Digital technology crucial to Telstra’s mission to revolutionise health

Digital is crucial to fixing a system under strain, the telco says.

Shane Solomon, managing director of Telstra Health. Picture: Glenn Hunt

Telstra’s stand-alone health unit is on a mission to revolutionise the nation’s strained healthcare system with plans to slash hospital waiting times, improve patient-to-doctor relations and usher in a new era of telehealth services that will elevate the telco as the ­nation’s premier e-health service providers by 2020.

The Health unit — carved out as a separate division at Telstra in October — has been on an acquisition war path over the past 24 months, spending more than $130 million on investments and joint ventures as it seeks to build the nation’s first integrated health system that will provide technology solutions in telemedicine, aged and residential care, hospital, radiology and pathology.

Telstra has astronomical ambitions for the unit, aiming to grow the business from its revenue run-rate of $40m a year into a billion dollar-a-year business and the nation’s leading e-health provider within five years. “That’s what we are targeting. We are very passionate and believe it’s a doable thing. It won’t be easy but once we do that the e-Health business of Telstra will be one of the biggest health businesses in Australia,” the managing director of Telstra Health Shane Solomon told The Australian.

The genesis of Telstra Health goes back to 2012 when the telco’s bet to sacrifice margins and spend big to lure customers back to its mobile network was showing ­serious signs of paying off.

More than 3 million mobile customers had flocked back to the telco following a worrying series of profit downgrades in 2010, but the telco’s board knew that to ­diversify its revenues streams and offset the declines in its rotting fixed line business it would have to look at new industries.

So Telstra turned to 13 global consultancy firms for pitches on where the telco should focus its attentions.

One of the firms was KPMG which presented to the telco three possible new growth areas: mining, transport and health.

Mr Solomon, who at the time was working for KPMG as its National Health Lead after a five-year stint as the chief executive of the Hong Kong Hospital Authority, delivered the pitch to now-retired Telstra chief David Thodey.

“After 1½ of saying nothing through the other two presentations, it took only about 10 seconds into my presentation before David (Thodey) started asking questions,” Mr Solomon said.

“David is passionate about what is broken in the healthcare system and how digital solutions can transform it. He can see the value of a digital transformation in health. He just didn’t know his way in.”

Out of the myriad pitches from the 13 consulting firms, just five ideas were taken to the Telstra board for consultation. Three were accepted: expansion into Asia, the development of enterprise global services and health.

“While telecommunications is big, health is bigger. So to have a slice of the big and growing health care system is key,” Mr Solomon said. Telstra’s quest to become a major player in the health space comes as an ageing population and increasing chronic illnesses pressure the nation’s already overburdened healthcare system.

The statistics that lay bare the strains facing the nation’s overburdened healthcare system are staggering. According to the Australian Bureau of Statistics, annual health expenditure grew by 45 per cent between 1997 and 2007 to reach $4507 per person.

As the government looks to strip about $50 billion from hospital funding over the next two years and with the rising incidence of chronic conditions such as heart disease, cancer, asthma, obesity and diabetes, combined with our ageing population, health costs are set to soar.

“We have an ageing population with diabetes, heart disease and other chronic conditions. The consequence of that is that we have a very high proportion of people — who we call frequent flyers — the revolving door syndrome,” Mr Solomon said.

Mr Solomon said these recurrent patients made up about 2 per cent of the population but consume 40 per cent of hospital resources with as many as 25 per cent being readmitted in a month.

“If you can reduce hospitalisation by 30 or 40 per cent then you are tackling the single biggest expenditure in Australia’s health care system. We’re talking about $40bn out of $150bn a year in healthcare costs,” he said.

“The fundamental thing is to change the way the consumer connects and interacts with the healthcare system and digital technology is fundamental to that and that is what Telstra is good at. Only Telstra can do this.” Chronic illnesses are just part of the addressable problem. Mr Solomon says Telstra has identified six challenges facing the health care system that it wants to improve.

These include: creating a more efficient and safer pharmacy system; improving integration of health information; using care coordination to reduce hospital and aged care admissions; consumer self-service; increasing access to specialist healthcare access; and improving productivity across the health system.

To address these issues Telstra is developing an integrated health record, new ways to improve the productivity of nurses and doctors, and the use of big data to predict and monitor the ebbs and flows of patient conditions in the health system.

The telco has also made substantial investments in pharmacy software providers and telehealth services like ReadyCare — a 24/7 telehealth services that will connect GPs and patients in an effort to address the estimated 2.2 million emergency department presentations each year that could have been treated by a GP. In isolation, many of these services and applications don’t seem revolutionary — after all, video conferencing with remote users, sharable health records and the use of big data are already being used in healthcare today.

But Mr Solomon said it would be the integration of the products and services into one system that would be the real money-maker. “No one in the world has put together that ecosystem yet. The idea is to get a position in each of those areas either by acquisition, joint venture or licensing, with a view to creating solutions that don’t exist in the market today.”