Market and Regulatory Study for telemedicine via...

ESA Telemedicine via Satellite Study

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ESA ARTES 1 Programme ESTEC Contract N.: 18163/04/NL/AD

Market and Regulatory Study for telemedicine via satellite

Final Report

Reference : ARTES1_Telemed_FR

Issue : 1

Revision : 3

Date : 11/06/2006

EUROPEAN SPACE AGENCY

CONTRACT REPORT

The work described in this report was done under ESA contract. Responsibility for the contents resides in the author or organisation that prepared it.


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ESA CONTRACT N°: 18163/04/NL/AD

SUBJECT: MARKET AND REGULATORY STUDY ON TELEMEDICINE VIA SATELLITE

CONTRACTOR:

ESA CR( )No

STARCODE No of volumes: 1 This is Volume N°1

CONTRACTOR'S REFERENCE: ARTES 1/Telemed_FR

ABSTRACT: This document presents the final report of the European Space Agency’s Market and Regulatory Study on Telemedicine via Satellite (ITT AO/1-4536/03/NL/JSC). The Study was undertaken for the Agency by Eutelsat S.A. and their partners D’Appolonia S.p.A., Avienda Limited and Telemedicine Technologies S.A with the collaboration of Frost&Sullivan for the market analysis aspects. The overall aim of the study was to provide a comprehensive review of the telemedicine market and perform an in-depth analysis of the regulatory frameworks affecting telemedicine. This report summarises the objectives, methodologies and results obtained in each of the four work packages undertaken by the study and also summarises the conclusions and recommendations reached.

The work described in this report was done under ESA Contract. Responsibility for the contents resides in the author or organisation that prepared it.

Names of authors: Lydia Gaillard-Faghihy (Eutelsat), Fabio Bagnoli (D’Applonia), Toral Patel (Avienda), Benedict Stanberry (Avienda), NAME OF ESA STUDY MANAGER: Francesco Feliciani

DIV: Telecoms Department/Applications section (EUI-TSU) DIRECTORATE: European Union and Industrial Programmes

ESA BUDGET HEADING: ARTES 1


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VERSION CONTROL

Version Date Changes / Comments / status of document Author / Organisation

1 20/02/06

First draft

Lydia Gaillard-Faghihy (EUTELSAT)

Fabio Bagnoli (D’Appolonia)

Toral Patel (Avienda)

Benedict Stanberry (Avienda)

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10/05/06 Second draft


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11/06/05 Final draft


VALIDATION

Approved by

Francesco Felician (ESA)i Nathalie Ricard(ESA)

Date of approval

12/06/2006


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Table of Content

1. INTRODUCTION .............................................................................................................................................6

1.1. CONTEXT OF THE STUDY............................................................................................................................. 6 1.2. OBJECTIVES OF THE STUDY ........................................................................................................................ 7 1.3. STUDY LOGIC.............................................................................................................................................. 8 1.4. STUDY TEAM............................................................................................................................................... 9

2. THE “STATE OF THE ART” OF TELEMEDICINE (WP1/TN1)..... ....................................................... 10

2.1. INTRODUCTION......................................................................................................................................... 10 2.2. METHODOLOGY........................................................................................................................................ 10 2.3. IDENTIFYING KEY PLAYERS AND ORGANISATIONS.................................................................................... 11 2.4. AREAS AND APPLICATIONS....................................................................................................................... 12 2.5. THE DATABASE ........................................................................................................................................ 15 2.6. THE EVALUATION PHASE ......................................................................................................................... 16 2.7. RESULTS................................................................................................................................................... 19 2.8. FINAL RANKING ........................................................................................................................................ 21 2.9. CONCLUSIONS........................................................................................................................................... 21

3. THE TELEMEDICINE SERVICE VALUE CHAIN (WP2/TN2)..... ......................................................... 23

3.1. INTRODUCTION......................................................................................................................................... 23 3.2. THE VALUE CHAIN CONCEPT..................................................................................................................... 23 3.3. THE VALUE CHAIN ANALYSIS APPLIED TO TELEMEDICINE......................................................................... 27 3.4. TRADITIONAL MEDICAL SERVICE PROVISION VALUE CHAIN...................................................................... 27 3.5. TELEMEDICINE SERVICE VALUE SYSTEM................................................................................................... 29 3.6. TELEMEDICINE SERVICE PROVIDER VALUE CHAIN.................................................................................... 32 3.7. CONCLUSIONS FROM THE VALUE CHAIN ANALYSIS................................................................................... 34

4. COMPARATIVE ANALYSIS ....................................................................................................................... 36

4.1. COMPARATIVE ANALYSIS METHODOLOGY................................................................................................ 36 4.2. DISASTER RELIEF TELEMEDICINE.............................................................................................................. 48 4.3. RURAL AREA TELEMEDICINE ................................................................................................................... 52 4.4. HOME MONITORING ................................................................................................................................. 57 4.5. E-LEARNING / TELE-TRAINING .................................................................................................................. 60 4.6. MARITIME / OFFSHORE / AVIATION TELEMEDICINE.................................................................................. 63 4.7. CONCLUSIONS........................................................................................................................................... 68

5. THE MARKET FOR SATELLITE TELEMEDICINE SERVICES (WP3/T N3) ..................................... 71

5.1. INTRODUCTION......................................................................................................................................... 71 5.2. METHODOLOGY........................................................................................................................................ 71 5.3. RESULTS................................................................................................................................................... 78

6. LEGAL AND REGULATORY ISSUES IN TELEMEDICINE (WP4 / T N4) ........................................... 84

6.1. INTRODUCTION......................................................................................................................................... 84 6.2. RATIONALE FOR THE TOPICS ADDRESS IN WP4......................................................................................... 85 6.3. THE FUNDAMENTALS................................................................................................................................ 88 6.4. USING TELEMEDICINE............................................................................................................................... 88 6.5. SUPPLYING TELEMEDICINE....................................................................................................................... 90 6.6. APPENDICES.............................................................................................................................................. 93

7. CONCLUSIONS AND RECOMMENDATIONS......................................................................................... 95

7.1. CHARACTERISTICS OF THE TELEMEDICINE MARKET:................................................................................. 95 7.2. MAIN BARRIERS:....................................................................................................................................... 96 7.3. MAIN RECOMMENDATIONS FOR TELEMEDICINE SERVICE PROVIDERS: ...................................................... 96 7.4. RECOMMENDATIONS TO SATCOM SERVICES PROVIDERS: .......................................................................... 97 7.5. RECOMMENDATIONS TO PUBLIC BODIES................................................................................................... 98


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Table of Tables TABLE 1 - IDENTIFIED TELEMEDICINE APPLICATIONS FOR EACH AREA......................................................................... 13 TABLE 2 - WEIGHTS PER CATEGORY FOR APPLICATION EVALUATION.......................................................................... 18 TABLE 3 - RANKING OF TELEMEDICINE APPLICATIONS................................................................................................. 19 TABLE 4 - FRAMEWORK OF PERFORMANCE INDICATORS APPLICABLE TO TELEMEDICINE............................................. 37 TABLE 5 -- POTENTIAL TELEMEDICINE IMPROVEMENTS ACCORDING HEALTH PERFORMANCE INDICATORS................. 38 TABLE 6 - SUMMARY OF THE CASE STUDY/SCENARIOS CONSIDERED IN THE COST COMPARISON ANALYSIS ................. 42 TABLE 7 – FACTORS FOR PATIENTS BENEFITS FOR THE CASE STUDIES.......................................................................... 47 TABLE 8 - CHALLENGES, BARRIERS AND OPPORTUNITIES IN DISASTER RELIEF TELEMEDICINE..................................... 48 TABLE 9 - SPECIFIC INDICATORS OF PERFORMANCE OF TELEMEDICINE SYSTEMS FOR DISASTER RELIEF...................... 51 TABLE 10 -CHALLENGES AND OPPORTUNITIES IN RURAL AREA TELEMEDICINE ........................................................... 52 TABLE 11 - SPECIFIC INDICATORS OF PERFORMANCE APPLIED TO TELEMEDICINE SYSTEMS FOR RURAL AREA

TELEMEDICINE.................................................................................................................................................... 55 TABLE 12 - CHALLENGES AND OPPORTUNITIES IN HOME MONITORING........................................................................ 57 TABLE 13 SPECIFIC INDICATORS OF PERFORMANCE OF TELEMEDICINE SYSTEMS FOR TELEHOMECARE....................... 58 TABLE 14 - CHALLENGES AND OPPORTUNITIES IN E-LEARNING AND TELE-TRAINING .................................................. 60 TABLE 15 - SPECIFIC INDICATORS OF PERFORMANCE OF TELEMEDICINE SYSTEMS FOR E-LEARNING ........................... 63 TABLE 16 - SPECIFIC INDICATORS OF PERFORMANCE OF TELEMEDICINE SYSTEMS FOR THE MARITIME CRUISE SCENARIO

........................................................................................................................................................................... 66 TABLE 17 - SPECIFIC INDICATORS OF PERFORMANCE OF TELEMEDICINE SYSTEMS FOR THE MARITIME CRUISE SCENARIO

........................................................................................................................................................................... 67 TABLE 18 - COMPARATIVE ANALYSIS APPLICATIONS SUMMARY ................................................................................. 69 TABLE 19 - SPLIT OF PRIMARY RESEARCH (TELEPHONE INTERVIEWS).......................................................................... 72 TABLE 20 - EVALUATION OF DRIVERS AND BARRIERS.................................................................................................. 78 TABLE 21 - CURRENT TELECOMMUNICATION CHARACTERISTICS FOR THE SELECTED APPLICATIONS (2005) ............... 81 TABLE 22 - MATRIX IDENTIFYING LEGAL AND REGULATORY ISSUES FOR REVIEW ....................................................... 84

Table of Figures FIGURE 1 – STUDY LOGIC............................................................................................................................................... 9 FIGURE 2 - HIERARCHICAL (TREE) APPROACH TO THE CATEGORIZATION OF TELEMEDICINE SERVICES........................ 10 FIGURE 3 – STUDY DATA BASE INTERFACE.................................................................................................................. 15 FIGURE 4 - PORTER’S VALUE CHAIN SCHEME............................................................................................................... 25 FIGURE 5 - VALUE SYSTEM SCHEME............................................................................................................................ 26 FIGURE 6 - MEDICAL SERVICE PROVIDER VALUE CHAIN............................................................................................... 28 -FIGURE 7 - GENERIC TELEMEDICINE SERVICE VALUE SYSTEM.................................................................................... 30 FIGURE 8 - TELEMEDICINE SERVICE PROVIDER VALUE CHAIN...................................................................................... 34 FIGURE 9 - DISASTER SERVICES-COSTS AND PATIENT BENEFIT OF ‘W ITHOUT TELEMEDICINE’ COMPARED TO ‘W ITH

TELEMEDICINE’.................................................................................................................................................. 49 FIGURE 10 - COMPARISON OF PATIENT ANNUAL COSTS ‘WITHOUT’ AND ‘WITH’ TELEMEDICINE.................................. 54 FIGURE 11 - ESTIMATED ANNUAL COSTS AND BENEFITS OF TELEMEDICINE ALLOCATED TO THE VALUE SYSTEM......... 54 FIGURE 12 - HOMECARE WITH TELEMEDICINE AVERAGE ANNUAL COST AND BENEFIT ASSIGNED TO THE VALUE SYSTEM

........................................................................................................................................................................... 58 FIGURE 13 - TELE-TRAINING ESTIMATED AVERAGE ANNUAL COST AND BENEFIT ALLOCATED TO THE VALUE SYSTEM61 FIGURE 14 - COMPARISON OF ESTIMATED DOCTORS’ ANNUAL COST AND BENEFIT ‘WITHOUT’ AND ‘WITH’

TELEMEDICINE.................................................................................................................................................... 62 FIGURE 15- OUTLINE TRANSPONDER DEMAND METHODOLOGY................................................................................... 77 FIGURE 16 - TRANSPONDER DEMAND METHODOLOGY IN DETAIL................................................................................. 77 FIGURE 17 - TOTAL NUMBER OF INITIATIVES IDENTIFIED, PER APPLICATION................................................................ 79 FIGURE 18 - DEGREE OF TELEMEDICINE IMPLEMENTATION......................................................................................... 81


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1. Introduction

1.1. Context of the study

Information and communication technologies applied to medicine - known as "telemedicine" and "e-health" technologies – have the power to radically transform health and social care for the better. Used appropriately, they can empower people to live healthier lives through receiving treatment, information and advice when and where they need it. The extraordinary developments that are occurring in such fields as computing, communications and medical technologies are now making possible long-foreseen advances in telemedicine and telecare. The convergence of these technologies with the technical advances being made in satellite communications are opening up new and exciting possibilities for the provision of health and social care. The European Space Agency (ESA) recognised the potential that satellite communications have in relation to the delivery of telemedicine and telecare applications. It has hosted and promoted telemedicine as part of the different elements of its « Advanced Research Telecommunications Systems » (« ARTES ») programme and has also held a Symposium on « Telemedicine via Satellite in the Information Society » in May 2003. The Symposium brought together information and communications technology specialists and health professionals. It was aimed at reviewing the current status of satellite-based telemedicine services and technologies and identifying the common requirements of direct relevance to future satellite telemedicine services. It was also a clear outcome from the Symposium that telemedicine represents a good opportunity for satellite telecommunication providers. Indeed, telemedicine via satellite offers the opportunity to extend medical services and health care to remote and rural areas – to any place where there is a need – and to enable specialists to consult with colleagues worldwide. Furthermore medical education represents a very attractive opportunity for satellite services, due to its intrinsic broadcast nature. It is thus a potential interesting opportunity of market for satcoms applications. However, it was also noticed that if Telemedicine via satellite can be considered as a key solution for addressing the problem of the European “digital divide”, until today there have been a number of impediments to the creation of a mature market, among which:

� There still seems to be some lack of clarity regarding definitions and specifications for telemedicine, what telemedicine is and what is truly needed in various applications.

� A major impediment is the lack of resolution as to how physicians (and possibly other health

care professionals) should be reimbursed for services they provide using telemedicine. This may be more significant in private-oriented health care systems.

� There are concerns that the introduction of telemedicine might lead to the disruption of

established referral patterns, linked to a possible lack of control of health care services. These


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range from individual practices concerned with loss of income to broader considerations of professional bodies regarding the future pattern of health care.

� Health authorities have faced many financial and administrative pressures. In this sort of

climate, detailed consideration and implementation of telemedicine systems has tended to be pushed aside by other priorities.

� There is growing acceptance that telemedicine systems require assessment and on-going

collection of relevant data for administrative purposes at the local level. However, in most regions, local resources for these tasks are minimal. There is a real problem in securing resources to gain some understanding of the effectiveness of telemedicine services. The worry is that systems might be acquired but then not be managed efficiently or used effectively.

� Questions of availability of specialist referral advice at major centres are not fully resolved,

especially for real time applications. Continued negotiations seem needed on scheduling of health care professionals and reasonable funding for the organisations concerned.

� Telecommunications and technologies standards are not consistent across the health care

system, so there is variation in the transmission costs and capability that apply to various regions.

From the first analysis carried out at the occasion of this Symposium, it seemed clear that the success of the implementation of telemedicine is rather a matter of organisational issues than of technical obstacles. The unclear legal and regulatory framework where telemedicine services and applications are spreading out can be considered one of the major factors that have hindered a full achievement of telemedicine. As far as market intelligence is concerned, it was underlined that insightful market studies on the specific application of telemedicine via satellite have not thus far been produced. The market surveys available are too general and do not give a clear picture of the potential for these applications. Thus taking into consideration the conclusion of this analysis, ESA decided to take a significant step towards achieving the ubiquitous use of satellite communications to deliver telemedicine services to European citizens by launching a study activity to systematically gather the data that will provide an overview of the telemedicine market and analyse the legal framework within which that market functions, notably for the sectors already identified. The objectives of the study being therefore to provide a comprehensive review of the telemedicine market and perform an in-depth analysis of the regulatory frameworks affecting telemedicine.

1.2. Objectives of the Study

The overall aim of the study was to provide ESA with a comprehensive analysis of the market potential for telemedicine services that are based upon satellite communication technologies, to


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identify commercial strengths, weaknesses, opportunities and threats and to provide a specific insight into the legal and regulatory barriers. The specific objectives of the study were:

� To give a clear picture on the telemedicine services and applications that could gain real benefit from using satellite technologies not only on the technical side but also on the economical and organizational side;

� To demonstrate to satellite industries and operators of ESA member states what are the potential opportunities in term of business development of the telemedicine services using satellite;

� Thus to help decisions makers to realise what directions should be privileged in the future to ensure that satellite and telemedicine developments matched together to provide sustainable and useful services for the citizens and the health communities.

