The current research on business models used for telehealth programs has limited information on comparing the strengths and weaknesses for each program. Although there is research done extensively on general business models and their ability to successfully analyze and plan for projects, they are lacking a focus on examining their usefulness for telehealth programs in healthcare organizations. The prevalent business models that have been examined in current research, and will be compared on this website, include the business model canvas, VISOR business model, National Rural Telecommunication Cooperative (NRTC) business model, and Arizona Telehealth Program (ATP) business model, as well as five strategies for collecting revenue that various telehealth companies have included into their business models.
Business Model Canvas
To introduce the business models that were compared, the Osterwalder’s Business Model Canvas has been examined. This business model was developed by Alexander Osterwalder and it is a tool to understand a business model in a structured and universal way. It focuses on customer segments, value proposition and how revenue will be earned. One advantage to using this model is that it can be used across many telehealth models to compare them as well as analyzing competititors models. The business model canvas is composed of a framework of 9 ‘building blocks’ which include: customer segments, value proposition, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure (Chen, et. al., 2013). The purpose of the business model canvas is to highlight a project or program’s value creation and enterprise operations (Chen, et. al., 2013). The business model canvas is a useful tool for its effectiveness in analyzing the value a program can create for a variety of business needs and settings since each of the building blocks can be applied to individual and unique organizations. However, the drawback for the business model canvas is that it does not address specific operational or technical aspects of implementing a telehealth program, and it does not show the interactions between each block leaving key information to be left out. Below is the business model outline.
Figure A: Alex Osterwalder's Business Model Canvas. (2014, January 15). Retrieved from https://e-equalsmc3.com/alex-osterwalders-business-model-canvas/
In order to address the gaps that telehealth programs may encounter when being applied to the business model canvas, the VISOR model has the ability to look at telehealth programs with more focus on the implementation and needs of technological systems and programs. VISOR is an acronym for Value Proposition, Interface, Service Platform, Organizational Model, and Revenue Model (Pereria, et. al., 2015). The important differences to note in this model compared to the business model canvas, are the interface and service platform categories. These allow for a more in depth analysis of the interaction a customer will have with the hard- and soft-ware as well as the infrastructure needed for a telehealth program to be effectively implemented and used. The VISOR framework also allows for an analysis of strengths and weaknesses within an organization, or community in regards to telehealth adoption. The following graph shows the areas in green that are driving the need for telehealth, and the areas in red are showing limitations. This is an effective way to look at a telehealth program on a high level, however it leaves a need for a more in depth analysis within each category. In this diagram, telehealth was looked at from a U.S. perspective, but this would be effective in looking at the challenges and strengths in an organization or community pertaining to a specific telehealth program or project.
Figure B: VISOR analyses of telehealth in the United States. Adapted from DovePress, by Pereira, F., 2015, Retrieved from https://www.dovepress.com/business-models-for-telehealth-in-the-us-analyses-and-insights-peer-reviewed-fulltext-article-SHTT
The Arizona Telehealth Program (ATP) business model was developed by Arizona state legislature with the goal of providing a single, evidence-based, and multiservice platform to serve as an “virtual organization” that facilitates the delivery of health services to private and public healthcare settings and encourages collaboration among health centers in Arizona (Barker, et. al., 2005). The ATP business model incorporates multiple layers to sustain a successful telehealth company. These layers include a vendor services which involves “leasing lines from utility companies serving Arizona", infrastructure services (i.e., marketing services and state funding), operational services layer (i.e., billing and reimbursement, training, equipment installation, etc.), which then supports the professional layer that healthcare members “may want to provide or purchase” (i.e., health-care provider services, protocol development, support for obtaining necessary credentials and licenses, etc.) (Barker, et. al., 2005). All ATP components ultimately support the client or consumer layer which provides the means necessary for healthcare providers to deliver services (Barker, et. al., 2005). This model is beneficial to orient telehealth companies to all components involved within a telehealth business that require financial support to maintain sustainability. However, the ATP model would cultivate more success by including the current strengths and weaknesses regarding how the telehealth business plans to support all layers involved and perhaps include a plan to adjust each layer if an aspect of the company is struggling.
In order to more efficiently predict success with providing quality patient care while also achieving sustainability, the National Rural Telecommunication Cooperative (NRTC) was formulated to establish a detailed-oriented business plan that would guarantee buy-in from funding sources and customers as well as reduce business risks. The NRTC emphasizes the importance of identifying the purpose for creating a telehealth business and detail how this business will improve the current status of healthcare for the communities that it will serve (Barker et al., 2008). This purpose will not only make the business more marketable to prospective affiliating members, but will orient additional business-related details during the planning process. Determining the needs and demands of those that will be receiving and providing services, identifying how to facilitate the nature of services provided, delegating a singular person to be a primary source of information, ensuring that expenses will not exceed revenue from providing telehealth services, and meeting differential state licensure and regulatory requirements for telehealth services are some of the many components considered within the NRTC plan (Barker et al., 2008). Although originally created for an the American Telemedicine Association, Figure C represents a fraction of the list of components that the NRTC has considered within its buisness model; demonstrating its diligent analysis of operating a telehealth business. The NRTC business plan is unique in that it is designed to establish a clear and calculated plan that is directed towards marketing the proposed telehealth product to funding organizations, customers, associated health care providers, and technical supportive services to accumulate support and control a more predictable operation. Despite the extensive, flexible, and detailed-oriented nature of the NRTC plan, this model would benefit from providing more examples specific to how it was implemented within several telehealth companies so that it can increase relevance and demonstrate success with providing services to different populations and communities.
Figure C: American Telemedicine Association Buisness Model. Adapted from DocPlayer, by Sutjiredjeki, E., Karnawati, H., Satria, F., Dewi, E.M., & Astami, K., 2015, Retrieved from https://docplayer.net/275664-Business-model-as-a-strategic-tool-in-telehealth-development.html
Five Financially Strategic Components Adopted by Telehealth Buisness Models
Based upon ten long-standing telehealth centers, five common approaches for generating revenue within a business model included receiving funding from grants, membership fees, associated clinical services, “per encounter charges,” and functioning as a cost center (Effertz et. al., 2017). Grants, although responsible for initiating the development of several telehealth centers and providing a source of income for several telehealth centers, were ultimately proven to not be sustainable by itself. This is due to the fact that grants are not guaranteed to consistently support telehealth services throughout the years or meet the increase in demands for funding as telehealth centers continue to expand. Several telehealth business models, such as the ATP model, have adopted a required annual membership fee to support the infrastructure of telehealth services as well as provide benefits to members, which may include discounts on equipment and credential and licensing support (Effertz, et. al., 2017). Telehealth centers may include per encounter charges for providing services that healthcare members may require, such as assistance with scheduling and registration of clients. Additional funding may also be received by providing services, such as medicare contracts, or from a supporting organization if a telehealth service is considered a cost center; demonstrating its’ financial value as a direct result from providing services to clients as a result (Effertz, et. al., 2017). Several telehealth programs are also considered as a cost-operative service where they recieve funding from an operation, such as a university, and continues to demonstrate value to that operation from implementing a telehealth business as a result (Effertz, et. al., 2017). Although these five common strategies were frequently implemented among several telehealth programs, these components only address how to gather revenue from various sources rather than identify expenses that will occur as a result of maintaining a business.