Electronic Child Health Network

Case Analysis

Austin Holmes
School of Public Health, New York Medical College
HPM6058
PROBLEM:
Szende is preparing for a board meeting where at he will present an overview of electronic
Children’s Health Network (eCHN) strategic plan. During this presentation he must address
several questions including; how to identify potential customers for eCHN’s various services,
what approach will be used to create value and achieve buy-in from the customers, how eCHN’s
services will be priced to achieve maximum profit potential. The answer to these various
different questions will determine the course that eCHN takes in the future.

PROBLEM ANALYSIS:
eCHN was developed in 1998 as a cooperative effort between Hospital for Sick Children (HSC),
IBM Canada, and four other health institutes with large pediatric departments located in Ontario.
The largest financial contributors of eCHN are HSC and the Ontario Ministry of Health, with an
investment of 7.5 million each. Currently eCHN offers three separate services, “Your Child’s
Health” (YCH), “PROFOR”, and “Health Data Network” (HDN). Each of these services targets
a different customer base, and each service requires a slightly different strategic approach. Let’s
analyze both the environment and the company:
1. Environment: There is a large demand for eCHN’s services. The Health Services
Restructuring Commission (HSRC) passed a mandate that required hospitals to develop
policies [and systems] that will increase both coordination and cooperation among health
care providers. Several years ago, the HSRC also mandated the development of a
designated Child Health Network for the greater Toronto Area. eCHN envisions that this
health network could be expanded to an area greater than just Toronto.
2. HSC: Hospital for Sick Children has operated in the Toronto area for over 100 years and
has earned a reputation of excellence. Currently, the hospital boasts a capacity of 383
beds and an operating budget of $305 million per year. HSC is active in all aspects of
health care including; engaging in compassionate care, acting as a teaching facility, being
highly involved in academics through scientific research and increasing the boundaries of
medicine through participation in clinical research. HSC has an aggressive strategic plan
that includes becoming the pre-eminent research center for pediatrics worldwide, and to
be a leader in the development of new treatments for children. HSC’s expansion strategy
may fit in with eCHN’s strategic plan, however, how much power should allowed to just
one company in the control of eCHN? This is a topic for another discussion.
3. Services provided: As described above, eCHN offers three separate services to different
markets.
a. “Your Child’s Health”: This service is dedicated to parents and their children so
that they may stay informed on various health topics. “Your Children’s Health”
was awarded a Canadian Online Product award last year for “[standing out as] an
excellent example of how health care organizations could effectively use the web
to better serve their community.” One of the biggest value points of YCH is that
the site included a section labeled “My Child is Sick,” which acted a basic
triaging tool to help parents determine if their child’s health issue was an
emergency and a trip to the emergency room was warranted. This would help
prevent parents from waiting needlessly in the ER. However, one of the biggest
 issues with YCH is that the website had extremely high maintenance costs.
Currently, YCH is not producing any revenue to off-set these costs.
b. “PROFOR”: Is a service to be used by physicians and other health care
professionals (including researchers) to allow collaboration and cooperation in the
treatment of diseases. The site is broken down into two major sections: Handouts
and live discussion boards. All the handouts or articles are reviewed by the eCHN
editorial board prior to posting. The live discussion board allows physicians to
post questions that can be answered by other physicians. The site is then further
broken down into specialty ( i.e. cardiology, ophthalmology, oncology, etc). Upon
entering the site, one would see these tabs; Presentations, Collaberation,
Standards, Research, Journals and Parental Education.
i. Presentations: This allows access to video presentations that discuss
relevant health care issues.
ii. Collaberation: This allowed professionals to ask questions and share
information. It is like a discussion board.
iii. Standards: This has handouts which delineate the “Standards of Care” for
each major disease. This allows more consistency in the standard of care
among health care professionals, and creates more efficiency in the
performance of care.
iv. Research: Provides information about on-going research within the eCHN
network.
v. Journals: Has selected literature covering patient care. A discussion about
why the journal article was chosen is included with some articles.
vi. Parental Education: This includes handouts for parents explaining their
child’s disease and all other pertinent information.
In order for PROFOR to be successful, physician buy-in is required. Szende knew
that investment in new technologies could either raise over-all expenses or
decrease over-all expenses. It was his hope that PROFOR would, in the end,
decrease over-all costs of performing care.
c. Health Data Network: This is by far eCHN most significant revenue generator.
HDN allows physicians to post patients charts, test results and procedure results
(echocardiogram, electrocardiogram, fluorescein angiogram, optical coherence
tomography, etc) onto a secure database that is only accessible through a WAN.
Since this connection is not done through the internet, separate connections must
be installed and routed to eCHN’s server. This unfortunately requires a high cost
of installation, since technicians must be hired and sent out to perform these
connections. This installation cost and the cost of maintaining the system are by
far the two largest expenditures. This has lead to an agreed price of $150,000/year
to access the HDN. However, this is problematic for smaller hospitals, or long-
term care facilities who run on a much tighter budget. Also of concern is
connection speed and connection reliability.
PROBLEM STATEMENT:
How can we create a system where each service is affordable to the respective targeted market
segment and allows for an expansion of eCHN’s services to the largest geographic area possible
while still maintaining profitability in both the short-term and long-term.

ALTERNATIVE SOLUTIONS:
In creating our long-term strategy, we must create a plan that includes several different stages or
solutions. Below are some ideas, with several of them being discarded and others being included
in the over-all package. We will merely liste them here.
1. Create a level of service (or membership packages) that are tailored to a businesses size.
2. Continue to make each business pay $150,000/year.
3. Create a fundraising department and host fundraising events.
4. Create a system whereby large institutions get a discount for each “privileged” LIP they
“include” in their system. This would lower over-all costs for the hospital or long-term
facility.
5. Create a members only area in “Your Childs Health.”
6. Allow business to advertise on “Your Childs Health.”
7. Close “Your Childs Health.”
8. Expand services for HDN to include non-pediatric practices.