The following issues have been addressed:

� The identification of the main domains where satellite communications can bring added-value to telemedicine services;

� The measurement of the market size and of the opportunities for existing and potential telemedicine services using satellite communications;

� The competitiveness of satellite solutions compare to others; � The modelling of the end-to-end telemedicine services value chains by identification of the

main actors and organisational structure of the services; � The analysis of the different scenario for roll-out of such services � The assessment of regulatory issues and potential barriers to telemedicine services

implementation.

1.3. Study logic

The study was split into four Work Packages (WPs). The detailed results of each work package were provided in a corresponding Technical Note (TN):

� WP1 / TN1: the summarisation, categorisation and review of the “state of the art” in telemedicine, by reviewing the main telemedicine technologies, applications, services, projects and organisations. From these, five representative applications and services were chosen for more detailed examination in further workpackages.

� WP2 / TN2: the development of a generic value chain model for telemedicine services, on the

basis of which a comparative analysis between the specific telemedicine applications selected in WP1 and traditional healthcare approaches could be carried out with respect to cost, operational and organisational benefits.

� WP3 / TN3: detailed market analysis of the opportunities to commercially exploit each of the

telemedicine applications and services identified in WP1.


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� WP4 / TN4: identification of the potential legal and regulatory problems associated with implementation of a satcom-based telemedicine business, with specific emphasis on the applications selected in WP1.

Figure 1 – Study logic

1.4. Study team

The study was performed by a multidisciplinary team composed of:

� Eutelsat , as a prime contractor, brought its expertise in the domain of satcom but also the experience gained through the implementation of various projects of satellite-based telemedicine networks.

� D’Appolonia S.p.A ., an Italian engineering company which benefit from expertise in telecom, ICT and their application in telemedicine

� AVIENDA Limited , a British consultancy company, which is recognised as one of Europe’s leading telemedicine and e-health consultancies especially in the domain of market intelligence and legal issues.

� Telemedicine Technologies S.A . a French company which has a unique experience in developing and marketing tele-services for the health sector.

� Additionally, Frost and Sullivan , a leading consultancy company operating worldwide was subcontracted to complete the competence of the team for the market and business analysis (WP3).


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2. The “state of the art” of telemedicine (WP1/TN1)

2.1. Introduction

The principle objective of Work Package 1 of the study was to provide an update on the “state of the art” in telemedicine through the collection of information on all existing and prospective telemedicine technologies, services and key players. WP1 was led by D’Appolonia SpA with contributions and support from all the partners. This data collection was performed without any a priori exclusions - even telemedicine applications tested only within research or technological development projects were included in our survey - and independently of any particular communication modality (eg, satcoms). It was therefore assumed that there was a considerable wealth of information that needed to be organized into categories and distilled through a selective process to identify those application or services for which a more in-depth analysis would be performed in the subsequent work packages.

2.2. Methodology

The categorisation of the telemedicine services was based on a hierarchical (tree) approach:

Figure 2 - Hierarchical (tree) approach to the categorization of telemedicine services

A clear distinction was made between the “demand side” and the “supply side”. The demand side is driven by medical needs and the different applications identified corresponded to specific medical usages of the technology. The applications were clustered in different areas, according to medical, technical and market features.


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Hence on the supply side each application could be used in a number of different services to fulfil a coherent set of market needs, on a recurrent basis, for paying customers. Such activities may include:

• owning, maintaining and operating a system

• ensuring appropriate customer support (eg, through a technical support hotline)

• providing telecommunication capacity (eg, satellite bandwidth), or

• providing medical services (eg, access to a medical expert). Under this approach the applications on the demand side can be grouped in different areas. An (application) area is in fact defined in the Study as a cluster of applications according to different criteria and features. These features can be:

• medical (eg, home care applications for chronic and degenerative diseases);

• technical (eg, real time advanced telemedicine);

• market (eg, clinical research applications addressed to the pharmaceutical industry).

2.3. Identifying key players and organisations

In parallel with the identification of the applications and services, a preliminary analysis of the key players was carried out, in order to identify the main actors on both the demand and supply sides. These key players were divided into the following categories:

• final users (eg, citizen, customer);

• medical service provider (eg, hospital department, general practitioner, specialist doctor);

• hardware and software provider (eg, medical equipment manufacturer, medical software manufacturer);

• network provider (eg, telecommunication provider);

• telemedicine service provider (eg, network integrator, turn key solutions integrator);

• institutional (eg, ministry of health, quasi-governmental agencies); and

• service sector (eg, medical education provider). A list of key organizations involved in telemedicine worldwide was prepared. For each of the identified organizations the following information was provided:

• name

• website

• contact person

• description of organisation

• potential role


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• geographical dimension.

The identification of these organizations has been useful for the definition of applications and services. In fact, the websites of these organisations were very useful in carrying out the research necessary for this work package.

2.4. Areas and Applications

The study team identified eight general areas of telemedicine application:

• Real-Time Advanced Telemedicine , which includes the most advanced possibilities offered by new telecommunication technologies;

• Specific Store-and-Forward Telemedicine , containing all the telemedicine applications based on captured audio and video clips, still images, or data that are transmitted or received at a later time;

• Generic Tele-consultation Applications , which includes the basic aspects of clinical consultation between geographically separated individuals such as healthcare professionals and their patients or professionals engaged in diagnostic, mentoring or others clinical decision making activities related to the delivery of the health care services;

• Home Care , this area involves the applications addressed to citizens at their home (eg, elderly people, patients with chronic disease);

• Portable and Mobile Applications , which includes novel applications based on sensor and miniaturization technologies in ways that assure extreme mobility for patients and for having the capabilities to intervene with different kinds of users;

• Continuing Education to Health Professionals , its applications are addressed to health professionals, and are offered to all users in the area “at home services” for the education;

• Clinical Research , including software and telematic applications to support clinical research; and

• Clinical Data Management , this area mainly includes applications for better management of the patient’s healthcare and of the organization of the involved sites (eg, hospital, clinic).

Within each area different applications were classified according to whether they were:

• fixed or mobile;

• required large amounts of bandwidth (Broadband) or not (Narrowband)

• synchronous (realtime) or asynchronous (store-and-forward). The identified applications are provided and implemented via different services. We further categorise applications into three categories:

• currently available through commercial telemedicine services;

• limited availability; and


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• technically mature but not commercially available. The identified applications for each area are provided in the table below:

Table 1 - Identified telemedicine applications for each area

Area Application

Tele-surgery

Maritime Telemedicine

Offshore Telemedicine

Disaster Relief Telemedicine

Tele-endoscopy

Travellers Medicine

Tele-echography

Tele-dialysis

Tele-rehabilitation

Speech and Language Therapy

Early Warning System

Real Time Advanced Telemedicine

Aeronautical Telemedicine

Tele-dermatology

Tele-pathology

Tele-radiology

Tele-neurology

Tele-ophtalmology

Tele-dentistry

Plastic Surgery Support

Specific Store and Forward

Telemedicine

Tele-mammography

Tele-psychology

Generic Medical Advice

Tele-veterinary

Generic Tele-consultation

Applications

Pre-hospital TeleCare


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Rural Area Telemedicine

Tele-psychiatry

Multidiscipline Tele-consultation

Tele-cardiology

Tele-therapy for Bulimic Disorders

Remote Pain Management

Prison Telemedicine

Home Monitoring

Tele-Education

On line Database for Citizens

Home Tele-nursing

Tele-care Applications Integrated with Smart Card

Technology

Tele-infusion

Home Care

Tele-spirometry

Personal Healthcare Applications Portable and Mobile Applications

Alcohol and drugs consumption control

E-learning

Tele-training

Virtual Library for Practitioner

Continuing Education to Health

Professional

On line Databases for Practitioner

Pharmaceutical research

Bio-informatics Clinical Research

Clinical Trials

On-line Patient Record Clinical Data Management

Clinical Management Applications


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2.5. The Database

A database (accessible via LAN and via WEB) was created under WP1 to implement the overall approach and methodology (tree approach to the services). It has been designed to include all the data collected in the study and to enable the selection of specific applications and services for more detailed study in WPs 2, 3 and 4. It has been therefore used to insert the marks concerning the defined criteria for each application. The database was based on Microsoft SQL Server 2000 Desktop Engine (MSDE 2000), as defined in the Technical Annex of ESA’s contract with the study team. It has been also ported to MySql. The database is accessible over the LAN (using an interface implemented in Visual Basic) and via WEB (through an ASP interface). The Study database can be reached at the following URL: http://studydb.esa.int, login: guest, password: guest.

Figure 3 – Study data base interface

The core of the database is formed of a set of tables that reflect the tree approach to applications and services. These tables are:

• areas

• applications


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• services

• evaluations

• criteria evaluations (to include the marks)

• criteria (list of criteria)

• criteria category

• key players

• actors (users of the database)

• type of connectivity (for the services)

• medical areas (for the services)

• organisations

2.6. The Evaluation Phase

The proposed approach of the study was based:

"… on the selection of a number of representative [medical] applications that will be used as a basis for the modelling of the telemedicine value chain, and for the definition of the scope of the business [and] market … analysis.”

This approach was mainly motivated by the need to obtain an updated picture of the current state of the art and establish an inventory of all medical fields for which the existing literature was mentioning telemedicine applications. A meaningful selection process is difficult to establish and there is always a risk that the results of the study will be "anticipated" by the authors on a "subjective" basis. To reduce this risk to a minimum, a structured scoring methodology was proposed. A series of criteria of "representativeness" was specified. When possible, these criteria referred to objective quantifiable indicators. The various applications were scored in a range [1, 10] against each of the criteria. This range was used to "order" the various applications, each one relative to the others, and the coherence of the resulting ranking was checked by consensus (within the study team) criteria by criteria to avoid "personal" artefacts. The criteria to evaluate the applications have been divided into six categories:

• medical relevance;

• technical relevance;

• role of the satellite;

• market relevance;

• additional social relevance; and

• process / organisational impact


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2.6.1 Medical Relevance

The medical perspective refers to the potential or demonstrated benefits resulting from the introduction of telemedicine techniques on the corresponding clinical practice, be it for the patients, for the involved health professionals, or from the point of view of cost-effectiveness. The medical relevance criterions are:

• improved diagnostic accuracy; and

• improved management of health professional resources.

2.6.2 Technical Relevance

The technical perspective refers to the maturity of the envisaged or implemented technical solutions and their implementation on a "market" basis estimating if these are solutions based on existing "off-the-shelf" systems or technologies, and if there are known examples of market based implementation. The technical relevance criteria are:

• technical maturity of end-to-end systems; and

• operational maturity of end-to-end systems.

2.6.3 Role of the Satellite

This criteria evaluates the suitability of satellite telecommunications to deliver the service, with respects to the following strengths:

• accessibility;

• ubiquity;

• broadband communications capability

• broadcast / multicast capability;

• quality of service (QOS); and

• flexibility.

2.6.4 Market Relevance

The "market" perspective refers to the current market development as it can be measured by the number of competitors and the estimated market size. The market relevance criterions are:

• level of competition in the market; and

• potential market size (impact).

1.1.1 2.6.5 Additional Social Relevance

The following criteria refer to the social value of the application:

• quality of life: an estimation of the improvement in the quality of life for users;


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• safety and working conditions: an estimation of improvement in the safety of the working environment; and

• support to major diseases: whether the application is dealing with major diseases and can reduce their impact or improve their management

2.6.6 Process / Organizational Impact

The following criteria try to evaluate how each application can improve the process and organization of the involved stakeholders.

• cooperation: evaluates whether the application improves the possibilities for cooperative working among all the involved actors;

• effectiveness in using human resources: prospective improvement that the application can give in optimizing the use of human resources in the involved organizations;

• regulatory requirements; and

• compatibility with current organizational structures: this criteria evaluates the prospective changes introduced by the service in the current organization.

2.6.7 The Evaluation Method

For each application identified in the study, each member (organization) of the study team has provided an evaluation (giving a mark from 0 to 10 for each criterion of any single identified application). In order to complete the evaluation procedure the following values had been calculated:

• average per category within the single evaluation;

• weighted (according to the initial proposed weights given in the table below)

• average per application within the single evaluation; and

• average of the different evaluations for each application.

Criterion Category Weight

Medical Relevance 0.8

Technical Relevance 0.8

Role of the Satellite 1.0

Market Relevance 0.8

Additional Social Relevance 0.4

Process / Organizational Impact 0.4

Table 2 - Weights per category for application evaluation


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For each application, marks for each criteria were inserted using the database (described in the previous section). These marks were based on the previously mentioned considerations and on the estimations and points of view of the study team. Details and comments about the marks proposed for each application were provided in an annex to Technical Note 1 (where the average value for each group of criteria were considered for each application). The aim of this methodology was to provide a ranking for the identified applications. The average of the different evaluations for each application was used to rank the application and the highest ranked applications were then considered for further analysis.

2.7. Results

The following table shows the ranking of all the telemedicine applications, starting with the highest ranked:

Table 3 - Ranking of telemedicine applications

ID Application Weighted Average

4 Disaster Relief Telemedicine 5.63

25 Rural Area Telemedicine 5.55

2 Maritime Telemedicine 5.53

3 Offshore Telemedicine 5.45

41 E-learning 5.41

42 Teletraining 5.34

32 Home Monitoring 5.34

31 Prison Telemedicine 5.28

48 On-line Patient Record 5.10

20 Telemammography 5.07

33 Tele-Education 5.07

12 Aeronautical Telemedicine 5.06

15 Teleradiology 5,04

44 On line Databases for Practitioner 5,03

13 Teledermatology 5,03

28 Telecardiology 5,03

24 Pre-Hospital TeleCare 5,02

14 Telepathology 4,98

43 Virtual Library for Practitioner 4,95

49 Clinical Management Applications 4,94


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26 Telepsychiatry 4,89

21 Telepsychology 4,88

35 Home Telenursing 4,76

27 Multidiscipline Teleconsultation 4,73

6 Travellers Medicine 4,49

34 On line Database for Citizens 4,37

47 Clinical Trials 4,34

22 Generic Medical Advice 4,27

38 Telespirometry 4,03

45 Pharmaceutical research 4,01

16 Teleneurology 3,94

40 Personal Healthcare Applications 3,93

17 Teleophtalmology 3,89

36 Telecare Applications Integrated with

Smart Card Technology 3,75

1 Telesurgery 3,71

46 Bioinformatics 3,61

7 Tele-echography 3,54

11 Early Warning System 3,53

30 Remote Pain Management 3,47

37 Tele-infusion 3,41

39 Alcohol and drugs consumption control 3,40

29 Tele-therapy for Bulimic Disorders 3,32

18 Teledentistry 3,29

10 Speech and Language Therapy 3,07

9 Tele-rehabilitation 2,68

5 Teleendoscopy 2,60

23 Televeterinary 2,57

8 Tele-dialysis 2,38

19 Plastic Surgery Support 2,23


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2.8. Final ranking

For each area the highest evaluated application has been pointed out:

Table 4 - Highest evaluated application for each area

Area

Highest evaluated application

within the study

Real Time Advanced Telemedicine Disaster Relief Telemedicine

Specific Store and Forward Telemedicine Telemammography

Generic Tele-consultation Applications Rural area Telemedicine

Home Care Home Monitoring

Portable and Mobile Applications Personal Healthcare Applications

Continuing Education to Health Professional E-learning / Teletraining

Clinical Research Clinical Trials

Clinical Data Management On-line Patient Record

2.9. Conclusions

After the collection of material, categorisation and evaluation of the applications, the following applications are proposed for a further analysis to be done in TPs 2, 3 and 4 of the study:

• Disaster Relief Telemedicine

• Rural area Telemedicine

• Home Monitoring

• Maritime/Offshore/Aviation Telemedicine

• E-learning/Teletraining The results of the evaluation phase are clearly affected by the high weight given to the “role of satellite” criteria. From the first analysis undertaken in WP1, some conclusions can be drawn:

• although the technology is now quite advanced, telemedicine is still not widely used. Compared to other telecommunications applications, for instance, there are very few telemedicine service providers for the identified applications.

