eHealth: Business Models and Impact
Sean Nicholson, Ph.D.
206 Colonial Penn Center
3641 Locust Walk
Office hours: Thursdays, 3:00 - 4:30
Jeff Goldsmith, Ph.D.
Health Futures Inc.
P.O. Box 5305
Charlottesville, VA 22905
Information is vitally important in the health care industry. Physicians use clinical
information to diagnose and treat patients; health insurers use extensive claims databases to price
their product and manage costs; pharmaceutical firms use genomics databases to identify new
drug candidates; and consumers are increasingly using the internet to learn about treatment
alternatives, search for providers, and transact with health insurers. New information
technologies, such as the internet, handheld devices for physicians, telemedicine, and remote
monitoring devices, have the potential to change how medical care is delivered, increase
efficiency, and restructure the relationships between the major players in the health care industry.
Unfortunately, many health care firms and many consumers have failed to fully exploit the
benefits of information technology.
(1) to understand how developments in information technology are changing the
economics of the health care industry
(2) to evaluate how established players are incorporating these new technologies;
(3) to evaluate the strategies and business models of start-up information
Format of Class Sessions
- the class will meet once per week: Tuesdays from 3:00 - 6:00.
- for many sessions, the first half of the class will be devoted to a lecture/discussion
and the second half to a presentation by a guest speaker. Most guest speakers will
describe how their company uses information technology and how information technology
affects their business model.
- Information Rules: A Strategic Guide to the Network Economy, 1999. Carl Shapiro and Hal
R. Varian. Boston: Harvard Business School Press.
- articles from the course pack, which is available from Wharton Reprographics
Although there are no prerequisites for the course, students are encouraged to take
HCMG 841 (or a similar course) prior to enrolling in this course for a detailed examination of the
structure and operation of the U.S. health care system.
Students should form into groups of 3 to 4 people. Students/teams will be responsible for
a) Analysis/critique of 3 guest presentations: for 3 different guest speaker presentations during the
semester, teams should critically analyze the presentation in a write-up (3-5 pages). Do you agree
or disagree with the presenter’s main points and conclusions? Why or why not? How would you
change how the speaker’s company is developing their product or applying new information
technologies? Are there other potentially viable applications of the information technology that
the presenter did not describe? At least 2 of the 3 write-ups are due by April 1, and all 3 are due
by April 22. (team assignment)
b) A project: The format of the projects is flexible but must be approved by the instructor. Each
team should turn in a short proposal describing your project by February 4. Examples include a
paper analyzing the current status and projected outlook of a particular company or information
technology, or a business plan for a company that uses an emerging health care information
technology. Teams will present their project to the class during the last session. Due on
April 22. (team assignment or individual assignment)
[Note: you can be on a different team for the project than the critiques, but must remain on the
same team for all 3 critiques].
c) Participating in class discussions. (individual assignment)
Written critique of guest speakers (3) 25%
Team project and presentation 60%
Class participation 15%
January 14 Impact of Information Technology on the Economics of the Health
- reduced search costs and transactions costs
- network effects and “tipping”
- dis-intermediation and re-intermediation
- reducing degree of asymmetric information between physicians and
patients, offering a greater role for patients in medical decision making
- technology adoption lifecycle
- Shapiro and Varian, Chapter 1 and Chapter 7.
- Porter, “Strategy and the Internet,” Harvard Business Review, March-April 2001.
- Nolan, “Information Technology Management From 1960-2000,” Harvard Business
School Note, 2001.
January 21 The Evolution of eHealth
Guest lecture: Stan Bernard, MD, President, Bernard Associates
- Bernard, “The Evolution of eHealth,” Pharmaceutical Executive Supplement, March
- Parente, “Beyond the Hype: A Taxonomy of E-Health Business Models,” Health
Affairs, 2000, 19(6): 89-102.
- Shapiro and Varian, Chapter 2 and Chapter 5.
- Bower and Christensen, “Disruptive Technologies: Catching the Wave,” Harvard
Business Review, January/February 1995.
January 28 Digital Medicine: Electronic Tools for Patient Management
Part 1: Lecture by Jeff Goldsmith
Part 2: David McCallie, Chief Scientist, Cerner Corporation
- Tang and McDonald, “Computer-Based Patient-Record Systems,” in Medical
- Musen, Shahar, and Shortliffe, “Clinical Decision-Support Systems,” in Medical
February 4 Connectivity and the Impact of HIPAA
Part 1: Lecture
- administrative and clinical benefits of connectivity
- network effects and a single dominant intermediary
- technological barriers
- different revenue models
- HIPAA: costs, benefits, and impact
Part 2: Jeff Margolis, CEO, Trizetto
- Shapiro and Varian, Chapter 8.
- MacDonald and Ward, “The Latest on HIPAA,” First Consulting Group, January 2001.
- MacDonald, “HIPAA – The Health Insurance Portability and Accountability Act,” First
Consulting Group, January 2001.
