Telus: Dial up and say 'Ahh'

While its rivals binge on content, Telus eyes a potentially larger and more lucrative prize: e–Health.

François Côté wants you to imagine you’re being discharged from the hospital following open–heart surgery. “Five days later, you’re home,” says the Telus Corp. vice–president and president of Telus Quebec and Telus Health Solutions. But, he says, don’t think you’re out of the woods, because “discharge is a very risky venture. A lot of mistakes happen.”

Never mind the potential for human error on the part of harried medical staff hobbled by incomplete or inaccurate information scribbled down on the papers they’ve managed to pull; even if all goes well, there will be a long list of instructions to impart, and this will be done vocally. “Are you going to be able to understand it all?” he asks.

And what if, a few days later, there’s some swelling or discomfort? There’s little chance you’ll be able to reach a doctor on the phone, let alone have one visit or somehow arrange for testing at home. “It’s into the car and back to the emergency room,” he says. “You can’t even go back to the ward. They’ll have to look for your records. Hopefully they can find your doctor.”

Obviously the process is going to result in lots of pain for you, but there are also some other bodies it’s going to hurt: your federal and provincial governments, and their health–care budgets. All that miscommunication and duplication of effort, let alone an unnecessary readmission to the hospital, which will cost the system something on the order of $2,000.

But there is another way, says Côté — one that the Vancouver–based telecom is betting on big. All of Canada’s big telecommunications providers face a similar problem in that their market is now consolidated and mature, and their one core business that’s still growing fast, wireless, faces new competition from the likes of Wind Mobile and Mobilicity. Whereas its peers are gambling on media content providers such as major TV networks (Bell Canada and Shaw Communications) and myriad publishing and broadcasting holdings (Rogers Communications), Telus has opted to throw its weight behind data processing and the creation of technology platforms in finance and, especially, health care. The business still accounts for a single–digit proportion of total revenues, but it is profitable and growing at a faster rate than overall revenues, even as competitors’ media properties languish. Telus stock rose 34% in 2010, highest among the large telecoms, which would seem to vindicate its strategy to remain a communications carrier, as opposed to content creator too. In 2011, the company is calling for revenue growth of around 4%, and some analysts have raised their outlooks even as concerns grow about new wireless competition.

And though it has yet to make a big impact on Telus’s bottom line, the health–care focus has huge potential upside. It’s already turned the firm into a dominant Canadian player in two closely related fields, electronic medical records (EMR) and personal health records (PHR), often considered in tandem as e–Health. Both sectors are still in the Wild West stage, highly competitive, and incredibly complex and convoluted. But they’re likely to shake down into a more streamlined form as they absorb billions of dollars in anticipated investments. As that occurs, your discharge will quickly take on a very different character, says Côté. In the new era, a tablet–toting physician will have instant access to all your medical records, and so will you, easily called up on your smartphone or laptop, where those verbal instructions will also be preserved. Once you’re home, your physician will be able to check your vitals and monitor a long list of easily self–conducted tests remotely, while prescriptions will be altered or renewed at the touch of a screen. Provision of this will cost on the order of “tens of dollars,” he says. Meanwhile, all that monitoring and enhanced care will make a return trip to the hospital less likely by a factor of about 50%, says Côté. And if it does become necessary, your arrival could be arranged electronically with the necessary information instantly available and appropriate staff on hand.

Whiz–bang? A little. But pie in the sky, not at all. In fact, this scenario is already common in much of Europe and Asia. According to a 2009 survey by U.S.–based Commonwealth Fund, Canada trails almost all developed countries in primary–care doctors’ access to electronic medical records. Usage was “near universal” in the Netherlands (99%), New Zealand (97%), Norway (97%), the United Kingdom (96%), Australia (95%), and Sweden (94%), but came in at only 46% in the U.S. and 37% in Canada. Those numbers are a bit misleading, contends Richard Alvarez, CEO of federally funded overseer Canada Health Infoway, in that they measure only physician usage; for some things Canada does not lag so terribly, and a few provinces, especially Alberta and Prince Edward Island, are pretty much on par with global leaders. Still, there is room — lots of room — for improvement. “Are we ahead of other countries?” asks Côté. “No, we’re not ahead. But I’m happy we’re at 37%; that’s the way to get to 50, then 60.” And, he adds, “It’s a great opportunity from a business perspective.”