• like all applications of new technologies, there are barriers to widespread diffusion for telemedicine. Some of the problems are related to the technology, but most can be attributed to other factors.


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• as it stands today, telemedicine has proven its value in support of the delivery of tele-radiology, tele-pathology, general medical diagnosis, remote consultations, triage decision-making and emergency evaluations. It has also been used as an effective support for pre-transfer or admission coordination, follow-up medical care, post-operative appointments and medication checks.

• the greatest number of services and telemedicine programs have been found in USA and Canada, rather than in Europe.

• opportunities for the delivery of telemedicine services via satellite, especially in some specific niches, can be identified and evaluated

• The research undertaken in WP1 has created a substantial address book including the providers of the identified services, the identified key organizations, the identified projects and the public and private organizations selected.


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3. The telemedicine service value chain (WP2/TN2)

3.1. Introduction

The overall purpose of WP2 was to analyse the service value chains of the applications selected in WP1, to identify the key actors along these chains and understand through more detailed analysis, the real benefits brought by the use of telemedicine in these targeted domains. WP2 was led by Avienda Limited, with contributions from all of the partners. The objective here is not to understand the potential of those applications from a market point-of-view but to understand the opportunities they represent (taking into account the benefits that can be realised in terms of cost-effective and cost-efficient operations, organisation change, etc.) As outlined in the Statement of Work, WP2 aimed specifically:

• to formulate a clear and coherent model of the generic telemedicine service value system;

• to identify the key actors and their roles and responsibilities, analyse the interactions among them and the typical elements of costs, revenues and funding sources in the different parts of the applications service value systems;

• to identify the market leaders and their positioning in each of the selected areas of telemedicine and to provide an analysis of the critical factors that so far have contributed to their respective achievements; and

• to conduct comparative analysis on cost, operations and organisation with respect to the traditional healthcare approach for each of the applications.

In the resulting Technical Note 2 the study team proposed:

• the analysis of the generic telemedicine service value system and the study of the value chains for the main actors in the value system;

• the application of these models to all the selected applications; and

• a comparative analysis for each application comparing the provision of traditional healthcare to that of telemedicine. This includes cost-effectiveness and cost comparisons analyses based either on existing case studies (rural, home monitoring and maritime telemedicine) or on scenarios analyses where appropriate case studies are not available for the specific applications (disaster relief telemedicine and medical e-learning).

3.2. The value chain concept

The value chain analysis concept is well defined by Michael Porter in his book Competitive advantage: creating and sustaining superior performance1:

1 Porter, Michael E. (1985) “Competitive advantage: creating and sustaining superior performance”, New

York: The Free Press.


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"Starting with the generic chain, individual value activities are identified in the particular firm. Each generic category can be divided into discrete activities [...]"

Value Chain Analysis describes the activities that take place in a business and relates them to an analysis of the competitive strength of the business. Work undertaken by Michael Porter suggested that the activities of a business could be grouped under two headings:

• Primary Activities - those that are directly concerned with creating and delivering a product (eg, component assembly); the activities are: inbound logistics, operations, outbound logistics, sales and marketing, service.

• Support Activities - which whilst they are not directly involved in production, may increase effectiveness or efficiency. These activities are administrative infrastructure management [Porter: Firm Infrastructure], human resources management, R&D [Porter: Technology Development], and procurement.

Porter has extended the concept beyond individual organisations in his concept of “value systems”:

"A firm's value chain is imbedded in a larger stream of activities ... the value system. ... Gaining and sustaining competitive advantage depends on understanding not only a firm's value chain but how the firm fits in the overall value system." 2

It applies to whole supply chains and distribution networks. The delivery of a mix of products and services to the end customer will mobilise different economic actors, each managing its own value chain. By exploiting the upstream and downstream information flowing along the value chain the firms may try to bypass the intermediaries creating new business models.

3.2.1 Porter’s value chain model

According to Porter, the value chain is a systematic approach to examining the development of competitive advantage. Competitive advantage is produced from the way firms organise and perform discrete activities. The operations of any firm can be divided into a number of activities. Value for firms’ shareholders is created through performing the different activities. The ultimate value a firm creates is measured by the amount customers are willing to pay for the product or service. If the value exceeds the cumulative cost of performing all the required activities then the firm is considered to be profitable. Firms can create competitive advantage by perceiving or discovering new and better ways to compete in an industry and bringing them to market, which Porter refers ultimately as “innovation". It is broadly defined to include both improvements in technology and better methods or ways of doing things.

2 Porter M. Competitive Advantage, New York: Free Press, 1985, p. 34.


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In order to analyse the specific activities through which firms can create a competitive advantage it is useful to model the firm as a chain of value-creating activities. Porter identifies activities, functions and business processes that have to be performed in designing, producing, marketing, delivering and supporting a product or a service. All the activities in the chain contribute to buyer value.

Procurement

Human Resources Management

Product R&D, technology, System Development

Inbound

LogisticOperations

Outbound

Logistic

Sales&Marketing

After Sales

ServicesMargin

General Administration

Primary Activities

Support Activities

Procurement

Human Resources Management

Product R&D, technology, System Development

Inbound

LogisticOperations

Outbound

Logistic

Sales&Marketing

After Sales

ServicesMargin


Primary Activities

Support Activities

Figure 4 - Porter’s value chain scheme

3.2.2 Primary Activities

The goal of these activities is to create value that exceeds the cost of providing the product or service, thus generating profit:

• Inbound logistics : include the receiving, warehousing, and inventory control of input materials.

• Operations : are the value-creating activities that transform the inputs into the final products.

• Outbound logistics : are the activities required to get the finished goods (products or services) to the customer, including warehousing, order fulfilment, etc.

• Marketing & sales : are those activities associated with getting buyers to purchase product, including channel selection, advertising and pricing.

• After Sales Service : These, are those activities that maintain and enhance the good’s value including customer support, repair services, etc.

Any or all of these primary activities may be vital in developing a competitive advantage.


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3.2.3 Support activities

The primary value chain activities described above are facilitated by support activities. Porter identified four generic categories of support activities:

• Procurement: the function of purchasing the raw materials and other inputs used in the value-creating activities.

• Technology development: include R&D, process automation, and other technology development used to support the value chain activities.

• Human resource management: the activities associated with recruiting, development and compensation of employees

• Firm infrastructure : includes activities such as finance, legal, quality, and management.

3.2.4 The value system

A firm’s value chain for competing in a particular industry is embedded in a larger stream of activities, which Porter has termed the “value system” shown in Figure 4. A firm’s value chain is part of a larger system that includes the value chains of upstream suppliers and downstream channel and customers. The value system includes suppliers who provide inputs (e.g., raw inputs etc.) to the firm’s value chain. On its way to the ultimate buyer, a firm’s product often passes through the value chains of distribution channels. Ultimately, products become purchased inputs to the value chains of their buyers, who use the products in performing activities of their own.

FirmFirmValue Value ChainChain

SupplierSupplierValue Value chainschains

ChannelChannelValue Value ChainsChains

BuyerBuyerValueValueChainsChains

FirmFirmValue Value ChainChain







Figure 5 - Value System Scheme

Therefore each of these blocks can be expanded in a Porter’s value chain, and we will have a Porter’s value chain for the supplier, for the firm, for the buyer, etc. Linkages not only connect activities within a firm, but also create interdependencies between a firm and its suppliers and channels. A firm can better create competitive advantage by better optimisation or co-ordinating these links to the outside. Value chain analysis could be performed for various types of firms (or value system analysis for groups of firms) whose final task is either to realise and commercialise a product, or to create and to supply a service.


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3.3. The value chain analysis applied to telemedicine

Value chain models were originally developed for manufacturing processes, but they can also be extended to the analysis of services, making attention that the translation attempted is treated more for analogy rather than literally. The problem is that in the provision of a service, the outputs from various participants in the process are not always so readily measurable and moreover in most cases there is a requirement of simultaneity of supply from a range of contributors for the service to be delivered at all. This often-literal simultaneity both makes the identification of individual contributor outputs more difficult and means that the chain concept is to be understood analogously rather than literally when applied in the service sector.

Based also on these considerations, three aspects of a possible generic telemedicine value chain model were proposed by the Study team:

• a traditional medical service provision value chain model. It represents the phases of how the traditional medical service is delivered.

• a telemedicine service value system. It shows the supply of the telemedicine service from a “functional” point of view indicating how the service is delivered to the final user and to the citizen/patient, and showing the position and the role of the key players (defined in TN1) inside the supply of the service.

• a telemedicine service provider value chain model. It shows the primary and support activities (following the Porter's value chain concept) linked with Telemedicine Service Provider’s functions.

3.4. Traditional medical service provision value chain

The model is focused in the delivery of traditional healthcare services to patients/citizens, from the Porter’s value chain model point of view . The primary activities represent the provision of the generic medical service through the traditional way of the healthcare (e.g. a patient who needs a medical consultation goes to the nearest hospital to have it); this scheme can be a stand alone one without telemedicine, having as support activities all the activities needed in the healthcare sector (administration, human resources management, procurement etc.) like in a Porter’s model. Generic telemedicine services are represented as a support activity for the delivery of medical service, its position can be located into the R&D-technology and system development activity.


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SUPPORT ACTIVITIES

Patient Acceptance,Anamnesis ,

INBOUND LOGISTIC Medical

Examinations,Surgical

Operations,Medical

Consultations,Treatment

OPERATIONS

Patients Transfer intoOther Hospital Units,

Patient Discharge

OUTBOUND LOGISTIC

Reimbursement of the

Service

MARKETING AND SALES

Patient Follow-Up

AFTER SALES SERVICES

Human Resource Management

Procurement


PRIMARY ACTIVITIES

Services R&D, Technology, System Development

SUPPORT ACTIVITIES

Patient Acceptance,Anamnesis ,

INBOUND LOGISTIC Medical

Examinations,Surgical

Operations,Medical

Consultations,Treatment

OPERATIONS

Patients Transfer intoOther Hospital Units,

Patient Discharge

OUTBOUND LOGISTIC

Reimbursement of the

Service

MARKETING AND SALES

Patient Follow-Up



Procurement


PRIMARY ACTIVITIES


Figure 6 - Medical service provider value chain

The primary activities in this model can be summarised as:

o Inbound Logistic : this first stage includes all the actions and procedures, mainly to collect patient data (personal data, medical history), for example:

All the procedures concerning the acceptance of the patient in the health care centre (hospital, first aid centre, general practitioner’s office,), like the personal data recording.

Anamnesis (medical history of the patients)

o Operations : it includes all the possible medical actions that have to be performed on the patient, such as:

- Medical Examinations

- Surgical Operations

- Medical Consultation

- Treatment

o Outbound Logistic : it includes all the processes of management of the patients that have already received medical care, for instance.

- Transfer of the patient in other hospital units or specialised hospital

- Patient Check-out

o Marketing & Sales : the delivering of medical care has a cost, these costs needs to be covered by someone (Public Health, private assurance companies, patients).

o After Sales Services : Once the patient has been dismissed from the hospital centre, he/she may need other care (treatment or follow up) all these “after-operation” functions are contained inside this box.


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The support activities in this model are the same activities considered by Porter’s model: human resource management, general administration, procurement, technology and R&D. They can be summarised as:

o General Administration & Human Resource Management : they are the same support activities in every context (manufacturing and service provision), to manage, for instance, personnel assumption, dismissal and all the functions needed for the correct operation of the health care structure.

o Procurement : it includes the management of the supply of every good (e.g. from bandage to NMR system) that the hospital units or other structures need to work.

o Technology, System Development, R&D : In the model that we have proposed, the Telemedicine has been seen as a support activity that aims to improve the delivery of the traditional health care service.

3.5. Telemedicine service value system

Our purpose in this section was to propose a detailed model that is focused on how ICT can modify the traditional way to deliver a medical service into a telemedicine service. It shows the flow of the delivered service starting from the Telemedicine Service Provider to the Citizen / Patient, considering the Telecommunication and the Hardware & Software Provider as a support activity for the implementation of the telemedicine services. This can be seen as the representation of the delivery of a telemedicine service from a functional point of view.

It is important to note how different players, are linked together. In all the models that we have created (general model and specific application models) the Telemedicine Service Provider (TSP) always gives input to the Medical Service Provider; the Medical Service Providers provide their output to the Final User (which can be the patient himself/herself, or an other medical centre, a hospital etc.) whose aim is to deliver the service to the citizen. Telecommunication Provider and Hardware & Software Provider play a slight different role; they, in fact, can be involved, in every level of the delivery of service depending on the chosen application. The square sketched boxes mean that, in some applications, telemedicine service provider and medical service provider functions can be merged in a unique entity that provides both tasks. Same considerations apply for the final user and the citizen, for example, in the home monitoring telemedicine application the final user coincides with the citizen.


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Tel

ecom

mun

icat

ions

Pro

vide

rH

ardware &

Softw

are Provider

Medical Service Provider

HospitalDepartments

GPs &

Specialists

ScientificCenters

Telemedicine Service provider

Network Integrator

Turn Key Solutions

Final User

Citizen

Tel

ecom

mun

icat

ions

Pro

vide

rH

ardware &

Softw

are Provider

Hardw

are & S

oftware P

rovider


HospitalDepartments

GPs &

Specialists

ScientificCenters


HospitalDepartments

GPs &

Specialists

ScientificCenters


Network Integrator

Turn Key Solutions


Network Integrator

Turn Key Solutions

Final User

Citizen

Final User

Citizen

-Figure 7 - Generic telemedicine service value system

3.5.1 Role and position of the key players

A Telemedicine Service Provider is a supplier of a medical service between two or more physically separate parties. The positioning of the telemedicine service provider is the following:

• co-ordinate all the system integration tasks (internal resources or external consultancies);

• take in charge or co-ordinate all logistic activities required for an efficient operation of the telemedicine solution and intervene as a "one-stop-shop" access point for the customer and the users;

• provide round-the-clock technical support, hotline & user training support;


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• ensure the continuity of service, quality assurance measures, integrity and confidentiality of data in full compliance with the applicable regulations;

• organise users feedback and continuous maintenance (evolutions) of the proposed applications, as well as assessment of clinical & financial efficiency;

• develop marketing & sales strategies, including the elaboration of contractual and financial solutions for service delivery; and

• maintain a dedicated sales force

The Medical Service Provider supplies professional expertise in the field of medicine. This expertise may be provided in the form of knowledge alone or as the practical application of that knowledge. This may involve an individual healthcare professional or group of healthcare professionals acting in a private capacity or as directly employed staff of a telemedicine service. The provision of medical services via telemedicine may involve one or many units or departments from a healthcare institution. Examples of medical service providers include hospital departments, emergency departments, First Assistance Local Unit, general practitioners (GP), specialist doctors and scientific centres. The Final User of a telemedicine service could on certain occasions be citizens or patients as private individuals, but it is far more likely that they will be healthcare organisations: typically local authorities, hospitals, clinics and healthcare professionals. Local authorities are likely to enter into similar arrangements for the supply of tele-homecare and remote monitoring services for the elderly and other vulnerable people residing in their area and who live in private or social housing or in sheltered accommodation. Hospitals, clinics and healthcare professionals may all be purchasers of telemedicine services where these may enable them to tackle specific organisational or clinical challenges such as a shortage of specific healthcare staff or the geographical distances between themselves and their patients. The role of the final user is usually determined by the healthcare setting in which they are operating. For example accident and emergency response services such as ambulances can benefit considerably from telemedicine services and therefore their value chain will differ from the application of telemedicine in another healthcare setting. This will in turn also influence the value of the technical component. The Citizen is usually the ultimate beneficiary of a telemedicine service. This benefit may be very direct where, for instance, they have been present during a video-consultation with a specialist, or it may be more indirect where they have benefited from the increased efficiency and effectiveness that the hospital caring for them has achieved through, for example, the use of tele-radiology to provide rapid reporting of images. Hardware and Software Providers: hardware providers supply tangible technology such as computing equipment and medical devices while software providers supply programs to run the hardware devices for telemedicine applications. This category of actors in the telemedicine service value chain is one of the largest, but there are very few examples of hardware and


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software suppliers also being a telemedicine service provider. Most typically, they will supply their products directly to a final user who will integrate them with the supply of medical services themselves, or they will supply them to a telemedicine service provider who will take on the responsibility to the final user for their installation, operation and maintenance. Telecommunication Providers are responsible for providing the telecommunication service whereby the various players in the provision of telemedicine can communicate with each other. Given the massive investment necessary to develop telecommunications networks and infrastructures these providers are almost always large companies for whom healthcare is just one of a number of important sectors. Telecommunication providers have few direct contacts with the medical users, because what they normally provide is the infrastructure, the network and bandwidth that will enable the telemedicine application to communicate. It is also the same for Satellite operators. However, due to the recent improvements of the satellite based solutions (in terms of flexibility of the proposed services, in terms of price and performances of the ground terminals), to the recent liberalisation of the telecom market in Europe and to the growing demand for broadband services in the medical sector, one can infer that there are clear opportunities. But the practical development of a telemedicine offer including satellite communications particularly requires the emergence of specialised service providers able to take in charge most of the logistic constraints: shipping, delivery and commissioning of ground terminals, compatibility with different satellite solutions, continuity with other telecommunication platforms etc., and to develop an adapted marketing and sales strategy.