- Wiederhold and Rindfleisch, “Essential Concepts for Medical Computing,” in Medical
- Weintraub, “Trizetto’s Rx for Health-Care Costs,” Business Week, October 9, 2002.
- Kurtz, “HL7 Version 3.0: A Preview for CIOs, Managers, and Programmers,” Journal
of Healthcare Information Management 16(4): 22-23.
February 11 Impact of IT on Pharmaceutical and Biotech Marketing
Part 1: Lecture
- factors that drive pharmaceutical market share
- traditional physician detailing versus e-detailing
- marketing to physicians via handheld devices
- effectiveness of direct-to-consumer advertising via the internet
Part 2: Kevin Nalty, Alliance Manager, J&J Strategic Customer Alliance Group
- Bach, Donato, Romanowski, and Schulman, “When the Consumer Drives Demand,”
In Vivo: The Business and Medicine Report, July/August 2001: 76-85.
- Esposito, “The Evolution of E-Empowered Consumer Marketing,” In Vivo: The
Business and Medicine Report, November 2000: 67-76.
February 18 Telemedicine
Part 1: Lecture by Jeff Goldmith
Part 2: Mark Bogart, MD, CardioNet
- Greenes and Brinkley, “Imaging Systems” in Medical Informatics.
February 25 Electronic Prescriptions
Part 1: Lecture
- winners and losers of electronic prescribing
- case study on the life cycle of new information technology
- keys to physician adoption
Part 2: James P. Bradley, CEO, RxHub
- Hammond and Cimino, “Standards in Medical Informatics,” in Medical Informatics.
- Moore, Crossing the Chasm, 1999: Chapter 1 and Chapter 2.
March 4 Physician Handheld Devices
Part 2: Glen E. Tullman, CEO, Allscripts
- Buckley, “Improving Drug Prescribing Practices in the Outpatient Setting: A Market
Analysis,” California HealthCare Foundation, October 2002.
- Gillespie, “PDAs Are Willing, But Will They Be Able?,” Health Data Management,
March 11 Spring Break: no class
March 18 Information Systems for Physicians’ Offices and Health Systems
Part 1: Lecture
- impact of information systems on physicians’ behavior and patient outcomes
- financial incentives for implementing clinical and administrative systems
- measuring and marketing superior patient outcomes
Part 2: Sunny Sanyal, Vice President of Clinical Information Systems, GE
- Glaser, The Strategic Application of Information Technology in Health Care
Organizations, pages: 55-72; 100-113; and 136-145.
- Doolan and Bates, “Computerized Physician Order Entry Systems in Hospitals:
Mandates and Incentives,” Health Affairs, July/August 2002: 180-188.
- Metzger and MacDonald, “Clinical Decision Support for the Independent Physician
Practice,” California HealthCare Foundation, October 2002.
- Shapiro and Varian, Chapter 6.
March 25 Genomics and Personalized Medicine
Lecture by Jeff Goldsmith
- Altman, “Bioinformatics,” in Medical Informatics.
- Overby, “They Want a New Drug,” CIO Magazine, October 12, 2002.
- Barrett, “Web Clinical Trials Break Through,” The Forrester Report, July 2001.
- Ridley, Genome: Autobiography of a Species in 23 Chapters (not in bulkpack).
April 1 e-Care, Telemedicine, and Advances in Disease Management
Part 1: Lecture
- disease management: traditional methods and recent innovations
- efficacy of remote monitoring devices
- financial incentives to use the new devices
- reimbursement issues related to e-encounters
- malpractice issues related to providing care remotely
Part 2: Greg Linden, Director of Operations, Patient Management, Medtronic
- LeGrow and Metzger, “E-Disease Management,” First Consulting Group, November
April 8 Information Technology at Health Insurance Companies
Part 1: Dr. Archelle Georgiou, CEO, Care Management Group, United
Part 2: Lecture
- predictive modeling of enrollee health and costs
- targeting enrollees who could benefit from disease management programs
- intervening before acute health events
- providing providers with information to influence enrollees’ medical care
- Goldsmith, “The Internet and Managed Care: A New Wave of Innovation,” Health
Affairs, 2000, 19(6): 42-56.
April 15 Business-to-Business Commerce and Supply Chain Management
Part 1: Lecture
- aggregating buyers and suppliers
- B2B exchanges: labor savings and impact on price of supplies
- impact of exchanges on group purchasing organizations (GPOs)
- response by manufacturers and distributors
- will one exchange prevail?
Part 2: Joe Arruda, Vice President of Marketplaces, Neoforma
- Cassak, “Burden of Proof,” In Vivo: The Business and Medicine Report, June 2001: 26-
- Cassak, “The New Internet Supply Chain: Issues for Device and Supply Companies,”
Start-Up:Windhover’s Review of Emerging Medical Ventures, March 2000: 16-26.
- Cassak, “Cardinal.com: The New Old Thing,” In Vivo: The Business and Medicine
Report, April 2000: 11-24.
April 22 Student Project Presentations