Changing Business Models & Adapting to New Business Realities

Editor’s note: This blog was written by John Tempseco, chief marketing officer of ICA.

Health information exchange (HIE) has changed dramatically in the past 4 years as both a verb and a noun. As the paradigm continues to change and shift, different stake holders struggle to determine how they fit into new models of data sharing.

Some stakeholders accommodate to change faster than others. A traditional, comfortable business model built up over many years tends to get in the way of effective change. These business models based on transactional revenue prevent improvements and efficiencies in healthcare more often than not. Large diagnostic laboratories appears to be one of the players who have been slow to recognize that change is coming and inevitable, and that therefore they need to examine their business model closely to determine what is their long-term gain.

I have worked in a variety of health information technology sectors over the years, including practice management, electronic medical records and claims clearinghouse prior to joining ICA. During that time, I saw the monopoly intranet-based, proprietary claims/remittance and eligibility systems models change to an Internet, standards-based transaction system. A company’s ability to simply charge what it wanted for the increased ease of claims processing and account balancing transactions completely evaporated within months of new HIPAA transaction standards and the proliferation of high-speed connectivity at a reasonable price.

What I quickly learned is that a company had to provide subscription-based capabilities that provide value to customers beyond the transportation of data. New vendors jumped into the marketplace offering dashboards, portals for physicians’ offices and patient access to payment information and claims status. ICA, for one, completely changed its business model to compete in the new environment – many companies didn’t and they no longer exist.

A few major laboratory vendors have developed an almost monopolistic approach toward supplying and distributing their services and must change their business models to accommodate a new world, just as the claims clearing sector did. They will quickly learn that competitors, including hospitals and regional labs, will figure out how to capture volume of actual value-based work (processing diagnostic tests and feeding results to both providers and patients quickly) and turn these business models upside down. If these organizations don’t learn to adapt to the changing environment and provide some kind of value other than electronic distribution of results of their work – others will quickly fill the void.

Companies adapting to change will thrive. A good example is telephone companies, which have morphed into communication companies offering a full range of communications, including mobile phones, television programming, home phones, etc.

I don’t believe that these laboratory vendors and other healthcare companies, for that matter, will need to evolve as quickly, because, as we all know, healthcare doesn’t evolve as quickly as other commercial, consumer-focused industries. But change is coming.