Case Study #13: Cisco and UnitedHealth Are in the Patient Relationship Management (PRM) Business

This morning, I read in the Wall Street Journal that Cisco and UnitedHealth will join forces to build a network linking patients and physicians across the country via video and medical-information technology. The companies will be competing in the telehealth industry. According to Datamonitor, this industry is forecasted to be $6 billion by 2012.

The telehealth industry is an extension of the telemedicine industry. Telemedicine is defined as the use of telecommunications to provide medical information and services. This is primarily done through transferring digital images from one location to the other and two-way interactive television when face-to-face consultation is necessary (Brown, Nancy S “Telemedicine, Telehealth and the Consumer”, Telemedicine Information Exchange, September 28, 1996). Digitization and video conferencing are not examples of new media. For years, they are used in the direct provision of clinical care via telecommunications – diagnosing, treating or following up with a patient from a distance. Telehealth not only includes telemedical services, but several incremental clinical and non-clinical technologies to serve patients, ranging from teletriage (health advice by telephone) to patient movement and remote admission. Here is an analogy: Telehealth is to patients as customer relationship management (CRM) is to retained customers. Ergo, telehealth is CRM to patients, so it can be called patient relationship management (PRM).

Cisco and UnitedHealth enter this relatively new telehealth industry with the capabilities to do PRM.

UnitedHealth is the second largest health insurer in the country and relatively recession-resilient. It also has a portion of the $6 billion allocated by the stimulus bill to improve telemedicine efforts. Cisco, on the other hand, is not as strong. They report 2009 3Q sales to be $8.2 billion (decrease of 17% year-over-year) and net income of $1.3 billion (decrease of 24.0% year-over-year). Companies that anticipate losses as a result of changing economic and business conditions must act quickly to evolve their business model. Cisco is a great example of this as it streamlines operations in areas of loss to focus operations on areas of growth. Both companies have complementary assets to successfully compete in this market. UnitedHealth has a network of 590,000 physicians and care professionals; Cisco has industry-leading video conferencing and other collaborative network technologies. Together, they will be able to connect a growing number of technologically savvy health professionals with a growing number of technologically savvy patients.

The roll-out of this program, “Connected Care”, is not nationwide or global. It will start as several pilot programs, including one in rural Mexico and another via a mobile clinic that will tour the United States this summer. Perhaps year one in the Connected Care business plan may not be a big revenue generator, but given the projected growth of the telehealth industry, UnitedHealth and Cisco will surely offset the costs in the year one launch with significant profits through 2012. The rich patient data generated by “Connected Care” will be a great source of information to better serve patients. It may also catalyze a consortium of health care stakeholders that can help solve macro issues such as reducing health care costs, innovating cures to deadly diseases and learning how to be 21 forever.

Okay, perhaps “Connected Care” may not help with the last issue, but it is still a timely innovation of vast utility driven by a partnership of complementary assets. The quantitative and qualitative output from the network will enable health care professionals to better serve their patients. And the patients will be able to urgently and immediately communicate with their doctors. This two-way communication will be mutually beneficial for all involved stakeholders.