Cardio Edge (pseudonym) is a rapidly-growing healthcare company which offers cardiovascular risk screening through specialized echocardiogram, EKG, and carotid scan tests. This screening reveals risk levels for serious medical events such as sudden cardiac death (SCD). A medical treatment paradigm is analogous to a supply chain which delivers good healthcare outcomes to consumers by involving a range of steps. In the context of professional and elite collegiate sports, this paradigm can span from a casual team athletic director to diagnostic equipment technicians, cardiology specialists, surgeons, and personal primary care physicians.
The delivery of healthcare in the United States is undergoing rapid changes because of the digitalization of treatment paradigms. This digitalization is in part due to The Health Information Technology for Economic and Clinical Health Act (HITECH), which authorized up to $27 billion in incentive payments to spur the adoption and “meaningful use” of electronic medical records (EMRs).  Before this movement, the traditional supply chain of healthcare delivery has relied on physical medical files, in the context of a highly-fragmented US system. This “clunky” and haphazard legacy resulted in long lead times between steps as information was manually located and carefully transferred in compliance with HIPAA guidelines. This all but necessitated a limited, localized supply chain with high barriers to entry. Today, EMRs generated from connected ultrasound machines can give instant visibility into customer demand for expert review and enable a physician in San Francisco to be sourced as-needed to review New York City patients.  In the age of a digitalized healthcare supply chain, Cardio Edge will need to be mindful that competitors can emerge more quickly due to the advent of electronic healthcare data and smart, connected products.
To build competitive insulation in an age of digitalized healthcare delivery, Cardio Edge is focusing on growing the scale of its proprietary database, building more specialization into its portion of the value chain, and reinforcing its complementary technology stack. The larger the database, the more Cardio Edge can put individual results in context and discover associations and understand patterns and trends to ultimately improve care, save lives, and lower costs.  Thus the same supply chain can now produce two very valuable outputs, the screening services and the accompanying data aggregation. While the value of the primary services is linear, the value of the data can be described more as an exponential function, and a near-term, volume-based business development strategy will maintain this advantage away from potential competitors. Equipment technicians are just one part of the cardiovascular health supply chain, but errors there can drive issues in downstream evaluation by cardiologists. And downstream errors are tougher to rectify when physician / technician interaction is 500 miles away rather than 50 steps away. Hence, in an age of portable medical records, quality is increasingly important and Cardio Edge is solidifying its competitive position by improving technician selection and training systems. The connected mobile-wireless ultrasound machines used for echocardiograms merit an entirely new technology infrastructure.  For example, identity and security software is a longer-term measure needed to add security given a shift to technicians entering data rather than patients. One of these identity and security systems is work modality list software, which reduces risk and liability tied to typographical errors on medical records . In an increased competitive environment, profits and switching costs are planned to be increased through offering tangential services such as EMR storage – essentially owning more of the technology stack. All these actions will help to solidify Cardio Edge’s position by galvanizing and better leveraging its own role in the digitalized supply chain.
My recommendations are geared towards making the data as much of a focus as the direct screening itself. Digitalization of the healthcare supply chain has coincided with a trend towards very valuable data sets, and healthcare M&A has confirmed how much value exactly there is to be had. On paper, Quintiles and IMS Health would seem an odd match for their $9 billion 2016 merger, but that was an opportunity for a contract research organization to capitalize on real-world data provided by IMS Health, plugging an external information source into Quintiles’ budding application platforms.  By acquiring Truven Health for $2.6 billion in 2016, IBM was able to fuel its Watson analytic engine with one of the world’s largest repositories of health-related data, bolstering its own technology stack.   To develop Cardio Edge’s own data set to the fullest, a fairly logical recommendation would be to ensure new customer contracts give Cardio Edge full rights to aggregated, blinded data. Another mechanical opportunity would be to incentivize long-term contracting to keep out competitors while building progressively larger data sets. Longer term, it may make sense to develop an application platform to build out the technology stack and provide external users an improved service and enable athletic benchmarking and business use.
Open questions for further examination include whether the digitalization of patient data will ultimately influence risk regarding patient privacy, and if so, what might be the best opportunities to mitigate that risk?  100,000 patient EMRs can be carried away more easily than 100,000 physical dossiers strewn across 1,000 hospitals. Also, in this supply chain, EMRs may ultimately lower costs in the long-term by systems like IBM Watson to replace physician judgement through automated sensors.  How realistic is this given legal considerations, and how long could it take?
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