It would certainly appear to be that. In 2009, Telus grossed more than $400 million from its Telus Health Solutions, a rapidly growing sideline that might have remained largely overlooked had not CEO Darren Entwistle chosen to make it the subject of an address to the Canadian Club of Toronto in October. In 2004, Entwistle lost his own father to a medical mix–up of the sort that EMR and PHR systems like Telus’s probably would have prevented, which gave the speech extra resonance and helped generate several media reports. “There’s a sense of mission,” says Joseph D’Cruz of the University of Toronto’s Rotman School of Management. “It’s tangible.”

Côté describes the e–health connection as being “in the Telus DNA.” It ties into strong roots in the company’s home turf of B.C. and Alberta, and squares with strategic corporate decisions dating back a decade or more. Early on, the telecom stored and managed health records for insurance companies; then in 2008 it paid $763 million for Montreal–based Emergis, a health and financial data–processing firm with annual revenues of just under $200 million. Côté had been president and CEO of Emergis, which, ironically, was a division of BCE, Bell’s parent, until spun off in 2004. At the time of the acquisition, Entwistle said he was as excited by the business prospects as he had been when Telus sprang into the wireless business with the 2000 purchase of Clearnet.

In the Canadian Club speech, Entwistle outlined some of the factors behind the growth of the e–health sector: rapidly escalating costs could have the Canadian health–care bill totalling $244 billion by 2020, amounting to half of provincial budgets. Chronic conditions and aging–related care already accounts for more than two–thirds of expenditures. Meanwhile, the scattershot evolution of e–health and the provincially run nature of Canada’s health–care system results in a multiplicity of regulators and systems, creating huge barriers to information flow. “In the Greater Toronto area alone, there are approximately 25 hospitals with more than 20 data systems and over 20 patient record systems,” he pointed out. Furthermore, governments and regulators recognize the many shortcomings, and seem willing to invest the money needed to fix them.

Canada Health Infoway’s Alvarez suggests that an investment of $12 billion would build a nationwide EMR system equivalent to the banking system (although much more complex) within five years, netting taxpayers $6 billion to $7 billion a year in cost savings. In December, federal Finance Minister Jim Flaherty held out the hope that the digitization of records would cut into health–care cost increases and help governments balance their budgets. “This thing is not going back,” says Alvarez. “A few years ago, established medicine was not onside, but that has changed.”

Enabling physicians, hospitals, wards, labs and pharmacies to connect with one another holds obvious benefits. Yet, as important as it may be for the system to catch up in its handling of electronic medical records, some experts see the next chapter as being more about personal health records. In a way, they’re the desktop computer to EMR’s mainframe. More and more treatment will take place outside of hospitals, and technology will enable people to monitor themselves along a much wider spectrum.

Telus is on to that, too. In May 2010, the company’s Health Solutions arm unveiled Telus Health Space, a PHR platform based on Microsoft’s U.S.–market HealthVault. The company announced several dozen partners, including hospitals, regional health authorities and organizations such as the Canadian Diabetes and Canadian Mental Health associations. Individuals will also be able to sign up for the service as it rolls out. Enlisted clients will be able to “create, store and manage all aspects of their health information and that of their family, such as immunizations, allergies, medications, height, weight, symptoms, key medical measurements, pre–existing conditions, as well as their medical history.”

It’s a long list, but if electronic PHR sounds more like a tech toy than a crucial tool, the antidote is a chat with Kevin Leonard. Leonard is a professor in health policy at the University of Toronto and a specialist in health technology; he’s currently examining the experience of Toronto’s Sunnybrook Hospital as it seeks to transform its handling of EMRs, with Telus as a major partner. Leonard’s interest in the subject goes well beyond the academic, though. As a sufferer from Crohn’s disease, he says, “I use the health system much more than I would like to.”

Leonard divides the population into three groups: the 50%–60% who are healthy, another 10% or so who have a temporary engagement with the health system and the remaining one–third of the population who have at least one chronic condition. “For the first two groups, paper documents work just as well, and it wouldn’t make sense to make the investments needed for electronic health,” he says. But the third group accounts for a huge proportion of the health–care spend. “That’s where e–health works,” he says. “Because there’s no getting better.”