3.6. Telemedicine service provider value chain

A "Telemedicine Service Provider" develops and operates a dedicated software / hardware infrastructure. In some cases this infrastructure may have specific interfaces with the networking infrastructure (e.g. satellite based networking) for instance to automate and streamline some processes required by the operation of the platform. In most of the cases today, the dedicated software / hardware infrastructure includes a client/server module, although "peer to peer" applications may co-exist. This implies that specific hosting and administration services have to be provided. Primary Activities

o Inbound Logistic Reception and storage of the equipment: This activity takes as input all the technical equipment provided by the procurement support activity. After the equipment inventory it can be distributed to the operations phase in order to create the final tool set for the telemedicine service

o Operations Servers Administration & Maintenance Ensure the continuity of service, quality assurance measures, integrity and confidentiality of data in full compliance with the applicable regulations.


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Service Deployment & Software Maintenance Provide the customers with the required software (and hardware if any) at the point of need. Organise continuous maintenance (evolutions) of the proposed (software) applications. Hosting Provision of the secure hosting environment for the servers and databases (access controlled rooms, fire detection & protection, protected power supply), provision of the required internet connectivity (at the servers level), provision of the servers and data storage space. Often this activity is outsourced to specialised companies.

o Outbound Logistic: once that the final product has been defined and produced, the service distribution process has the task to deliver it to the store centre or directly to the customer.

Final Configuration of the Telemedicine Service (at customer’s premises) Take in charge or co-ordinate all logistic activities required for an efficient operation of the telemedicine solution and intervene as a "one-stop-shop" access point for the customer and the users. One of the advantages of becoming "electronic" is to reduce double data entries and provide easy data retrieval depending on the context of use. In some cases this may require that specific gateways be developed to enable interoperability with Information Systems already in use at customers’ site. In the case of satellite networking, there is a clear barrier as the required earth terminals have to be deployed before the service can be delivered. However, part of the corresponding activities can then be sub-contracted, e.g. to specialised resellers or certified companies (e.g. to install and maintain a specific type of earth terminal).

o Marketing and Sales Business Development Develop adapted marketing & sales strategies, including the elaboration of adapted contractual and financial solutions for service delivery. Maintain a dedicated sales force.

o After Sales Services Technical support Provide round-the-clock technical support, hotline & user training support.

Support Activities: Considering the four support activities defined by Porter, in the TSP value chain two of them have a main role.

o Services R&D, Technology, System Development Users feedback In a market that can be considered as being in "embryonic" or "start" phase, with strong operational constraints at user sites, with a life cycle of the knowledge and technologies that continuously shortens (average 12 months), it is vital to maintain an "in house" strong R & D effort in close relationship with users feedback. A dedicated development team has to be maintained, and efficient interface with the identification of users needs and trends has to organised.


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o General Administration

User & contract management User accounts management, including the implementation of adapted "authentication" methodologies and procedures are integral part of the service ("operations"). The contract management and invoicing can also be considered as part of the service and not as "general administration" for instance. Compliance with specific regulations has to be considered too.

SUPPORT ACTIVITIES

Reception, storage and internal

distribution of the system (equipment) to be integrated for

the service

INBOUND LOGISTIC

Server Administration

& Maintenance,Service Deployment

& Software Maintenance,

Hosting

OPERATIONS

Final Configuration of the telemedicine

service (at customer premises)

OUTBOUND LOGISTIC

Business Development

MARKETING AND SALES

Technical Support,Customer Care



System Procurement (HW & SW Equipment, Telecommunication Infrastructures)

PRIMARY ACTIVITIES


User & Contract Management


User Feedback

SUPPORT ACTIVITIES

Reception, storage and internal

distribution of the system (equipment) to be integrated for

the service

INBOUND LOGISTIC

Server Administration

& Maintenance,Service Deployment

& Software Maintenance,

Hosting

OPERATIONS



OUTBOUND LOGISTIC



OUTBOUND LOGISTIC


MARKETING AND SALES


MARKETING AND SALES






System Procurement (HW & SW Equipment, Telecommunication Infrastructures)

PRIMARY ACTIVITIES


User & Contract Management


User Feedback

Figure 8 - Telemedicine service provider value chain

3.7. Conclusions from the value chain analysis

The value chain analysis model can be applied to a wide variety of both manufacturing and service provision contexts. The problem is that in the provision of a service, the outputs from various participants in the process are not always so readily measurable. Moreover in most cases there is a requirement of simultaneity of supply from a range of contributors for the service to be delivered at all. From the analysis of the traditional healthcare value we have defined telemedicine as a supporting activity to traditional healthcare provision. Depending on the case, its main function can thus be to make the process more efficient, more cost-effective, or provide better quality.


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In our definition of telemedicine and telemedicine service value chain we have also taken the following important considerations:

• the telemedicine service is seen in this study as a technical service delivered mainly to the medical service provider. As defined in Technical Note 1, the telemedicine service provider does not deliver the medical service components itself.

• we did not consider the B2C option where the customer is the citizen or the patient. The attempt was in fact to clearly separate the medical from the technical components of the value chain by introducing the concept of "Medical Service Provider" versus "Telemedicine Provider" seen as the provider of the technical component. Three aspects of a possible generic telemedicine value chain model have been therefore proposed by the Study team:

1) A Traditional Medical Service Provision Value Chain M odel , representing the phases of how the traditional medical service is accomplished.

2) A Telemedicine Service Value System , showing the supply of the telemedicine service from a “functional” point of view;

3) A Telemedicine Service Provider Value Chain Model , showing shows the primary and support activities (following the Porter's value chain concept) linked with Telemedicine Service Provider’s functions.

Telemedicine by definition implies, in fact, the co-operation of several distinct entities. Porter's model is originally designed to model the value chain of the internal (primary) processes of an industry (company, institution). To model "telemedicine services", it is therefore necessary to switch to the concept of "value chain system" which has been introduced in the current report. There, the various "distinct" co-operating entities can be evidenced and all components easily identified:

• the "remote medical contributor" defined in the Study as "medical service provider", whose key characteristic is that they are not in the presence of the patient himself and has its own organisational and production constraints;

• the "telemedicine service provider" who provides the necessary technical component and provides the telemedicine service;

• and the "medical care provider" (final user) who has usually the patient (the ultimate beneficiary of the service) in front of them.


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4. Comparative analysis

A comparative analysis was undertaken aiming at providing a general overview of the benefits of telemedicine in comparison to traditional healthcare approaches in the domain related to the selected applications. The study team also used a specific cost model to assess the specific benefits of telemedicine. The objective here was not to understand the potential of those applications from a market point-of-view but to understand the opportunities they represent (taking into account the benefits that can be realised in terms of cost-effective and cost-efficient operations, organisation change, etc).

4.1. Comparative analysis methodology

Previous value chain and value system diagrams show how telemedicine supports the delivery of healthcare to patients. To succeed in being accepted by healthcare professional and to penetrate more widely the healthcare sector, telemedicine has to prove that it effectively brings benefits to its users and beneficiaries (the patients). Many studies have tried to show how telemedicine is beneficial for the different actors of the healthcare value chain by helping healthcare professional in the delivery of care, helping patient in accessing healthcare, helping also public health authorities monitoring healthcare (epidemiological network for example, etc.) helping insurance company saving costs by avoiding useless travel for patients, etc. The benefits of telemedicine have been analysed systematically for the five telemedicine services selected for the purpose of this study in WP1. The economic (thorough cost-effectiveness analysis) and organisational impact of telemedicine has been examined by comparing the traditional process with telemedicine solutions in the different cases. For some case studies or scenarios, quality aspects have also been drawn.

4.1.1 The comparative analysis conceptual framework:

When the generic value chain model is applied to the application of telemedicine in medical service value systems, it provides an insight into the interconnections between players in the overall provision of a telemedicine service, and allows the contribution of each player to the ultimate value of the healthcare provided to the final user, or citizen, to be quantified. Where the use of telemedicine changes this value, it can be described as the economic benefit of telemedicine .

The benefits of using telemedicine can be analysed at the various stages of the value system by identifying the benefit to the key players :

• Benefits to patients at every stage of the primary activities, since the chain is patient/citizen based: such as the advantages of being diagnosed both quickly and with


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minimum disruption to everyday life and work)3; reduced waiting times for treatment and rehabilitation; reduced travelling times and cost; easier scientific and statistical analysis; better management of the population’s health by governments; and a more appropriate point of access for patients.

• Benefits to clinicians can be mainly in the operations of the healthcare system: such as new opportunities to consult experts; broader base for decision-making; reduced travelling; improved image quality and the opportunity to manipulate images; and availability of better clinical and operational information.

• Benefits to hospitals can be mainly in the operations of the healthcare system, such as improved efficiency; lower operating costs; reduced risk of images getting lost; faster and more precise diagnosis and treatment; better communication between sites; transport savings; more efficient use of equipment; better demand management and also better returns to healthcare entities.

• Benefits to other groups can be classified as the value chain section of “After Sales Activities”, such as relatives being closer to patients and services; provision of an additional teaching resource for students; and easier scientific and statistical analysis.

This is the basis of the case studies/scenarios set out in the sections concerning the specific selected applications. The value added brought by telemedicine services to the healthcare value system has been identified as a set of benefits of telemedicine.

International organisations dealing with Health systems standardisation and policy development, such as WHO, OECD4 and ISO5, have addressed the issues of the evaluation of health systems performance, especially to evaluate the impact of the use of health informatics.

The framework of performance health indicators for healthcare systems proposed by those organisations can be applied to some extent for the evaluation of the benefit that telemedicine can bring to traditional healthcare process in our study.

The ISO conceptual framework has been defined taking into account the work already carried out by WHO and OECD on the same subject of performance evaluation. For the purpose of our study we have decided to select the indicators that have a direct relevance to the telemedicine comparative analysis.

OECD Concept of Performance ISO Health Indicators C onceptual Framework – Health System Performance

Quality (health/improvement/outcomes) Effectiveness, Appropriateness, Safety, Competence*

Responsiveness Accessibility and acceptability

Efficiency Efficiency, Continuity*

Equity Accessibility can also be a component of all dimensions.

Table 4 - Framework of performance indicators applicable to te lemedicine

(*May also have an impact on efficiency.)

3 Bladwin L.P, Clarke, M, Eldabi, T and Jones R.W (2002) “Telemedicine and its role in improving communication in healthcare”, Brunel University, UK and Chorleywood Health Centre, UK. 4 Hurst , J and Jee-Hughes, M. (2001) Performance measurement and performance management in OECD Health Systems. OECD Labour Market and Social Policy - Occasional Papers No. 47. Paris: OECD. 5 ISO/TS 21667 “Health informatics – Health indicators conceptual framework” First edition 2004-04-01.


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We have chosen to use some of the OECD performance indicators and Table 5 below is showing the correspondence between the OECD and ISO indicators.

Table 5 has been further refined and developed to provide only those performance indicators that would be applicable to telemedicine in our analysis and, also the generic benefits of telemedicine that can be achieved for all applications.

Performance indicators Telemedicine Improvements

Effectiveness (health/improvement/outcomes)

Clinical outcomes (It is important to note that very little data is available internationally about the impact of telemedicine on clinical outcomes. This is due to several factors, such as the lack of structured research using recognised rigorous research methods, the occurrence of several variables in, such clinical practices and skills, the availability of other healthcare resources, and difficulties in attributing direct cause and effect relationships between the clinical outcome and telemedicine.)

An important benefit can be the impact of reduced waiting times for healthcare. Long waiting times can result in higher costs where conditions deteriorate and patients are unable to work. Where telemedicine can reduce this waiting time, direct benefits occur. Again, very little data is available from research. This will also be an aspect of responsiveness.

Responsiveness For remote areas with difficult or time-consuming transport links, services may not be available for some people. In these circumstances, telemedicine can improve access to services . However, this would usually be part of a planned investment that includes increased capacity to provide the additional healthcare needed by the population, but not provided.

Telemedicine can make services more responsive by enabling shorter waiting times . This would also be an aspect of quality. This benefits patients by reducing the time they have to wait for their healthcare.

Efficiency For patients, telemedicine can be more efficient by reducing the time they spend, and cost they incur, travelling to take up healthcare.

For medical service providers, it can improve efficiency by reducing the time and cost of travelling and so enable these resources to be reallocated to direct healthcare for patients. It can also enable reductions in the number of contacts with patients in home care settings, for example in post-operative care, by reducing the need for personal contacts to collect information about patients’ conditions. These can lead to improved resource utilisation, leading to improved productivity, and so reduced costs. For example organisational changes in clinical and working practices and performance (see 4.6).

Time needed for medical training and continuing medical education can also be saved by using telemedicine in e-learning.

Table 5 -- Potential telemedicine improvements according health performance indicators


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While performing the comparative analysis of the selected telemedicine applications we will refer to these performance indicators, in order to evaluate how these applications impact on the performance of health delivery.

4.1.2 The Study Cost model

The aim of the comparative analysis is to determine the value added, as defined by benefit, of each application, using telemedicine and estimating the benefit brought to the different actors of the value system in terms of effectiveness , responsiveness and efficiency as defined above.

As a basis of this evaluation we have chosen to use the tool of cost-effectiveness analysis in order to determine if telemedicine is shown to be more effective than the traditional healthcare process. The cost comparison that this analysis enables at different stages of the value system permits us to size the benefit brought by telemedicine to the various actors: the patient, the healthcare professionals, the hospital etc.

To perform this analysis for each of the selected applications, we have identified and analysed existing published case studies, and created scenarios where suitable case studies were not available. When a specific case study or scenario has been identified, the relevant data has been transferred to a cost model for analysis. Sources for scenarios include business cases and business case performance standards. The findings from a scenario are less robust than the findings from a case study.

� Principles and definitions

The cost model used to evaluate and compare the ‘with telemedicine’ to the ‘without telemedicine’ service is derived from a generic cost model used to evaluate the economic and financial performance of e-health. It has been developed by, and is used by, TanJentConsultancy6 7 to evaluate operating e-health applications.

The cost model combines data on:

• Development, capital and set up costs of projects;

• Benefits for patients, carers and communities;

• Operating and running costs for healthcare entities;

• Impact on variable and semi-fixed costs;

• Impact on direct and indirect costs;

• Impact on resource utilisation, such as productivity;

• Effect of lead-in times of change;

• Impact on cash outflows and income.

These can be combined to reveal the:

• Economic performance; 6 TanJent Consultancy specialises in healthcare. It engages in private, joint research with other consultancies to develop care and cost models to support business cases for, and evaluations of, change. Examples of its recent projects are the financial and economic evaluation of proven e-health applications with the European Commission, and cost modelling, linked to care models, for planning major changes in delivery of hospital, primary care and mental health services, reviewing business cases for major investments in teaching hospital and oncology services. 7 Jones T. (2003) e-Health - Financial and Economic Case Studies, ACCA (The Association of Chartered Certified Accountants) with the European Commission, DG INFSO, http://www.accaglobal.com/pdfs/members_pdfs/publications/m-eh-001.pdf


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• Financial performance over time;

• Performance of the healthcare provider;

• Impact on patients;

• Utilisation of applications.

The model provides outcomes based on two perspectives, the healthcare provider and the patients. These have the performance indicators noted earlier embedded in them (effectiveness, responsiveness and efficiency). The two perspectives show the narrow financial effect for healthcare providers and patients and the wider economic and financial effect on healthcare providers, patients and communities.

The model enables marginal costs to be used for measuring costs and benefits. This is a monetary estimate of the effect of providing one more, or less, unit of service. Marginal cost is derived from the variable costs - the extra time for doctors and nurses and extra medical supplies, for example - and does not include fixed costs, such as the capital cost, or building maintenance costs of a hospital.

