Transcript Handouts
IT and Market Dynamics The (R)Evolution of Technology Class 6: ISM P3 January 2005 The Imaging Healthcare Problem 450 million imaging studies a year X $35 life time cost per study = $15 billion cost 50% of imaging studies not available to physicians when needed 15% of imaging studies permanently lost 4% expected annual increase of imaging studies Class 6: ISM P3 January 2005 Information Flows: The “Enterprise” Problem Hospital IS (Billing, Patient data) Referring Physician 50% not online Pre Radiologist 15% lost Patient Radiology X-Ray Hospital IS (Billing, Patient data) Referring Physician Integration & Storage Patient Radiology X-Ray Class 6: ISM P3 January 2005 Post Radiologist Information Products: New Economies of Scale and Scope Ease of versioning: different people can receive it in different forms – new economies of scope Ease of large scale distribution: low cost of production and logistics – new economies of scale Class 6: ISM P3 January 2005 The Failure of PACS High cost (only radiologists in large hospitals could afford it) Many IT integration issues with existing IT Lots of new IT infrastructure needed, such as information storage systems New technology risk (e.g. for small hospitals) Class 6: ISM P3 January 2005 Why would MI say ”no” Focus on current market, radiologists in large hospitals. A small market (physicians in small hospitals) is too small for a large company Focus on improving current PACS technology Focus on increasing services to current market (more services = more $) Fear of cannibalizing their current market Class 6: ISM P3 January 2005 What “Wise” People Said… 1. “I think there is a world market for maybe five computers” Thomas Watson, chairman of IBM, 1943 2. “There is no reason anyone would want a computer in their home” Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977 3. “The horse is here to stay. The automobile is only a novelty, a fad” The President of Michigan Savings Bank telling Ford’s lawyer not to invest in the Ford Company, 1903 Class 6: ISM P3 January 2005 Stakeholders Stakeholder Key Issue Radiologists “Funky functionality” Referring Physicians Images accessibility Reasonable resolution Small Hospitals Cost Integrate with current IT Risk averse to new IT Large Hospitals High resolution High quality services to radiologists Cost Incumbent (General Electric) Increase radiologists market share Improve current technology Increase radiologists’ services (= more $) Class 6: ISM P3 January 2005 Stentor’s Market Entry Approach “Attack from below” Serve the less demanding physicians (“enterprise market”) in small hospitals Avoid competition – it’s a virgin space Low-cost/Low-risk proposition ASP model: pay per use, rent not buy Installed at zero cost over the internet 30 days free trial option Hardware, if needed, provided at cost Minimize IT integration problems Use existing IT with minimal changes Consider moving in the more demanding market of radiologists later, using revenues from the entry market Class 6: ISM P3 January 2005 Entering the high-end market: Key Challenges 1. Technology: – Can iSyntax technology move up-market? 2. Service: – Stentor ranks lowest in market (implementation, support, monitoring, etc) 3. People: – Many engineers, poor product understanding by operations and sales people 4. Vision, Mission, and Culture: – A focus on Product and Technology Class 6: ISM P3 January 2005 Challenge #1: Technology Improve key technology features Possible once you have the money from the initial market (physicians) to support technology improvements for the high-end market (radiologists) Increase functionality Achieve high technology reliability Increase resolution performance Class 6: ISM P3 January 2005 Challenges # 2+3: Service and People Recruitment of a COO (ex-EDS manager) Build a new services organization Develop large IT implementation capabilities (training, testing, etc) Provide excellent 24/7 IT monitoring, support, and maintenance Manage technology upgrades Class 6: ISM P3 January 2005 Stentor’s Organisation 2001 CEO CEO Engineering Engineering CTO Sales/Mktg Tech Support QE*Eng Quality Operations Operations VP Level Senior Director Level Director Level Manager Level Jumior Level Class 6: ISM P3 January 2005 Stentor’s Organization 2002 CEO Engineering CTO Marketing COO Sales QO* OPS SA **** QE** TS*** 24 members 1 Senior director 2 Managers *QO=Quality Operations**QE=Quality Engineering ***TS = Technical Support Class 6: ISM ****SA = Strategic Alliances P3 January 2005 A Clear Implementation Procedure Class 6: ISM P3 January 2005 A Technology Monitoring System Class 6: ISM P3 January 2005 Challenges #4: From Product to Service Centered Stentor’s Mission 2001: To deliver customer- focused, high performance, medical information solutions Stentor’s Mission 2002: To Improve Patient Care Class 6: ISM P3 January 2005 Key Lessons Technology’s evolution is shaped by the dynamics of : – The different (types of) stakeholders/users/markets – The differences in the needs and technology risk profiles of the different stakeholders – The difficulties of integrating the new technology within the current technological infrastructure An entry strategy of new technologies: – Enter a (often new) less demanding market: “attack from below” – Provide a low cost and low risk proposition – Minimize integration issues with existing IT infrastructure The “natural” evolution of new IT - Improve key functionality features - Move from product to service … and (as always) the power of IT to transform healthcare through digitization: dramatic cost reduction, improved service Class 6: ISM P3 January 2005 Next Class Internet, Technology, Society Adopting IT at the societal level Assessing the social IT readiness Class 6: ISM P3 January 2005