For this group, Leonard says, the use of PHRs won’t just make life easier or cases more manageable; it will actually lead to improved health as individuals take on more responsibility. “There will be learning moments,” he says. “If I eat a pickle, my blood pressure goes up. If I eat a doughnut, my blood sugar goes up.” It’s for this reason that a substantial chunk of Telus’s first PHR customers are associations geared to specific conditions, who then supply the platform, along with appropriate applications, to the people they serve. Presto! Doctor and hospital visits decline as people begin to more closely monitor their own health and communicate with health professionals remotely. A social–media–style interface grants different levels of access to different people, from health–care professionals to family members. Soon the platform will be sold directly to individuals — an elderly person who needs help keeping details straight, for example. Hard data on what works and is cost–effective are only beginning to come out, Leonard says. But it’s important to research now “before the system morphs into something we don’t want.”

One of the mandates of Canada Health Infoway is to develop industry standards and certify e–health products that meet them, a roster that at the moment extends to precisely one: Telus HealthSpace. In the U.S., the Microsoft platform on which it’s based competes against a similar one developed by Google, but Canadian regulations stipulate that medical records must be stored within the country and, for now anyway, no one has contracted with GoogleHealth or a European variant to offer a Canadian version.

The possibility that someone will does not worry Côté. What does are matters such as physician compensation: currently, doctors aren’t paid to talk on the phone and therefore don’t. Some arrangement has to be made for time spent on the computer. He also cites budget pressures and competing priorities on the part of health authorities, but notes that the concern is easing as the benefits become more apparent.

D’Cruz of the Rotman School believes that Telus is in an enviable position, and the move into health care may ultimately trump its competitors’ emphasis on media properties. “The media world is very fickle, almost like entertainment,” he says. “In health, if you establish a strong user base, that is not fickle because the users are tied. They are sticky. Entertainment is not sticky. If Rogers were to pick up Google Health and knock on the doors of hospitals, they would find it very hard to penetrate.” At the same time, he says, global competitors do represent a threat. Telus might be vulnerable to the arrival of a Siemens or IBM that already has a strong presence in the industry.

The telecom’s two major products do seem to be ideally situated. Its hospital platform, Oacis, is more of an integration platform, capable of knitting together the country’s hundreds of disparate systems. Meanwhile, Health Space launches it into the less institutionally based near future. And the combination of the two makes for a more comprehensive e–health platform than any competitor’s.

Nevertheless, other concerns exist. D’Cruz cites the Ontario e–Health shemozzle of 2009, in which controversy raged over the use of expensive consultants, slowing progress and “definitely hurting Telus.” Karim Keshavjee, a physician and consultant associated with Toronto–based Infoclin, points out that Telus platforms will only be as strong as the applications that other companies develop for them. And Andre Kushniruk, a professor of health information science at the University of Victoria, notes that under the Canadian system, most doctors are independent contractors who make individual decisions on whether to buy in. In B.C., the government has been paying for 70% of doctors’ handheld devices, “yet the adoption rate has been slow.” (Some doctors complain that hospitals have failed to provide wireless systems that are up to the task.) Of course, there are also lingering worries over the security of data, but Côté largely dismisses these, citing the experience of the financial system. “Are you afraid to bank online?” he asks. “I’m not.”

And there remains the incredibly complex nature of the mission. It’s true that some countries have enjoyed rapid progress, says Kushniruk, “but everywhere in the world has found that this is far more complicated than they originally thought.” The United Kingdom’s recent co–ordinated effort, he says, stands “as the world’s largest IT project ever.”

Of course, the monumental scale of the project is not exactly a bad thing for Telus. “I want to grow very fast,” Côté says of the company’s health arm. “Double–digit in both revenue and EBITDA,” numbers that media providers can only dream of in the current environment.

Among the things that have to occur for that to take place is a recognition within the sector of who should do what, a process that Côté says is now well underway. “Hospitals should not be in the data business. They should be in the care business,” he says. “They’re getting the message. The timing is perfect.”