Information from e-health and telemedicine research projects mainly rely on marginal costs and benefits, and so the changes in the costs and benefits to the actors. The model can also use total costs and benefits, but these are rarely available from research projects and so have to be prepared by TanJent for specific projects. This is especially applicable where utilisation and productivity changes, with consequent resource re-allocations, may have arisen from the e-health and telemedicine applications, and so new pricing policies are needed.

A standard limitation of e-health evaluations is to identify cause and effect. There are always more changes than just the e-health application. Sensitivity analysis has to be applied to deal with this, and to identify any over optimistic findings.

The main definitions in the cost model are:

• Capital needed for the investment costs to medical service providers, such as buying and installing new telemedicine equipment

• Costs to medical service providers, including running costs of telemedicine, cost of change and extra costs of providing healthcare

• Costs to patients and carers, especially those associated with extra travel, or additional payments for improved services.

• Benefits to medical service providers, including lower costs of providing healthcare, improved productivity, increased capacity, reduced travel costs and improvements in clinical risk

• Benefits to patients and carers, including lower travel costs, faster treatment and better outcome.

Where possible in our case studies and scenarios, these have been included and analysed where appropriate data was available.

� Applying the Model to Telemedicine

Two options have been compared: ‘without telemedicine’ and ‘with telemedicine’. Differences between these show the cost and benefit impact of telemedicine. Both have been estimated over five years to allow for smoothing effects of:

• Capital items over time

• Lead-in times of change.


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The resulting costs and benefits are shown in two ways:

• Estimated average annual amount of costs and benefits

• Estimated new costs and the benefits in the value system, including capital flows to suppliers.

The main components of the models are:

• Initial capital costs for set up and development, including hardware, software, installation costs and enabling costs

• Cost of depreciation, between three and five years

• Annual costs of running the telemedicine services, including leasing or depreciation, maintenance and telecommunications

• Costs of changing the way that services are delivered by healthcare providers, such as nursing staff re-deployed

• Benefits to healthcare providers, including reduced cash flow and unit costs

• Benefits to patients, usually reduced travel times and costs, based on estimates of travel costs and time values, but usually not improved outcomes due to lack of data in the research studies.

• Benefits of faster delivery in the disaster setting

• Project management, especially for installation and procurement of telemedicine applications, based on TanJent norms

• Change management to realise the benefits, based on TanJent norms

• Contingency to reflect optimism bias in estimates, based on TanJent norms.


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Table 6 - Summary of the case study/scenarios consi dered in the cost comparison analysis

Application Case Study Description

Disaster Relief Telemedicine

The Furiani case -

Corsica, France

For the disaster relief application two options were compared. Option 1 involved emergency response

services “without telemedicine” using an emergency unit and services comprising hospitals,

paramedics, air ambulances and fire brigade to deal with casualties with one disaster occurring during

a five-year period. Option 2 involved a combination of emergency and disaster services with

telemedicine. This used combination of telemedicine and an emergency unit and services with one

disaster occurring during a five-year period.

The Furiani case was used as the basis of the scenario as it represented a small-scale disaster and

provided adequate information on casualties and on emergency response services that are

traditionally used.

Rural Area Telemedicine

Teledermatology in

Norway

For the rural area telemedicine application two options were compared. Option 1 involved a

combination of a visiting service (by a dermatologist) and patient travel (to the university hospital).

Prior to teledermatology implementation a specialist visited and travelled regularly to the health centre

at Kirkenes to conduct out patient consultations although with the workloads involved a combination

service comprising a visiting specialist and patient travel was necessary. The maximum workload the

visiting specialist could handle was 240 patients. The remaining 235 patients as in this case study

would have to travel to the clinic at UHT. The costs to consider were the salary and allowance for a

specialist and two part time nurses. Option 2 involved teledermatology being delivered through real-

time telemedicine. The personnel involved were one GP who worked at the telemedicine/photo-

therapy clinic for 1 day a week (20%) and one specialist at UHT who provided 2 hours per week

(participated only in the videoconferencing sessions). In common with Option 1 two part-time nurses

were also involved in the service.


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Home Monitoring

Home-Care Service,

USA

For the home monitoring application two options were compared. Option 1 a home care

service “without telemedicine”. Option 2 examined a tele-homecare service using telemedicine. The

telemedicine service is one that utilised ordinary telephone-based video-conferencing equipment to

link homecare providers with patients and families in their homes. The programme was originally

launched to reach rural patients for whom home care was not available. In practice, however, the

majority of tele-homecare recipients have lived in urban communities. The system has been used for

routine nursing assessments and symptom management, as well as psychospiritual support, typically

provided by home care social workers.

e-Learning / Tele-training

e-Learning for

Continuous Medical

Education (CME)

For the e learning for the continuous medical education (CME) application scenario two options were

compared. Option 1 involved CME of specialist doctors using traditional methods “without

telemedicine “to deliver 5 CME courses to 50 specialist doctors at 1 site. Option 2 involved E Learning

for CME of specialist doctors. The “with telemedicine” option delivers CME courses to an additional

450 specialist doctors, and replaces the traditional “no telemedicine” option at their locations. It has

been assumed that these extra 450 specialist doctors would have incurred travel costs at the same

rate as the original 50 doctors, and that they would be able to replace, and so avoid the cost of

traditional courses.


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Maritime (Merchant)

Shipboard

Telemedicine, UK

For the maritime- merchant application two options were compared. Option 1 involved a combination

of evacuation through ship diversions, helicopter and lifeboat evacuations. This did not involve using

telemedicine, but a combination of different evacuation methods were used, and it was assumed that

0.4 of all evacuations would be carried out via ship diversions, 0.5 by helicopter evacuations and 0.1

by lifeboat evacuation.

Option 2 was a combination of evacuation through ship diversions, helicopter and lifeboat evacuations

and telemedicine. In the maritime- merchant case study costs were calculated for just using

telemedicine (100%) and not another evacuation method, for using 75% telemedicine and 25% of

other methods, for using 50% telemedicine and 50% other evacuation methods and using 25%

telemedicine and 75% other evacuation methods.

Maritime (Cruise)

Cruise Telemedicine

Scenario

For the maritime-cruise application scenario two options were compared. In Option 1 “without

telemedicine,” it was assumed there would be no increase in the passenger ticket price. In option 2

cruise ships offered a telemedicine service with four cruise ships offering a telemedicine service

connected to three hospitals via satellite communications.


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� Data Issues

Cost and benefit data has been drawn from specific studies. None of this was compatible in terms of structure, scale and scope. To achieve comparability, data from each case study was included in the model and set alongside standard cost and benefit items such as project management, change management and travel costs. Also, differences in scale of healthcare provision between ‘without telemedicine’ and ‘with telemedicine’ options have been adjusted to ensure that differences in scale did not distort relative costs and benefits.

A data limitation is the small scale of the studies. This must be recognised in the generalisations from the findings. The findings from each model were tested with sensitivity analysis.

� Estimating Costs and benefits

Economic characteristics are that costs and benefits represent changes in value, but often, these values, such as improvements to the health status of patients, are not expressed directly in money terms. For the telemedicine case studies and evaluations, a monetary value has been assigned to all costs and benefits, and derived from research findings, or explicit judgements, in order to estimate the impact of a telemedicine investment. Economic techniques, applied in the cost model, enable this type of data to be assembled as a cash flow over an appropriate time to reveal the costs and benefits of telemedicine projects.

� Time horizon

Telemedicine takes time to implement, requires capital and one-off investment that has a life-cycle and depreciates, carries a cost of obsolescence, and results in annual operational costs that includes the time and costs of healthcare professionals. Benefits from telemedicine also take time to be realised in full. This time horizon is reflected in the cost benefit model to measure the dimensions of:

• Cash flow for implementation and full operation

• Temporal requirements of depreciation and obsolescence

• Lead-in times for benefit realisation

After the analysis of each selected application a detailed comparative analysis is set out in sections 5-9 for each application. Furthermore, the organisational differences with and without telemedicine have also been outlined together with some general conclusions for all the applications.

� Estimating patient benefits

Economic evaluations relied on cost benefit analysis. Patient benefits had to be identified, and assigned a monetary value, so that their impact was included alongside the costs and benefits of medical and healthcare providers. However, patient benefits were not included in any of the case studies. Creating and adding this extra information required the case study findings and analyses to be enhanced by applying a set of economic concepts, methods and factors. These enabled monetary values to be estimated and added to the case study data. An equivalent approach was used in compiling the scenarios.


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o Concepts

A core feature of the evaluations is that every factor in each case study was assigned a monetary value. Several concepts were relied on. First, benefits were divided into two types. One was qualitative improvement; the other is a reduction i n cost.

Qualitative improvement is where a patient gains an intangible change, such as better health status, better health outcome, or time saving, by using telemedicine. This could be by earlier access, faster treatment or, better quality of services.

Reduction in costs to patients occurs where telemedicine enables patients to reduce their overall spending on accessing healthcare without telemedicine. Typically, this would be fewer or shorter journeys. Second, estimating monetary values relied on three main concepts:

- Willingness to pay – an estimate of a notional payment that patients or citizens may make, if they could only receive the qualitative improvement by making a commercial payment that reflected the value of the qualitative improvement to them;

- Value of time – an estimate of the monetary value that patients or citizens would attribute to the time needed to take up their healthcare;

- Cost of travel – an estimate of the cost of travelling to and from a healthcare site to receive healthcare.

None of the case studies used in TN2 included either types of patient benefit, and so did not include monetary values by applying any of the three concepts to convert them into a cost.

o Method

Estimating the qualitative improvements and reductions in costs relied on standard monetary values held by TJP Consulting’s and TanJent consulting’s private database for:

- Willingness to pay a notional price for a service, where no commercial price exists;

- Value of travel time for the type of time;

- Value of travel costs per kilometre;

- Willingness to pay an extra commercial price for the availability of a telemedicine service.

An additional method was needed for the willingness to pay a notional price for a faster service, where no commercial price exists. This is not normally part of the TJP consulting and TanJent consulting’s private database, and so was estimated from the data for the willingness to pay for a service.

This method enabled working estimates to be compiled, then tested, using sensitivity analysis. This is an essential part of the method to ensure that the estimated monetary values are reasonable, and do not distort the overall findings.

o Factors

Several factors were identified for each case study. They can be summarised as:

Case study Factors for Patient Benefits

Rural Travel costs and travel time. Travel cost based on estimated cost per kilometre


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Travel time estimated by monetary value of time travelled

Home Patient situation is unchanged (patients do not travel in the traditional homecare setting) the benefits accrue to the healthcare professional

Disaster scenario Faster recovery for half the patients removed by ambulance. Monetary value based on an estimate of willingness to pay method

E-learning scenario Travel costs and travel time. Travel cost based on estimated cost per kilometre Travel time estimated by monetary value of time travelled

Maritime cruise Estimated extra price paid by passengers for value of extra healthcare available from telemedicine

Maritime merchant None

Table 7 – Factors for patients benefits for the cas e studies

The table shows that each case study/scenario has different factors for patient benefits. Consequently, the concepts and methods were applied differently to each case study. The details of patient benefits estimation are given in the following chapters where each case study/scenario is analysed.

� Cost benefit results

For each case study and scenario, it has been possible to identify the changes to costs and the locations of the benefits on the value system. This has three perspectives. One is from the medical services provider as the telemedicine investor and partial beneficiary. A second is from the perspective of the patient or the learner. The third includes the cost of telemedicine hardware and software set up.

� Generic comparisons

With a consistent cost model and costing method, the resulting cost benefit performance and the new cost benefit profile across the chosen value system, enabled generic themes to be identified from the group of cost models.

4.1.3 Comparative analysis on the organisational aspects of the selected telemedicine applications

This refers to changes in the following as a result of telemedicine implementation:

• Changes in clinical practices – the way in which clinicians use improved information technologies and knowledge bases to change the way they provide diagnosis and treatment for some patients.

• Changes in working practices – increasing reliance on technology, in this case, telemedicine, may enable some treatments to be provided by clinical staff working in, or near, the disaster area instead of hospital based medical teams.


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• Changes in healthcare professional team working – where telemedicine reduces the need for direct referral or patient transfer, it is part of the developing the role of integrated healthcare teams.

• Changes in performance. These are linked to improved resource utilisation and productivity that are outlined above. Telemedicine per se does not deliver benefits; in fact it adds to the cost of the healthcare service. The benefits resulting from telemedicine often rely on telemedicine implementation and organisational changes. The above are generic to all the applications examined in the further sections (for each selected application).

4.2. Disaster relief telemedicine

Table 8 - Challenges, barriers and opportunities in disaster relief telemedicine

Challenges

Potential qualitative improvements using

telemedicine

Potential barriers to the adoption of telemedicine

Difficulty in

communications:

usually, in big disaster

events, the terrestrial

communication facilities

broke down very early.

Faster patient identification

Communication pathway selection The

main challenge is to match the right

communication and contingency systems

with a given disaster medicine plan or

scenario

Low co-ordination

among the different

teams that are working

on the disaster field.

Faster availability of patient's

objective medical data

Interpretation and manipulation of the

acquired information and communication

of the essential results where they are

needed.

Direct data exchanges between field

actors and dispatching room

consoles' operators

Bandwidth Limitation: bandwidth of the

transmission medium limits the types of

telecommunication systems that can be

used.

Creation of a patient's medical file

and therefore a better medical and

operational traceability

Environmental Conditions

Environmental

Conditions, the

environment in a

disaster field is full of

dangerous areas like

ruins, clefts, fire etc.

Early preparation for the patient Power Interruptions


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hospitalisation

Fast "triage" medical process

Better remote primary diagnosis

directly on field

Improve training: for the medical

personnel, for example the use of

virtual reality in the simulation of a

battlefield environment

Training of personnel

4.2.1 Cost effectiveness analysis results

The analysis the disaster telemedicine case scenario shows that the additional cost of telemedicine and the patient benefits are a small proportion of the total cost of the whole disaster service. Patient benefit for disaster relief is cost savings in terms of travel cost and travel time based on follow-up treatment and also faster recovery as there is quicker access to care.

DISASTER SERVICES - COSTS AND PATIENT BENEFIT OF 'W ITHOUT TELEMEDICNE' COMPARED TO 'WITH TELEMEDICINE'

-500,000

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

Applications Telecoms Change Medical Total cost Patient Benefit

TYPES OF COST AND PATIENT BENEFIT

EU

RO

S

Without Telemedicine

Telemedicine

Patient Benefit GainedfromTelemedicine***

Figure 9 - Disaster Services-Costs and Patient Bene fit of ‘Without Telemedicine’ Compared to ‘With

Telemedicine’


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This is consistent with the findings from a review of a major earthquake that there are no benefits from telemedicine. When the earthquake disaster in Gujarat, India in January 20018 occurred, the local hospitals were damaged and so therefore were unavailable to treat patients or provide links to the telemedicine facilities.

The scenario shows that the effect of with telemedicine is to produce a slight overall cost. The extra estimated cost of telemedicine to the medical service provider is slightly more than the estimated benefits to the patients at the disaster. This is the equivalent to a breakeven point for costs and benefits.

Consequently, the sensitivity analysis shows that with telemedicine is extremely sensitive to assumptions for costs and benefits. In the scenario it has been assumed that no lives would be saved thanks to telemedicine.

If any of the estimated individual telemedicine and telecommunications costs increase above the estimates used in the scenario, it increases the small extra overall cost of the with telemedicine option. There is a similar effect when the estimated benefits to patients are reduced.

However, the extra estimated cost of with telemedicine is only about 1% (which would certainly be worth paying for if it was assumed that telemedicine saved lives) of the total emergency services costs. After carrying out some sensitivity analysis, they still remain a relatively small proportion of the total estimated cost of the emergency services needed to respond to the disaster.

4.2.2 Qualitative improvements gained from telemedicine

However in a disaster case the value of even one single life saved is more important than the investment done. In the specific case we have analysed the “economic” benefit of using telemedicine is not obvious because the telemedicine systems has been used only for one disaster and that all investment costs have been amortised on this specific disaster case, thus impacting a lot on the valuation of the benefits brought to patient and rescue teams.

It is important to recognise that considerable effort may often be focused by recovery teams on acute care for a relatively small number of people, as identified in Haiti9. In this context, the qualitative benefits are what can motivate the use of telemedicine in such domain.