DECISION CRITERIA

• Fits in with eCHN’s objectives

• Allows affordability to all types of clients.
• Creates value to both the physicians and the patients.
• Off-sets operating cost of “Your Child’s Health.”
• Allows maximum profitability.

DISCARDED SOLUTIONS:
The solutions below either did not fit in with the decision criteria, or where out-weighed by other
decisions.
1. Close “Your Child’s Health”: Even though “Your Child’s Health” is currently
costing eCHN, a plan to try reducing costs should be implemented first. YCH has
become valuable to numerous parents, and having received awards, is a good structural
foundation to build on. Keeping YCH open is essential to further eCHN’s objectives.
2. Continue to make business pay $150,000/year for access: First off, there has
got to be a better way. In out competitive market, if we do not adapt to the forces, we
will lose market segmentation. To charge large fees on top of not having flexible service
options is a recipe for certain mediocrity and loss of growth potential. It goes back to the
old saying, “it’s better to capture a larger market segment with a reduced profit margin,
than to have a small market segment with a higher profit margin.” Good examples
include Microsoft and Southwest Airlines.
 3. Create Institution Discounts: This would work, however, it cuts into profits. Having
levels of service is a better option that fulfills our objective of maximizing profit.
4. Expand HDN services to include non-pediatric care providers: This option does not
fit in with eCHN’s over-all objectives. Also the name explains why this is a bad option;
Children’s health network.

eCHN’s STRATEGIC PLAN:

All the other above solutions are included in the following plan. However, I will discuss the plan
by breaking it down into each constituent service.
1. “Your Child’s Health”: As discussed, YCH must stay active on the internet. However,
costs must be off-set and controlled. In order to do this, we propose several options:
a. Membership Section: Still allow free access, but also have a membership
service. In this section, allow patient to look up and compare physicians and also
access relevant statistics for these physicians, including out-comes, patient
satisfaction, lawsuits, etc. This will create a positive sum competition as specified
in Porter’s “Re-defining Health care.” Good examples to use as models are
ucomparehealthcare.com or vitals.com.
i. Also included in this section would be the ability to access the same
“Standards of Care” as found on PROFOR. This would allow the parents
to become more interactive in their child’s care, allow for greater
understanding and give credibility to the physicians providing care and
thus allowing for more efficient care.
ii. Create a members only discussion board where doctors also give advice.
Good model, WebMD.
b. Advertising: Allow companies to advertise. This would bring in large amounts of
revenue to off-set costs.
2. PROFOR: This service is essentially optimized, however it’s target and access should be
more flexible. Instead of only HDN eCHN members able to access this service,
physicians and other healthcare providers (like researchers) should also be allowed to
access this service independent of HDN membership.
a. Pricing: Pricing for access should start at $1,200/year per user. This is affordable,
yet still allows for profitability. This pricing strategy is to encourage users to
purchase other services based on the “Foot in the Door” principle. It is our hope
that once providers see the value in using eCHN services, they will want to
continue using services with the HDN.
3. HDN: This service presents both the most complex problem and requires the most
complex solution. Like many RHIO’s, they are both expensive to set up and operate.
Once the infrastructure is in place, fixed costs of maintaining the server will be easier to
estimate. The HDN should be set up as a WAN, utilizing a phone connection equivalent
to a T1 that is routed through a tunneling VPN. This allows access to the server without
connecting directly to the internet. Also, local telecommunications companies should be
contracted under the control of the CTO to set up these connections.
a. Pricing: As discussed, a flexible pricing option should be available. A way to set
this up is the creation of “user licenses” as would be found in Microsoft’s
Terminal Server (formerly known as remote desktop). Each user could sign onto
the system and access the database from any computer that is connected to the
 RHIO system. This would also allow multiple users at a single facility to access
the system. Several levels of service follow:
i. Small Business: 5 user licenses are provided at a cost of 50,000/year.
Access to PROFOR would cost an additional $1,200/year per user. Proper
computers would have to be supplied by the provider.
ii. Medium business: 15 user licenses are provided at a cost of
$100,000/year. Access to PROFOR would cost an additional 1,000/year
per user. Proper computers would have to be supplied by the provider.
iii. Large Businesses: Unlimited licenses are provided at a cost of
$150,000/year. Access to PROFOR is included for users “on-site.”
However, off site access to PROFOR would be an additional $500/year
per user for providers under the “Large Business” plan. Proper computers
would have to be supplied by the provider.

FORSEEABLE PROBLEMS:
1. Depending on future fixed cost, small business plan for HDN access may not be
profitable.
2. Reduced demand for access to “Your Child’s Health” due to fees. What price target
would be good?
3. Control of eCHN services. HDN members may feel as if they have a “right” to control or
influence business decisions since they are paying such a large fee.
4. Demand may be low if proper value isn’t created.
5. PROFOR price may be too high for service provided. How can this site become more like
JSTOL. Also, may need to ‘re-make” PROFOR as the pre-eminent source for pediatric
research and journal access. This could be done by quality of research or ease of database
search.

CONTROL AND EVALUATION:

1. Collect sales data on types of HDN services purchased
2. Create more accurate estimate of fixed costs through time analysis.
3. Track number of membership sign-ups to number of hits on Your Childs Health.
4. Create a feedback box on both Your Childs Health and PROFOR.
5. Survey level of satisfaction with service.
6. Survey perceived value index for the three services.