Wednesday, September 16, 2009

The Seven Myths of Healthcare Technology
6. Health IT is just a product

And as a product, it is subject to the same market drivers and business strategies as any other commodity.

This was the point of a rather difficult conversation I had the other day with a very smart, very senior business-management consultant at a major firm. I had asked his thoughts on cross-border IT and the difference in implementation costs between the States and Canada. I brought up the idea of the cultural differences and the market limitations these impose on vendors. I posited that there might be value to both customers and vendors alike in having some sort of "cultural/market versioning support." He did not think so. Smart software developers, according to my friend, only deliver one version of their products for the largest single market or buyer. These "large-target" versions are sold across the board and the additional customization and implementation costs are passed down to the smaller buyers and the smaller markets. The Canadian market is much smaller than the US.

And while the number of people in Canada is one-tenth that in the US, the market for HIT is even smaller. After all, my friend noted, because of National Health, there are only a few buyers--the Provincial and regional health authorities; So, maybe 6 in all of BC? One in Alberta? Who would build a special version for only a few dozen customers when there is the US market with hundreds of facilities?

Now, this friend of mine is very smart, and he has been very generous with his insight and time. But on this I am not sure I can agree. Yes, in business, as in the US, healthcare is a commodity. The Cato Institute just said so in US News and World Reports. In Canada, however, this is not the case. Healthcare here is a community responsibility (and the best thing the government has ever done, according to some surveys. As a community, the Canadian HIT market population (providers) is about 8% the size of that in the US--about the size of California, and no developer is writing off the Gold Rush State. Healthcare providers are also different from consumers of other softwares. They are not shopping for something to give them an "edge" over their competitors. Healthcare providers, including the technologists, are always aware that their work is about someone's life--someone in their community. This very non-business value structure makes them companions, not competitors. As companions, they can work together to pressure US vendors to fulfill requirements of the Canadian market (as is already done for bilingual functionality).

As to there being so few buyers, shouldn't that be a good thing? HIT software is usually licensed by the number of users, not the number of contracts. So shouldn't managing a few large sales be better than making and managing a lot of small ones? Imagine selling to all of California with only 50 sales, instead 1050.

Maybe US software companies just have trouble understanding the Canadian customer. Perhaps Canadians have trouble communicating their values to American vendors successfully. The culture gap is certainly wider than people might think, and it appears in the most unexpected places.

What are your thoughts? Is Canada big enough to get more "ready-to-use" software? Are developers only successful if they follow a Keynesian model? Is healthcare just a commodity? And is HIT just a product like any other?

I grew up in one country and have lived and worked in both the US and Canada. But this is a real puzzle to me--and to many people I speak with every day. So let me know your thoughts. Maybe my friend is right.....

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