In disaster relief case, telemedicine can assist in providing faster delivery of more appropriate healthcare and communications in some disaster events and to some people. In addition, during an acute phase of a disaster, when information can be scarce, all available means will be mobilised, often regardless of cost, including the provision of expensive telecommunications links, land and mobile satellite terminals10.

Table 10 summaries the improvements that would have been realised for the Furiani scenario in the second column and how they correspond to the general performance indicators.

Performance Indicators Specific indicators for Furi ani case


- Better diagnosis

- More appropriate care

8 Prehospital and Disaster Medicine Vol.17, No.4 Cf.: http://pdm.medicine.wisc.edu 9 Garshank and Burke – Applications of Telemedicine and Telecommunications to Disaster Medicine: Historical and Future Perspectives. 10 Report on Medical Seminar –Exercise Bogorodsk 2002.


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Responsiveness - Faster patient identification

- Faster triage" medical process

Efficiency - Less evacuation

- Better communications and information exchange between the medical teams.

Table 9 - Specific Indicators of performance of tel emedicine systems for disaster relief

4.2.3 Recommendations

Preparation, planning and training are vital in dealing with disaster relief, and this can be difficult to achieve at the disaster response stage. However the role of using telemedicine in the early stages of disasters may only be that of communications support. Telemedicine per se was thought to be of use in the post-acute or recovery phases of a disaster rather than in the acute phase of a disaster during the first few days11. Telemedicine can therefore be useful in the recovery phase of a disaster in providing specialist care for specialities such as dermatology, radiology and orthopaedics, including hand surgery. The use of existing telehealth networks already established can improve communication and medical response in disaster events. Several initiatives address the utilisation of and interconnection of existing health network resources to support the disaster areas. For example in the US the Southern Governers’ Association’s Telehealth /Home-land Security conducted an assessment of how telehealth, public health, and distance learning networks of the member states could use those resources for regional disaster in terms of preparedness and response 12. This model offers the potential for a cost effective telemedicine service in the overall emergency and disaster service. Using telemedicine from the US/USSR Space Bridge Project assistance was provided during the Armenian earthquake in 1988. Over 12 weeks, the programme cared for 209 patients. Diagnoses for 54 patients were changed by using telemedicine and new diagnostic studies were recommended for 70 patients and treatment plans were changed for 47. In Somalia, for 74 patients, some avoided air evacuation and some avoided on-site surgery, but no detailed figures are provided by the study13.

11 Zimmermann, H. (1998) Telecommunications in the service of humanitarian assistance Cf.

http:www.reliefweb.int/telecoms/intro/whatis_eng.html 12 http://pubmedcentral.nih,gov/articlerender.fcgi?tool=pubmed&pubmedid=12595406 13 Garshank and Burke.


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4.3. Rural Area Telemedicine

Table 10 -Challenges and opportunities in rural area telemedicine

Challenges 14

Potential qualitative improvements using telemedicine

Access to health care: access to advanced technology,

allied health services, emergency trauma centres, and

public health is limited in rural communities.

The analysis of health care settings in a rural

context showed that the size of the

improvements introduced by telemedicine is

determined by some factors like: the distance to

alternative care, the change in quality of locally

available care, and the number of individuals

affected. For example, a rural telemedicine

service can be cost effective if the distance

between the rural and main hospital is greater

than a specific limit value and expensive if the

distance is lower.

Financial Concern: rural hospitals are more exposed to

the risk of closure than urban hospitals, this is due to the

small size, low occupancy rate, low patient case

complexity, type of ownership, local economy, and

competition among neighbouring hospitals endangered by

reimbursement and regulatory constraints. The closure of

a rural hospital often commences the final chapter in the

viability of a rural community.

Improvement of patient care

Recruitment/Retention: the health provider workforce in

rural communities reflects difficulties in recruitment and

retention. Rural physicians are professionally, and often

physically, isolated. This isolation results in inadequate

access to information and services available in secondary

and tertiary level institutions. Such conditions create a

barrier to optimal patient care and to the professional

satisfaction that could potentially keep physicians

practising in the rural primary care setting

Improvement of patient satisfaction

14 The University of Iowa, National Laboratory of the Study of Rural Telemedicine Cf. http://jeffline.tju.edu/CWIS/OAC/hslc/sym95/holtum.html


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Barriers to telemedicine include technology,

standardisation, and cost. At the present time the

technology is still quite complex and there is relatively little

standardisation in equipment, hardware, and software.

This could lead to the rapid development of many small,

proprietary, and mutually exclusive systems and networks

Reduction of travel time and costs

Furthermore, the current technology is costly. Cost and

effectiveness studies must be developed in order to justify

the use of advanced telecommunications technology in

rural hospitals, many of which are currently in marginal

financial condition. Grant funding allows smaller hospitals

the option of connectivity and networking, but may not

provide ongoing support beyond the life of the contract

period. We still have a lot to learn about what specific

services are needed, will be utilised, and will be effective

in the rural care setting. A tremendous diversity exists

among rural health care sites in terms of patient

demographics, physicians’ characteristics, and hospital

capabilities. It would be inappropriate to assume that

requirements (technological and patient services) for all

rural hospitals and communities are similar.

More readily availability of speciality

consultation

Reduction of professional isolation

Access to health care

4.3.1 Cost-effectiveness analysis

The case analysed showed that clear benefits can be gained for patients by reducing their travel costs and the amount of time they have to travel for their healthcare (Cf. Figure 10) because fewer patients need to travel to the main hospital for diagnosis, but rely on tele-consultation instead. The analysis also shows that the remoteness of the population may not be critical to the decision to invest in telemedicine. The medical services provider gained most of the benefits by being able to reduce significantly their variable costs. In this scenario, the distance from the dermatology centre may not be a critical factor in telemedicine utilisation. When the benefits are reduced to reflect changes in the distance of the population from the hospital centre, the investment returns change. An average distance of 200 km and 400 km replaced the 800-km that was the actual distance in the study, and still showed an investment return for the hospital.


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C O M PAR ISO N O F EST IM AT ED PAT IENT ANN UAL CO ST S 'WIT HO UT ' AND 'WIT H ' TELEM ED IC IN E

-

50 000

100 000

150 000

200 000

250 000

Tra ve l c os ts Travel t im e Tota l

T YPES O F C O ST S

EU

RO

S

W ith ou t te le m ed icine

W i th te le m ed icine

B enefi ts

Figure 10 - Comparison of patient annual costs ‘wit hout’ and ‘with’ telemedicine

The analysis also showed that annual running costs for telemedicine and telecommunications are a small proportion of the MSP’s marginal cost of providing healthcare (cf. Figure 11).

ESTIMAT ED ANNUAL CO ST S AND BENEFIT S OF T ELEMEDICINE ALLOCATED T O T HE VALUE SYST EM

-

2 0 0 00

4 0 0 00

6 0 0 00

8 0 0 00

10 0 0 00

12 0 0 00

14 0 0 00

16 0 0 00

Telemedic in e Serv iceProv ider

Telecommunications Prov ider Medical Serv ice Pro v ider Citizen

EU

RO

S

B enefits

Cos ts

Figure 11 - Estimated annual costs and benefits of telemedicine allocated to the value system

The case study indicated that a workload of 164 patients and above is sufficient to justify telemedicine as part of a dermatology service. The study was based on a telemedicine investment at both the hospital and community locations. For subsequent deployment, telemedicine facilities investment would only be needed at the community


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location, and so offer a potentially greater return as set up costs would be reduced, and the operational gains should be similar. This effect has not been estimated. Sensitivity analysis has been applied to identify any factors in the analysis that exert a high proportionate influence on the cost benefit assessment. This has shown that if the set up costs of telemedicine, the hospital fixed costs and the hospital variable costs doubled, the telemedicine application would still make a return. If these costs tripled, the telemedicine project would only just make a return. This indicates that estimates for these cost items, and the conclusions drawn from them, are reasonably robust.


Table 11 shows some of the main qualitative improvements that were realised for the rural area telemedicine in the second column and how they correspond to the general performance indicators.

Performance Indicators Specific indicators for rura l area telemedicine


- Diagnosis was improved by the tele-presence of a specialist that was able to help the GP in its diagnosis, other wise more patient would have to travel to the UHT even if not necessary.

Responsiveness - Specialist advise is brought close to the patient

Efficiency - Some patients can avoid travel costs and time

- Medical service providers can reduce their variable costs, and this results in a reduction in their total costs

Table 11 - Specific Indicators of performance appli ed to telemedicine systems for rural area telemedic ine

The table below shows the qualitative improvements that can be gained from telemedicine from the organisational perspective outlined in section 4.5 under the headings of changes in clinical practices, working practices, in professional healthcare working team and performance.

Changes in clinical practices

- Significant changes in the relationship between doctor and patient . The principal change is the fact that the patient is being diagnosed or monitored at a distance, whereas before, the patient or the specialist invariably had to travel to give / receive diagnosis. The patient prior to telemedicine had also face -to -face consultation with the physician in this case a dermatologist. An element of physical separation is introduced in the doctor-patient relationship.

- The way in which clinicians provide diagnoses, treatment or rehabilitation, and monitor, with fewer visits. Clinical practices can be enhanced with improved information technologies and knowledge bases. The changes in working practices impact on greater efficiency in healthcare delivery, reduction in some resources and increasing reliance on telemedicine, requires new skills and expertise and different ways of working, for example in creating medical records and admitting patients.


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Changes in working practices

- Changes also arise in the numbers of patients receiving consultation. By reducing the time of medical teams in travelling, it seems feasible to redeploy this resource to increased patient contact, and so deal with more patients, but whilst this can apply to diagnosis, treating more patients may depend on the availability of hospital and clinic capacity. There maybe also changes in the number of healthcare professionals needed to provide teledermatology - by reducing the time travelling, less time will be needed at rural centres, creating the potential for a more centralised team.

Changes in the healthcare professional working team

- Where telemedicine reduces the need for direct referral from primary care to hospital care by hospital doctors supporting and enabling primary care staff in providing healthcare to more patients, and so changing and developing the role of the integrated team.

Changes in performance

- These can also been seen such as new features of telemedicine. For example reducing the time from first appointment to diagnosis and providing routine information about patients changing conditions, enables healthcare providers to improve performance in achieving better health outcomes, operational transfer of patients along the value chain, and, in most settings, reduce costs.

- In addition to these benefits for medical services providers, patients can benefit by earlier diagnosis and improved monitorin g, and so potentially improved health outcome and status . However, evidence from published papers identifying costs seldom have data on changes to patients health status. For example, evidence of faster diagnosis is not matched by data to show faster access to treatment and rehabilitation. These tend to indicate the publications showing cost changes seem to focus on a narrow range of costs benefits that change before and after the introduction of telemedicine, but not reveal a picture of the full effect of the telemedicine impact.

4.3.3 Recommendations

Overall, it may be generalised from the case study for rural area telemedicine that the annual benefits over a five-year period exceed the cost on the, telemedicine service provider, telecommunications provider for the medical services provider. The analysis shows a clear economic and qualitative benefit of using telemedicine in rural areas especially in the studied case for replacing non-existing specialists consultation on site. In general there are quicker diagnoses, improved communications between the medical team itself and the medical team and the patient, and unnecessary travel avoided, especially for patients, and a reduction in waiting time.


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4.4. Home Monitoring

Table 12 - Challenges and opportunities in home mon itoring

Challenges

Potential qualitative improvements using telemedici ne

Remoteness Delivery of the right patient care, at the right place with the right care

provider

Overuse

Reductions in emergency room visits, re-admission rates, length-of-stay,

ALC (Alternate Levels of Care) time and the use of other community services

Acceptance by health care

practitioners

Increased patient safety through the implementation of more rigour with

respect to follow-up with patients once discharged from the hospital

environment. This includes enhanced follow-up to ensure improved

compliance with prescribed regimens

Acceptance by patients Extension of care to more patients, thereby increasing accessibility

Demonstrable cost savings

Increased focus towards health promotion

Credible assessment of

positive clinical outcomes

Improved and more efficient use of the health care system, as only those

who truly need more advanced care will be triaged onwards to an

institutional setting

Affordability Reduced waiting time for follow-up care

Optimal technical approach Ability to share patient clinical information between providers over large

geographic distances in support of quality care

Information integration,

security and privacy issues

Lack of an integrated

regulatory environment


The case analysed suggested that the total homecare service costs, where telemedicine is used, are dramatically reduced from the second year onwards of the investment. It also shows that fewer physical visits are required using telemedicine (as some visits are tele-visits and do not require the physical presence of a healthcare professional). In the specific case analysed, hysical visits for


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telehomecare were 436 compared to 1766 in a traditional homecare setting – a reduction of about three quarters - and therefore lower costs are incurred by the medical services provider. (Cf. Figure 12)

HO M E CAR E WIT H T ELEM EDIC INE AVER AG E ANNUAL CO ST AND B ENEFIT ASSIG N ED T O VALU E SYSTEM

-

10 000

20 000

30 000

40 000

50 000

60 000

M S P cos ts for Tele m edic in e M S P cos ts forTeleco m mu nic at ion s

M S P cos ts an d bene fi ts for d irec thea lthca re

VALU E SYST EM CO M PO NEN T S

EU

RO

S

B enefit

C os t

Figure 12 - Homecare with telemedicine average annu al cost and benefit assigned to the value system

Sensitivity analysis has been applied to identify any factors in the analysis that exert a high proportionate influence on the cost benefit assessment. This has shown that if the set-up costs of telemedicine are five times the estimates used in the model, the telemedicine option still offers a return. If the homecare running costs under telemedicine are increased by five times, the telemedicine option still makes a return. This indicates that estimates for these cost items, and the conclusions drawn from them, are reasonably robust.


Table 13 shows some of the main qualitative improvements that were realised for telehomecare in the second column and how they correspond to the general performance indicators.

Performance Indicators Specific indicators for rura l area telemedicine


- patients can benefit by earlier diagnosis and improved monitoring, and so potentially improved health outcome and status.

Responsiveness - Patient can benefit from a quicker and better adapted reaction from the medical team when the health problem is well identified by the tele-monitoring system;

- Alert system Efficiency - Reduced visits and patient days and also

reduced travel time for nurses - Medical service providers can reduce their

total costs

Table 13 Specific Indicators of performance of tele medicine systems for telehomecare


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- Significant changes in the relationship between nur se and patient who is being cared for at home. In the traditional method the nurse paid frequent visits (approximately once every 1.4 days) to the patient at home in order to monitor their recovery, vital signs, providing support etc. With the implementation of telemedicine there is a greater distance introduced between the nurse and patient in that there is a reduction in the frequency of visits to the patients (approximately once every 5.5 days).

- The way, in which clinicians monitor patients, for example, at home wither fewer visits , clinical practices can be enhanced with improved information technologies and knowledge bases and therefore impacts on the changes in clinical practice.


- Changes to working practices can lead to greater efficiency in healthcare delivery, reduction in some resources and increasing reliance on telemedicine, requires new skills and expertise and different ways of working, for example in creating medical records and admitting patients.


- Where telemedicine reduces the need for direct patient visits it enables care staff in providing healthcare to more patients, and so changing and developing the role of the integrated team and consequently impacting on the healthcare professional team work.


- Changes in performance are also present with new features of telemedicine, such as providing routine information about patients changing conditions, enables healthcare providers to improve performance in achieving better health outcomes, operational transfer of patients along the value system, and, in most settings, improve costs.

- In addition to these improvements for medical services providers, patients can benefit by earlier diagnosis and improved monit oring , and so potentially improved health outcome and status . However, evidence from published papers identifying costs seldom, have data on changes to patients health status. For example, evidence of faster diagnosis is not matched by data to show faster access to treatment and rehabilitation. These tend to indicate the publications showing cost changes seem to focus on a narrow range of costs benefits that change before and after the introduction of telemedicine, but not reveal a picture of the full effect of the telemedicine impact.


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4.5. E-learning / Tele-training

Table 14 - Challenges and opportunities in e-learni ng and tele-training

Challenges

Potential qualitative improvements 15

People may lack familiarity with

computer technology

Just-In-Time Training: Deliver knowledge on-demand, with up-to-

the-minute information. Students can access training instantly-at

the office, at home, or on the road, 24 hours a day, seven days a

week. Education is available when and where they want (and

need) it.

Technological barriers: such as lack of

interactivity, content availability,

technological standards, and bandwidth

Cost-Effectiveness: It saves travel time and cost

Adapt courses to the specific needs of

physicians

Flexibility: Students can choose online instructor-led courses or

interactive self- paced courses, and they can take advantage of an

extensive online reference library.

