Ecommerce on Healthcare Sector

The healthcare industry, with more than one trillion dollars in revenue, accounts for about one-seventh of the U.S. economy. A significant portion of this revenue is lost to escalating healthcare system costs. This article examines the shortcomings of the traditional healthcare delivery system in terms of information flow, communication standards, case collections, and IT spending. It makes the case that e-commerce has the ability to transact some healthcare business more efficiently and cost-effectively. With the Internet as a delivery platform, several models offer improvement over the status quo.

The Internet has created both opportunities and threats that providers of all stripes must eventually confront to remain viable businesses in the new economy. Although business-to-business (B2B) innovations offer great hope in reducing costs and providing other efficiencies, electronically connecting with patients is a particularly challenging frontier where technical hurdles are generally exceeded by political, legal, workflow, and other barriers. However, the rise of consumerism compels a response—one focused on the needs and demands of the patient.

Consumerism has been building for several years. It represents a subtle shift from selling to buying in the economy. Informed consumers are largely in charge of an increasing number of transactions and acts, according to their perceived needs. This is especially evident with commodities; the layers of organization between manufacturers and consumers have been reduced to the absolute minimum, with a thinning overall margin. Conducting such transactions over the Internet exposes consumers to new ways of communicating with purveyors of products and services, e-mail being a simple but stand-out example.

These experiences are shaping consumer expectations, which are spilling over to healthcare, albeit slowly and with continuing debate. Changes in consumer attitudes have been fueled by the increasing access and availability of information, again, as a result of the Internet. In healthcare, informed consumers are both better enabled and are demanding to be more involved with decision making that involves their health or that of loved ones. Very often the impetus is a life-threatening or serious illness when information—from any source—is of vital interest.

Day in and day out, however, simple conveniences and respect for precious time are potentially more relevant as patient satisfiers. Why should it take half a day of inconvenience for ten minutes of service? Few have that kind of time today, and wasting time is offensive, even to those who do. How should providers respond? Where should initiatives be focused, and what are the critical components of success? Are the underlying business models of various market solutions financially sound? Will they endure and grow? How will personal health records factor into solutions? Who will “own” those data, and who will be charged with the responsibility for managing them? Unfortunately, the answers to these questions are anything but clear.

Nevertheless, the possibilities of current technology and successes in industries other than healthcare are, along with consumerism, a collective and serious call to action. Such has been suggested elsewhere. Providers must overcome fear, procrastination, need for perfection, and searches for the “killer app,” as delay itself has its own set of risks.In the short run, response is a matter of getting started to overcome inertia and uncertainty. One must conclude that there is a critical mass of motivating factors, recognize the real disadvantages of the status quo, and set about a sensible course of action.

In the long run, it’s truly business survival that has an impact on traditional economic measures of revenue, costs, and market share. However, the ultimate by-products of these activities may be of greater importance, including an evolving electronic infrastructure for healthcare information, secure longitudinal medical records, comprehensive disease management, wellness, and an increased responsibility for health placed on the patient. Healthcare e-commerce involves transactions and the exchange of information among vendors, hospitals, insurance agencies, state and federal regulators, and doctors’ offices.

Patients, the end consumers, are not directly involved. Forrester Research estimates that by 2004, $2.7 trillion worth of business, accounting for 17 percent of the total economy, will be conducted via B2B e-commerce. The B2B on-line healthcare market is estimated to rise in value from $6 billion in 1999 to $348 billion in 2004, making it one-sixth of the overall trade in the healthcare industry.63The primary emphasis of B2B e-commerce is on the supply chain. B2B strives to accomplish three goals: improve efficiency, reduce transaction costs, and provide real-time information to all concerned.

Efficiencies are improved typically by simplifying the delivery of health-care. Multilayer approvals are abolished and replaced by simpler and faster ones by using artificial intelligence technologies. Inventories are better managed and tracked by locating them centrally and sharing information on usage and future demands. Proactively managing illnesses and implementing preventive health maintenance measures helps avoid prolonged hospital stays. For instance, ePhysician.com allows physicians to write prescriptions online using palm tops. Physicians can interact with clinical systems not just to write prescriptions but to order lab tests and view patient information. Vendors such as Claimsnet.com allow providers to submit claims online to payers; it uses only one standard for claims submission.

As an example of order processing, e-commerce would enable the healthcare provider to swipe a client’s health insurance fund membership card on a dialup terminal, enter the appropriate data, and immediately receive payments for the fund’s contribution to the service provided; the client then pays the balance. Reduction in transaction costs occurs by reducing the costs of executing purchase orders with vendors, reducing the costs of payment of goods and services, and reducing the cost of transfer of vital information. These are all generally accomplished by pooling together the requests of different departments or groups to qualify for quantity receiving discounts, getting the latest pricing information, and using the Internet to process all transactions.

Agreement of companies like empactHealth.com with Health Management Associates (HMA) and Columbia/HCA that exclusively use the empactHealth.com’s online requisitioning, ordering, and purchasing network for all medical and nonmedical supplies and services, is an example of this. B2C healthcare e-commerce is an electronic marketplace designed to inform healthcare users about medical products and services.

The ultimate objective of B2C e-commerce is to either save future treatment costs by better educating users or generate revenues through sales of products and services. Among the changes sweeping B2C healthcare e-commerce is the blending of on-line customer service and a friendly voice on the phone; this is, in fact, occurring on the Web. Voice-over–net Protocol gives customers the opportunity to connect with service representative’s right over the phone. Nine-to-five (9/5) days are slated to be replaced by service twenty-four hours a day, seven days a week (24/7).

20To achieve its objectives, B2C e-commerce relies on creating attractive sites with easy-to-execute purchase transactions, organizing electronic discussion forums or chat groups, and providing privacy features to guard against theft of personal information. For instance, Portland’s e-health companies in the Sapient Health Network (now a part of Healtheon/WebMD) used the Internet as a forum visited by patients, doctors, nurses, and therapists for research and information sharing. Its next proposal is to electronically link patients with data from doctors, pharmacies, health plans, laboratories, hospitals, and alternative medical practitioners. The goal of these endeavors is to help improve customer satisfaction, enhance the quality of care, and reduce healthcare costs.

Another example of B2C e-commerce is insurance shopping on the Web. As increasing number of employers are leaning toward “defined contribution” plans that give workers the right to assume responsibility for their own healthcare, with the employer contributing a preset amount, workers are scouring the Web looking for the best deals. The Web traffic for online insurance shopping is getting a boost from self-employed people, part-time workers, and small business owners.