HealthBond - Krohn

Rick Krohn

Nationally, physician networks are in the midst of a period of self-appraisal and adjustment to an evolving healthcare marketplace. New technologies are allowing network planners to integrate practices and facility based providers in new and innovative ways. The cornerstone of this networking strategy is to link network members informationally and clinically through the creation of a virtual medical network. By leveraging existing systems and the Internet, the virtual network can establish shared business and clinical services within a broader context of geographic and clinical access, and within a reasonable expense budget. The virtual network expands core competencies, encourages growth through provider partnerships, and promotes competitive advantages without burdensome capital demands or formal organizational consolidation.

But what exactly is a virtual network? The term virtual networking is often misinterpreted to describe a spin on the traditional matrix organization. In fact, it is a unique linkage between providers at any location utilizing Internet and information technologies, and requiring relatively simple physical resources. These linkages occur primarily through online connectivity rather than physical infrastructure, and feature the following advantages:

· easy to implement - the infrastructure is already in place, browser technology creates universal access

· widely accessible, user friendly - anyone with a phone line and computer can belong to a virtual network, and the learning curve to take part in virtual networks is very brief

· a natural application of Internet technology - health care is an obvious application of a technology that supports wide access, shared information, and cost efficient connectivity.

Because the commercial growth of the Internet is still a relatively recent phenomenon, some terms used here deserve further explanation.

Virtual Integration - a method of fostering communication and economic alliances between discreet elements of healthcare finance and delivery based upon shared access to financial, clinical, and statistical information

Internet - a global network of standardized microcomputer and communications technologies

Intranet - an internal network of standardized electronic information resources (usually a single or linked organizations)

Extranet - a wide access network of standardized electronic resources (usually a professional community or public access)

Browser Technology - a standardized, user friendly information retrieval and processing technol-ogy

Virtual networks may be proprietary and private (and Intranet) or an open access platform targeted to specific audience (an Extranet). In both configurations the virtual network is driven by browser enabled access (such as Netscape). In practice, the virtual network allows electronic transmissions conducted over the Internet to replace almost any process, communication, or transaction that otherwise would occur by phone, fax, or mail.

Virtual Network Characteristics

A virtual network is not an asset consolidation, and at the moment is effected by some significant flaws - for instance the Internet it is not entirely secure, bandwidth (the amount of Internet traffic that can be handled) remains a problem, and currently date there is no effective regulatory mechanism to govern quality and reliability of information on the Internet. These issues are being addressed however, and the explosion of Internet based technologies will promote the deployment and proliferation of virtual medical networks.

Initially, virtual networks tend to offer contract management services such as claims processing and referral management, online eligibility verification, and also offer clinical management services such as demand and disease management programs, shared data warehousing and outcomes development, a secure medical Intranet and email capabilities. Advanced virtual networks offer interactive educational, diagnostic, and ecommerce services. The unique advantage of this approach is that network members achieve a high degree of clinical and administrative integration without surrendering significant autonomy - because there is no formal economic integration of the underlying member practices. More advanced virtual networks connect payers, providers and health care consumers in cost effective, resource efficient ways.

Internet acceptance and usage has eclipsed all previous media technologies in terms of growth.

The virtual network allows providers to collect, interpret, and share information of all types and sourced from any linked location. The virtual network can conduct physician office processes, such as billing and claims management, registration and scheduling, eligibility and authorizations, and promotes physician communication and education. The virtual network can also support practice based clinical services, such as wellness and prevention, protocols and guidelines, data warehousing and data mining, patient communications, and physician credentialling. In a hospital setting, the virtual network can create linkages among often isolated, internally focused departments such as the emergency room, intensive care units, pharmacy, lab, surgery, and care units. In any setting one of the key value proposition of the virtual network is connectivity - the ability to share information in ways that improve the quality of care, coordinate health care resources efficiently, and encourage a more interactive clinical culture.

In the virtual healthcare network, there are three main constituencies: institutional (managers), providers, and health care consumers.

In strategizing the virtual network its vital to evaluate the membership, customer base, and growth track of network services. . The network must have the talent, resources, bandwidth, and scalability to build out the membership and customer bases as the network grows and transforms itself during its maturity phases of development. .

Ecommerce and the Virtual Network

Beyond the initial stage virtual networks, where the strategic focus is placed upon creating arch-tecture to support clinical operations, there is a corollary opportunity to push the network into new and profitable avenues of economic activity. Its been estimated that 25% of each health care dollar is consumed by back office activity, a substantial portion of which is duplicative and unnecessary. If those activities can be conducted electronically and collaboratively in a network environment, then the accumulation of the information needs to occur a single time. As mentioned earlier, these types of processes include online eligibility, claims submission, referral management, and other time and resource intensive procedural tasks. These tasks can be streamlined in obvious ways: preprinted electronic forms, real time patient account inquiries and updates, appointment/ medication reminders, and more.

The health care Ecommerce industry is expected to grow to $3 billion by 2001. This will consist largely of business-to-business transactions; mainly online purchasing of supplies, drugs, medical devices, and value added health care products. But additional opportunities will present as the network expands beyond its core constituents and markets products and services directly to the healthcare consumer. The opportunity to market the virtual network to the consumer should not be underestimated: to date over 70 million Americans have searched the web for health information (Louis Harris poll) and "Direct to Consumer" ("DTC") is going to recast the relationship between health care seller, health care provider, and health care consumer.

Wireless Technologies and the Virtual Network

Because healthcare delivery, particularly in a facility setting, occurs in many locations, with variable degrees of access to electronic media, the development of wireless Internet technologies has firmly taken root. These technologies have clear applications in the virtual network, by allowing information to be captured and retrieved at the point of care, in ever more innovative ways. Handheld computers, mobile workstations, object oriented technology, plug and play, haptic technology, voice recognition, are all examples of ways in which virtual networks can take advantage of Internet based technologies that clearly lend themselves to health care delivery. This trend is further borne out be the fact that healthcare currently represents over half the market for Windows CE devices.

To date physicians have shown only a modest inclination to embrace Internet based technologies. A fraction of physicians regularly use patient email, and a similar few refer patients to health care information on the Internet. This barrier to market entry must be breached if the virtual network is to achieve its fullest potential. Physicians must be compelled to accept the new technologies and network culture because its faster, cheaper, easier, and supports the mission of providing quality care. Network managers must also recognize - and target as their customer - the health care consumer. As information becomes more accessible, and consumer choice plays an expanding role in health care provider selection, the virtual network must seek out and capture the health care consumer by branding, quality, and perceived value. Finally, the issue of patient information secu-rity must be resolved to even the most skeptical patient's satisfaction if the network is to gain the trust - and the business - of the health care consumer.
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Richard Krohn is a member and contributor of HealthBond. View his expert page on HealthBond.

Richard Krohn is President of HealthSense. Krohn is a widely-published managed care expert as well as a dynamic speaker providing in-depth, practical and timely information on topics such as managed care contracting, strategic positioning for provider organizations, building new provider alliances, reengineering practice operations, developing market driven products, and creating equitable physician compensation plans.

December 14, 2000