Lecturers must be trained to write web-

based courses

Customization: Customer can quickly assess individual and group

needs, then tailor learning modules to appropriate interests, career

objectives, and job profiles.

Courses must be flexible

Measurement: It's easy to set up new users, monitor their

progress, and produce detailed usage reports. With the ability to

create assessments, it is possible to know what students have

learned, when they've completed courses, how they performed,

and their levels of improvement.

Compatibility between systems,

platforms

Variety: Hundreds of in-depth courses are available instantly-

covering everything from business skills and IT certification to

workplace safety.

International approach of Distance

Learning

The quality of physician education must

be maintained

15 http://www.elementk.com/benefits_of_elearning/htm/overview.asp


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The case analysed showed that annual telemedicine and telecommunications costs are a high proportion of the costs for the CMEP, compared to the other case studies and scenarios. (Cf. Figure 13)

TELE-TRAINING EST IMATED AVERAGE ANNUAL COST AND BE NEFIT ALLOCATED TO VALUE SYSTEM

-

100 000

200 000

300 000

400 000

500 000

600 000

700 000

800 000

900 000

1 000 000

CMEP c osts forTelemedicine

CME P cos ts forTelec omm unicat ions

CME P operating cos tsand benefits

Doctor

EU

RO

S

B enefit

Cost

Figure 13 - Tele-training estimated average annual cost and benefit allocated to the value system

Benefits for the CMEP are achieved by potentially reducing the number of centres that produce conventional material for continuous medical education. However, to achieve these benefits, it must succeed with complex changes to its organisation. If it succeeds, the benefits over five years should be sufficient to pay for the extra costs needed to set up a ‘with’ telemedicine option.

The breakeven point showing the value added of telemedicine is 1 less CME facility compared to 2 for traditional CME delivery of courses. One traditional facility must stop operating to break even for telemedicine. The case also shows a direct impact of e-learning in the reduction of travel costs for both the trainers and the trainees: the medical education provider does accrue the main benefits together with the trainer specialist doctors and also the recipients who also do not have to travel.


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DOCTORS ANNUAL COSTS 'WITHOUT TELEMEDICINE' AND EXT RA COST SAVINGS AT OTHER SITES 'WITH TELEMEDICINE'

-

100,000

200,000

300,000

400,000

500,000

600,000

Travel Costs Savings Travel Time Savings Total Savings

TYPES OF COSTS AND SAVINGS

EU

RO

S

Without telemedicine

Telemedicine Extra Savings

Total Savings

Figure 14 - Comparison of estimated doctors’ annual cost and benefit ‘without’ and ‘with’ telemedicine

Sensitivity analysis is critical to this scenario, because it is not based on case study data. It has been applied to identify any factors in the analysis that exert a high proportionate influence on the cost benefit assessment. Increasing the capital cost by a factor of four does not affect the benefits significantly. If the course redundancy is reduced by one third, the net benefit is still sufficient to provide a return on the telemedicine investment. If the number of extra doctors is reduced by half, benefits are still available. This indicates that estimates for these cost items, and the conclusions drawn from them, are reasonable, although they still represent a scenario, and that is unlikely to be as robust as a data from a case study.


Table 15 shows the improvements that were realised for the e-learning scenario in the second column and how they correspond to the general performance indicators.

Performance Indicators Specific indicators for CME example


- Not possible to assess

Responsiveness - Ability to provide courses to a wider audiences at limited additional costs

Efficiency - Reduced travel times for specialist doctor trainers

- Reduced cost of course production over several locations – no information is available on the clinical benefits to doctors when


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compared to the no telemedicine option.

- Reduced travel costs for specialist doctor trainers

Table 15 - Specific Indicators of performance of te lemedicine systems for e-learning


Changes in CME delivery

- Significant difference between way traditional CME is delivered and how CME thorough e-learning is delivered. The main difference is that CME using e learning can be provided at a distance to g reater number of recipients than previously.


- There are changes in working practices in terms of greater ef ficiency in medical education design and delivery, reduction in resources being wasted.


- The main observation for e learning is that the role of the trainer is dramatically altered and how they relate to the learners. Another important feature of telemedicine in e-learning is the scope of learners needed to ensure a benefit. Whilst small-scale learner volumes can offer a bene fit, it is widespread access that offers the critical ma ss .


- There is also an impact on performance in that e-learning offers scope to improve staff retention and reduce absenteeism.

4.6. Maritime / Offshore / Aviation Telemedicine

Maritime, offshore and aviation telemedicine are similar cases where medicine has to be provided in location where little medical care is accessible. In a ship, depending on the type of ship (cruise ship, ferry or merchant) there can be either a general practitioner, a nurse or only a trained officer. Similar situations exist on offshore platforms, where there is usually a nurse providing basic care. On a plane, the situation is even worse as there is no medical staff on-board, crew members are trained to provide basic care only or to use medical devices such as defibrillator in case of heart attacks. In all those case, telemedicine is essentially useful to address urgent cases, where the health condition of a passenger, a crewmember or a worker needs to be diagnosed. On big ships or off-shore platforms, a telemedicine system establishing regular connection with an ashore health centre can contribute to the continuity of care for the potential patients on-board, enabling regular contacts between the doctor or the trained staff on board and competent heath care professionals. Given the similitude of the different cases, maritime, offshore and aviation, it was decided to analyse in detail the maritime telemedicine applications which market is undoubtedly bigger


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and more mature than the aviation one where, due to the relatively short duration of the travel, the need of regular telemedicine is more rare. Nevertheless, especially in transcontinental flights, telemedicine can support the decision making process and avoid unnecessary and very expensive route diversions. Maritime Telemedicine Applications aim at supplying solutions for medical consultations on board ships, addressing passenger ships, cruise ships, ferry boats, and merchant vessels. The objective is to provide travellers and crew members with an effective medical assistance service in case of emergency and in all those cases when the on board medical staff requires a second opinion.

Table 9 - Challenges, barriers and opportunities in maritime telemedicine

Challenges

Potential qualitative improvements using

telemedicine*

Potential barriers to the adoption of telemedicine

Lack of competent

medical staff on board

Reduction in costs of passenger /

crew evacuation and ship diversion

Cost and resource concerns (especially for

merchant ships).

Costly evacuation

Great efficiency in terms of care

delivery and provision

Limited numbers of passengers can be

treated using telemedicine as

evacuations/diversions are still necessary in

some instances.

Risky working

conditions in the case

of off-shore

Ability to deliver quality of care that

is in some cases comparable to

land based medical care.

Technical issues (compatibility and

interoperability issues with existing

shipboard equipment notably satellite

equipment).

Large population (a

ship can have

thousands of

passengers and

hundreds of

crewmembers)

Increased security for passengers

and crew on board ships

Lack of knowledge and awareness of

telemedicine and e-health.

Large scale of

potential diseases

Ability to share patient clinical

information between providers over

large geographic distances in

support of quality care.

Legal issues


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Lack of adapted

medical devices

Problems during the trial phase in the use of

telemedicine technology as suppliers are not

always aware of the maritime environment

and hence of user needs.

Those who make the investment do not

harvest financial benefits: Typically, the

insurance company is covering all the

evacuation costs, not the ship owner

himself. Therefore the ship owner might not

be motivated in the implementation of the

telemedicine service. They do not see a

concrete financial benefit for themselves.

However they could have direct revenue

from the service by the negotiation of a

lower insurance premium due to a

decreased level of evacuations for the

passengers.

4.6.1 Merchant Case conclusions

� Cost-effectiveness analysis In the maritime industry there are various sectors (merchant, cruise, ferry, etc.) and therefore the benefits for each sector will vary according to the medical needs and requirements for each sector. In the case study provided there is a mixture of merchant and passenger evacuations but the evacuation in the specific oceanic region mainly relate to merchant ship evacuations. For maritime, a critical factor in the case study was the high cost of satellite time when the study was carried out. However at present these costs have been considerably reduced with a larger number of satellite operators providing bandwidth to the maritime industry. In the maritime situation the balance of the resources between patient transfer from ship to medical facility and the medical services is not the same as other healthcare settings. The patient transfer cost is much more significant. To make maritime telemedicine viable appropriate telemedicine investment is needed in shore-based medical facilities. In the case analysed, the first year of operation of telemedicine adds to the costs of the medical services due to overlapping provision. For subsequent years, potential benefits may be available. Sensitivity analysis has been applied to identify any factors in the analysis that exert a high proportionate influence on the cost benefit assessment. This has shown that increasing the medical costs by a factor of 30, still gives a net benefit, and the telemedicine application would still make a return. If the capital cost is increased by a factor of 10, telemedicine still offers a net benefit. This


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indicates that estimates for these cost items, and the conclusions drawn from them, are reasonably robust. However, if the evacuations rise from 75% to 90%, the benefit is deleted because the cost model is sensitive to the nature of the clinical conditions of the patients, and the extent to which evacuation or diversion can be avoided. The Patel study did not have access to this type of data. Moreover if satellite costs are increased by ten times to about €170, net benefits still prevail. � Qualitative improvements gained from telemedicine

Performance Indicators Specific indicators


- The diagnosis can be more accurate thanks to medical expert second opinion;

- Better treatment;

- Education of the on-board medical care provider

Responsiveness - The diagnosis can be made more quickly thanks to the telemedicine service that give access to experts

Efficiency - Avoidance of some patient evacuations or ship diversions.

Table 16 - Specific Indicators of performance of te lemedicine systems for the maritime cruise scenario



- There are changes in clinical practices – the way in which clinicians provide diagnoses, treatment or rehabilitation, and monitor patients, is enhanced with improved information technologies and knowledge bases.


- In terms of changes in working practices there is greater efficiency in healthcare delivery, reduction in some resources and increasing reliance on telemedicine, requires new skills and expertise and different ways of working, for example in creating medical records and admitting patients.


- Telemedicine reduces the need for direct transfer to hospital care, and so developing the role of the integrated team. New features of telemedicine may enable reductions in transfer costs for some patients.


- For maritime telemedicine in terms of the relationship between medical provider and patient there is no change between traditional practices and telemedicine since the relationship is always from a distance especially in the merchant sector.

- In addition to these benefits for medical services providers, patients can benefit by earlier diagnosis and improved monitorin g, and so potentially improved health outcome and status . However, evidence from published papers identifying costs seldom, have data on changes to patients health status or the type of conditions. It may be that fewer that 25% of crew may be able to remain on board during treatment. These tend to indicate the publications showing cost changes seem to focus on a narrow range of costs benefits that change before and after the introduction of telemedicine, but not reveal a picture of the full effect of the telemedicine impact.


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4.6.2 Cruise case conclusions

� Cost-effectiveness analysis The first year of operation of telemedicine adds to the costs of the medical services due to overlapping provision. For subsequent years, the deficit reduces, but can only be financed by an increase in ticket prices of €7. In the maritime industry there are various sectors (merchant, cruise, ferry, etc.), and therefore the benefits for each sector will vary according to the medical needs and requirements for each sector. In the scenario there is a mixture of merchant and passenger evacuation, but the evacuations in the specific oceanic region relate mainly to cruise ship evacuations. A critical factor in the scenario was the high cost of satellite time. However, these costs have been considerably reduced, with a larger number of satellite operators providing bandwidth to the maritime industry. To make maritime telemedicine viable, an appropriate telemedicine investment in shore-based medical facilities is essential and is a significant cost component. Sensitivity analysis has been applied to identify any factors in the analysis that exert a high proportionate influence on the cost benefit assessment. The cost benefit position is sensitive to the number of cruise liners in the fleet. If these are increased from 4 to 10, then the required ticket price increase drops from €7 to €5. The cost benefit performance is not sensitive to the number of passengers using telemedicine. As passenger numbers increase, the estimated cost of using telemedicine will increase, so the scope to convert the loss to the shipowners of telemedicine will be limited. � Qualitative improvements gained from telemedicine Table 17 shows the improvements that were realised for the maritime cruise scenario in the second column and how they correspond to the general performance indicators.

Performance Indicators Specific indicators


- Better care can be delivered to the patient

- Better diagnosis thanks to medical expert second opinion

Responsiveness - Specialist consultation available

Efficiency - Avoidance of some patient evacuations Table 17 - Specific Indicators of performance of te lemedicine systems for the maritime cruise scenario



- There are changes in clinical practices – the way in which clinicians provide diagnoses, treatment or rehabilitation, and monitor patients, can be enhanced with improved information technologies and knowledge bases.


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- In terms of changes in working practices there is greater efficiency in healthcare delivery, reduction in some resources and increasing reliance on telemedicine, requires new skills and expertise and different ways of working, for example in creating medical records and admitting patients.


- Telemedicine reduces the need for direct transfer to hospital care, and so developing the role of the integrated team. New features of telemedicine may enable reductions in transfer costs for some patients.


- In addition to benefits for medical services providers, some patients can benefit by earlier diagnosis and improved monitoring, and so improved health outcome and status. However, evidence from published papers identifying costs, seldom have data on changes to patients health or the type of conditions. It may be that fewer that 25% of patients may be able to remain on board during treatment. For cruise ships, and passengers, the conditions will be much wider, but still result in a relatively small proportion of patients avoiding transfer.

4.7. Conclusions

From this analysis the general findings of the financial and economic implications of telemedicine can be summarised as follows:

� economic and financial benefits are available for medical service providers and citizens for most

applications, excepting disaster relief where it is just provided as a response to a particular event

instead of a part of routine emergency services;

� for all case studies and scenarios, spending each year on telemedicine and telecommunications

running costs are very small percentages of the marginal costs of providing medical services;

� the scale of telemedicine investment seems to be limited to narrow healthcare activities, such as

groups of patients, geographic areas and service sectors, when its application to a wider scale could

yield a financial and economic return; and

� economic and financial case studies do not seem to deal with factors such as patient benefits, health

outcomes and status, and organisational themes such as achieving the changes in clinical and

working practices needed to realise the benefits.


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Application 5 year 5 year 5 year 5 year 5 year 5 yearCost Benefit Return Benefit Benefit Return

to MSP to MSP to Citizen total total

Rural Area Telemedicine 149 130 672 655 351% 468 300 1 140 955 665%

Homecare Monitoring 50 385 264 358 425% - 264 358 425%

Maritime Merchant Telemedicine 372 717 1 192 096 220% - 1 192 096 220%

E-learning 1 942 164 3 608 290 86% 2 561 331 6 169 620 218%

Maritime Cruise Telemedicine 2 887 691 - -100% 8 137 691 8 137 691 182%

Disaster Relief Telemedicine 47 800 1 936 -96% 45 000 46 936 -2%

Comparative Analysis Summary

Table 18 - Comparative analysis applications summar y

The table above shows over a period of 5 years, which of the selected applications provide the highest returns on investment (ROI). From the table it is clear that:

� Rural area telemedicine and home monitoring provide the highest potential economic and financial returns for the Medical Service Provider (MSP) and overall. The case studies were based on a small scale but little investment in telemedicine provides large potential returns for the MSP and the citizens. Therefore if the scale of these projects was expanded the returns could be significant.

� Maritime merchant telemedicine provides a large return for the MSP. � Maritime cruise telemedicine does not offer returns for the MSP but provides large returns for

passengers. � E-learning provides some returns for the MSP but a significant return for the recipients of CME. � Disaster relief telemedicine although not providing economic returns could be implemented for other

reasons such as having the latest and advanced technologies for disasters.

One of main conclusions that has emerged from the majority of the cases analysed is that the costs of telemedicine applications and its related telecommunications costs represents a small proportion of the overall capital outlay needed to migrate from traditional healthcare setting to telemedical services. It contradicts the preconceived idea that investment in telemedicine hardware, software and telecommunications is generally the main obstacle to its adoption. On the contrary the analysis highlighted the importance of the medical service provision costs itself. In deciding to change to telemedicine solutions, costs of project management, including procurement processes, change management, to develop new clinical and working practices and so secure the benefits, implementation, training etc. are often not taken into account as part of the telemedicine investment costs. Although they represent the costs needed to help realise the benefits of telemedicine. They are essential resources for the success of telemedicine. It is also important to stress that when telemedicine is introduced, it is essential that each organisation ensures that the transition period is effective and short as possible. This should ensure that the benefits are realised fully and rapidly from the operation stage. The new level of performance does not occur immediately after implementing telemedicine but it comes after the change in working practices have been


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achieved. It does not suddenly step up on day one. A lead-time will be inevitable, and the larger the project, the longer the lead-time. The organisational implications are that telemedicine needs to be managed across three stages: 1. Before; 2. Transition period; 3. Full operation period. What can also be drawn from the comparative analysis is that the benefits of telemedicine are not necessarily passed on to those actors in the value system that actually have to invest in the telemedicine service. This is particularly true for the case scenario analysed for cruise telemedicine, where we saw that the main beneficiary is the passengers, while it requires an additional investment from the ship owner. Most of the cases analysed were focused either on specific projects or small geographical areas. For that reason, telemedicine may not seem cost-effective, although we could see that if the scale of the telemedicine service was expanded to cover a larger number of sites or greater geographical area then the application could be cost-effective. Thus a critical success factor for a given telemedicine application or service is the ability to be expanded on a large scale.


