questions, respondents were allowed to pick multiple answers.


47



CopyrightCopyright 2017, Vertical Web Media LLC. All rights reserved. All Content of the Internet Health Management 2017 Healthcare E-Commerce Opportunities Report, whether in print or digital formats, and all content of the Top500Guide.com database version of this publication (collectively, the “Content”), is owned by Vertical Web Media and protected by U.S. Copyright and by applicable intellectual property laws worldwide. The Content is intended solely for the personal use of Purchasers or Authorized Recipients of said Content, which use is limited to viewing, analyzing and creating reports for internal noncommercial use only.

Purchasers and Authorized Recipients of the Content may share such usage with others within his/ her company, but may not copy, download, reproduce, republish, sell, make available, distribute, display, transmit, share, or otherwise distribute any part of the Content to any other persons or entities without the written permission of Vertical Web Media. Purchasers and Authorized Recipients of the Content, in any and all of its formats, may not modify, create derivative works of, reverse compile, disassemble or reverse engineer, republish, sell, license, lease, sublicense, assign, incorporate into published material or any information retrieval system, or otherwise transfer any of the Content without written permission of Vertical Web Media. The trademarks and service marks “Vertical Web Media”, “Internet Retailer®”, and “Top 500 Guide®”, and any logos, designs, slogans or other source-identifying devices, including combinations thereof (excluding any third party owned trademarks or service marks) (“VWM Trademarks”) displayed on print, digital and Top500Guide.com database research products are owned by Vertical Web Media. Internet Health Management 2017 Healthcare E-Commerce Opportunities Report print, digital and database research product is designed to provide accurate and authoritative information in regard to the subject matter covered. This research products is sold with the understanding that the publisher is not engaged in rendering financial, legal, accounting, tax or other professional service. Vertical Web Media makes no warranty as to the reliability, accuracy, timeliness, usefulness, adequacy, completeness or suitability of the Internet Health Management 2017 Healthcare E-Commerce Opportunities Report.


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