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5. The market for satellite telemedicine services ( WP3/TN3)

5.1. Introduction

WP3 aimed to provide a market analysis of the applications selected in WP1, highlighting the areas that were most likely to provide opportunities for the development of satcom-based telemedicine services. The outcomes of this study help evaluate the level of risk and return that can be expected from any future investment in telemedicine in general and identify opportunities for the satcom industry in particular. The findings of WP3 cover the enlarged Europe region (25 member states: Austria, Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxemburg, Malta, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, Netherlands, UK) and Canada. A short analysis of the current state of the telemedicine market in the US was undertaken in order to provide a comparison with the European market. Outputs have been provided at a regional (Europe-wide) level, because a country-specific research focus is expected to add inconsistent value per application.

5.2. Methodology

The study team carried out extensive primary and secondary research in order to gather all the relevant information to be used to support analysis and to generate conclusions and recommendations.

5.2.1 Secondary sources

• study team proprietary databases and market reports on healthcare IT and telemedicine markets

in EU, US and Canada;

• clinical, patient care and association databases;

• subscription databases: Espicom, Walnut;

• multiple non-proprietary documents, articles and reports shared by Eutelsat within the framework of this study;

• web-based research.


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5.2.2 Primary research

In order to generate a market-validated and up-to-date snapshot of the market environment for each of the selected applications, the study team carried out 65 interviews with stakeholders across the industry. Three main groups of stakeholders contributing to the telemedicine value chain were identified as optimal targets for interview purposes. A list of all participating organisations and companies can be found in Appendix 2 of Technical Note 3:

• Potential clients: Potential clients for the telemedicine applications selected including hospitals, GP surgeries, universities, medical centres, charities, local authorities, disease management centres, disaster relief organisations, aviation companies, maritime companies and oil companies.

• Telemedicine Service Providers: According to the definition provided in TN2, telemedicine service providers are “suppliers of a service intended to perform the telemedicine service between two or more physically separate parties […] there is a growing role in this function for organisations able to Integrate Networks and provide so-called turnkey solutions”

• Competitors: These are the telecommunication service providers. They are “responsible for providing the telecommunication service whereby the various players in the provision of the telemedicine can communicate with each other […] Telecommunication providers have few direct contacts with the medical users, because what they normally provide is the infrastructure, the network and bandwidth that will enable the telemedicine application to communicate from one site to another” (TN2).

In order to provide as representative a picture of possible across the applications, the primary research has been split in the following manner:

Table 19 - Split of primary research (telephone int erviews)

ApplicationPotential Clients

Providers/ Vendors Competitors Total

Home Monitoring 4 4 3 11E-learning 4 4 2 10Rural Telemedicine 4 4 2 10Disaster Relief 2 2 2 6Maritime 2 2 2 6Aviation 2 2 2 6Offshore 2 2 2 6Total EU 20 20 15 55Canada 4 3 3 10Total EU & Canada 24 23 18 65


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Specific questionnaires were designed to address each of the three target groups. The ‘backbone’ structure is the same for each of the three questionnaires, and it is organised around six main sections (seven sections for the “Potential Clients” group):

• General: this section assess the motivation for using/providing/supporting telemedicine, and the type of telecommunication and network needed.

• Terrestrial versus Satellite: assess the benefits of satcom-based telemedicine as such and compared to terrestrial solutions.

• Drivers, Barriers and Trends : what are the main trends and challenges affecting the specific telemedicine applications in general, and the satellite-based application more specifically? Are there any opportunities for satellite transmission for the specific application in question?

• Market Metrics: estimates the number of telemedicine initiatives for each of the selected applications, as well as the total number of users of these telemedicine applications. It also aims at estimating the number of terminals in use for each application, and the proportion of satellite terminals vs. total.

• Competitive Landscape: identification of the telemedicine service providers and telecommunication providers.

• Pricing and Revenue: to explore the framework for managing telecommunications costs by potential Clients and the telemedicine Service Providers, and the revenue framework for the Competitors.

• Purchasing (only for Potential Clients): What and who influences the choice of whether or not to use telemedicine?

The methodology used to estimate the number of terminals in use for each application relies on both extensive secondary research and primary research in the form of interviews conducted with a cross-section of the main players on the telemedicine market as outlined above.

5.2.3 Initiatives mapping

A detailed mapping and analysis of all telemedicine initiatives has been undertaken. The denomination ‘Telemedicine initiatives’ is understood to include any commercial and non-commercial telemedicine projects and services. This is further split into ‘Pilot’ initiatives (trial programmes with scheduled completion dates) and ‘Running’ initiatives (currently implemented programmes with indefinite future application) in each of the applications. The outputs map all known telemedicine initiatives that fall within the definition of each application as outlined in TN1, which form the basis for the scope of this study. For this reason, and whilst the selected applications are expected to make up a significant proportion of all telemedicine initiatives, this study does not aim to map all known existing telemedicine initiatives. For the selected applications, several criteria have been scrutinized in order to map a clear picture of what is the current profile of the telemedicine marketplace. The criteria chosen for mapping the initiatives are:

• country


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• application targeted

• initiative name

• details of the initiative

• date implemented

• status (pilot initiatives or running initiatives)

• project coordinator and contact details

• geographical scope of the initiative (local, national, international)

• main stakeholders (medical service providers, telemedicine service providers and telecommunications service providers, payers etc)

• budget

• nature of funding (private versus public and in which proportion)

• how many workstations / terminals

• how many patients concerned per year

• time per initiative (frequency and duration)

• what is the primary communication service (PTOS, ISDN, DSL, Satellite, etc...)?

Interviews with the main actors in the telemedicine market helped provide a higher degree of detail and granularity to the secondary research-driven mapping process. However, the type and quantity of available information on each initiative varies significantly, and therefore the levels of data generated for each initiative also vary.

5.2.4 Market forecasts

Both primary and secondary research allowed estimates of the number of users, terminals and the percentage of satcom-enabled usage to be established. For revenue forecasting purposes, growth rates are applied to these estimates up to 2009 inclusive. These are firstly derived from the averages of growth rates as expressed in the professional opinion of telemedicine service providers, competitors and end-users interviewed as part of the primary research. The growth rates expressed by respondents are modulated to account for the impact of market drivers and barriers, the current degree of market advancement at country level, for reliable secondary information available for these applications and finally for the Study team’s professional experience of similar markets, technologies and technology-uptake scenarios both in healthcare and satcoms markets. A number of limitations need to be considered with the forecasts provided. Professional literature and reviews currently available on the telemedicine market in general, and on the applications studied here in particular, lack quantitative evaluations or estimates relative to the current situation. In the data available, equipment markets are more readily evaluated than


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telemedicine services markets. An objective of this study is to help bridge this information gap, whilst nonetheless being limited both to the applications selected in TN1 and to satcom-enabled telemedicine services. Key opinion leaders and major market players were interviewed during the course of this study. Although the majority appear to be optimistic regarding the potential market for telemedicine in both Europe and Canada, the quantitative information that emerged throughout the research process did not always prove consistent or coherent across applications and/or geographies. As a general rule, incoherent or inconsistent quantitative information (market metrics, size, share etc) provided by respondents can be motivated by a number of factors, but is most usually indicative of emerging markets, technology-focused markets (as against solution- or customer-focused markets), fragmented markets (demand or supply) and markets showing multiple or overlapping segments. A qualitative assessment of the telemedicine applications analysed in this study doesn’t allow us to categorise them neatly within any one of those criteria, but as the research outputs demonstrate, the telemedicine market shows elements of all these criteria. In order to compensate for this lack of market-driven quantitative information, and as with standard forecasting procedures, assumptions have been made for market forecasting purposes. These assumptions are highlighted for each of the revenue forecasts provided.

The resulting forecasts can therefore be considered to be the most reliable estimates allowed by the framework of this project. It should nonetheless be noted that, in line with the scope and objectives of this project, the degree of statistical representativity of quantitative findings is indeterminate.

5.2.5 Application-specific methodologies

Due to the lack of available studies and numerical data on telemedicine markets, the number of users and number of terminals used for telemedicine application was extrapolated using available secondary data and the outcomes of primary research. For each application, different criteria have been used to determine both the number of users and the number of terminals needed. � Home monitoring

The number of users of home monitoring solutions in Europe and Canada can be derived using the prevalence of chronic illnesses in these regions and modelling based on the following assumptions:

• home monitoring is most widely used to monitor patients with chronic illnesses (Diabetes, Congestive Heart Failure (CHF) and Chronic Obstructive Pulmonary Disorder (COPD) being the 3 main chronic diseases affecting Europe and Canada);

• only a fraction of patients with Diabetes, CHF and COPD have been considered to be ideal candidates for remote monitoring; and

• one patient equals one terminal.


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� Rural Telemedicine

Extrapolation from secondary research allowed the total number of rural practices to be estimated as a proportion of total healthcare practices. Available studies on telehealth initiatives subsequently allowed an estimation of the percentage of rural practices involved in telemedicine. � E-learning / Teletraining

The number of users and terminals in use for E-learning and teletraining was extrapolated using the total number of practitioners and nurses in both the EU and Canada. Primary and secondary research provided us with the information needed to calculate these numbers. � Disaster Relief

The number of users and terminals for this specific application is highly difficult to estimate as it is linked with the use of telemedicine in disaster areas. These phenomena are in turn hard if not impossible to predict accurately within the forecasting timeframe of this project. However, we recorded every major accident over one year – war or natural disaster – that had required emergency medical assistance, and assumed that the same occurrence of catastrophes will occur annually. � Maritime, Aviation & Offshore

The number of ships, planes or oil rigs is equipped with telemedicine facilities needed to be established. We have made two assumptions:

� for aviation, maritime and offshore every ship, aeroplane or oil rig is already equipped with telecommunication capability to be able to communicate with mainland; and

� because of the need for ubiquity and mobility for maritime and aviation, and the remote location for oil rigs, terrestrial solutions cannot be implemented and therefore all communications are via satellite.

5.2.6 Transponder demand methodology

The methodology used to estimate the number of transponders in use for each application relies on both a demand model and primary research in the form of interviews conducted with a cross-section of the main players on the telemedicine market. The model’s methodology is underlined by the graphs below:


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Figure 15- Outline transponder demand methodology

Figure 16 - Transponder demand methodology in detai l


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Interviews with the main actors of the telemedicine market helped provide key details, including the number of users connected, demand of bandwidth per user, bandwidth per user, quantity of stored content, additional capacity required from growth and percentage satellite access.

5.2.7 Qualitative evaluation methodology

Drivers and barriers in individual chapters are evaluated against two key criteria: importance to the end-user (the level to which the criteria fulfils end-users’ needs) and impact on growth (the level to which the criteria results in market adoption).

Importance

for the end-

users

Impact Significance

High High The criteria meets a need that is key to market adoption

Low Low The criteria adds little value with little impact on market adoption

High Low The criteria meets a need that is not key to market adoption

Low High The criteria adds little value but favours market adoption

Table 20 - Evaluation of drivers and barriers

Qualifying drivers and barriers in terms of importance to the end-user and impact on growth will help both in understanding markets dynamics and supporting market forecasts.

5.3. Results

5.3.1 Mapping of the telemedicine initiatives

Feedback from both European and Canadian respondents during the research process suggests that telemedicine in general, and the selected applications in particular, can generate significant benefits for both patient and doctor, and demonstrates a high level of development potential. A sense of measured optimism prevails in feedback from industry players such as service providers and operators, as well as end-user physicians. Across respondent groups, however, further research has also shown that telemedicine practice in Europe and in Canada remains in its infancy, despite this strong level of interest amongst industry participants. The reasons underpinning the emergent status of this market are largely considered by respondents to be structural, citing barriers to uptake such as legislation, technical homogenisation and reimbursement systems in particular. Given the structural nature of these barriers, the development of telemedicine to its full potential is therefore expected by industry participants to happen in the medium- to long-term. Multiple


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telemedicine initiatives have nonetheless been undertaken or are currently underway, helping facilitate the longer-term uptake of telemedical practice through the demonstration of the benefits and technological feasibility of telemedicine. For the seven applications studied, approximately 100 ongoing initiatives have been identified, as shown below:

Total Number of initiatives

2

1

2

1

45

23

26

0 5 10 15 20 25 30 35 40 45 50



Aviation Telemedicine

Disaster Relief

E-learning/Teletraining

Rural Telemedicine

Home Monitoring

Figure 17 - Total number of initiatives identified, per application

Home monitoring, rural telemedicine and e-learning / teletraining are the most widely used applications, mainly because initiatives in these areas are led by regional and/or national governments, and therefore funding is at least partially available.

5.3.1 Key Market Opportunities

The degree of technological ‘readiness’ of the market for telemedicine applications has increased significantly over recent years, priming the market for more intensive use of the enabling technologies utilised in the practice of telemedicine. Within this context, and in terms of transponder lease revenues, the three leading applications are estimated as follows for 2009: 2009 Annual Revenues

Home Monitoring €380,263 Rural Telemedicine €458,959 E-learning/teletraining €6,967,293


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E-learning/teletraining shows the greatest promise for wide-scale market uptake. The attractiveness of this segment is further strengthened by its potential in non-medical applications that can be run from centralised learning institutes such as universities. Whilst currently not the most attractive application in terms of revenues, home monitoring is seen by experts as having very strong development prospects, driven by demographics, the increase in preventive medicine and the adoption of cost-containment measures by national health authorities:

“Home monitoring [will have the most potential] because of cost savings, time saving, providing a better service, providing a service to people in remote locations, and keeping in touch with elderly people” (UK university involved in pilot study).

Rural telemedicine is perceived to offer new possibilities allowing greater equity of care across rural populations and to offer solutions where none other are possible. Its uptake is perceived by industry participants to be hampered by poor reimbursement status and perceptions of high cost of telecommunications where broadband access is not an option. Disaster relief, aviation, maritime and offshore te lemedicine services are still to be implemented on a wide scale. Reasons provided by industry participants for the low-scale implementation of telemedicine in these settings include the perceived cost of telecommunication, the lack of official guidelines concerning the provision of telemedicine on-board planes, ships and oil rigs, and the perceived lack of need for telemedicine in many cases.

5.3.3 Geographical Opportunities

Whilst the high degree of fragmentation of the telemedicine market acts as a barrier to growth in telemedicine markets, the identification of the stage of telemedicine development in countries in Europe and in Canada can help identify where the main opportunities lie for its promotion, development or reinforcement. Canada, France, Germany, Scandinavia and the United Kingdom can be considered as markets showing the greatest readiness for the continuing uptake of telemedicine applications. A key consideration for Tier 3 countries, and particularly in Eastern Europe, is the expected influx of structural funding from EU institutions which will reinforce the existing increase in healthcare standards. The positively evolving nature of healthcare structures and technology adoption in Eastern European countries is considered to position this region as a favourable candidate for early-stage adoption of telemedicine.


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Figure 18 - Degree of Telemedicine Implementation

5.3.4 The satcom-enabled telemedicine market

While pilot initiatives have demonstrated the possibility of using higher bandwidth services in these applications, the table below shows the characteristics of actual services deployed at the time of the study. The table therefore does not show how the services’ characteristics will be likely to evolve beyond the forecast period. It should be noted that bandwidth requirements indications are not representative of - nor are an average of - all services deployed.

Home Monitoring

Rural Telemedicine

E-learning / Teletraining Disaster Relief

Aviation Telemedicine



Fixed ��

Mobile ��

Narrowband ��

Broadband ��

Real Time ��

Store and Forward ��

Bandwidth Requirement

56 Kbps up to 2Mbps up to 2Mbps 56 Kbps 56 Kbps 56 Kbps 5 6 Kbps

Source: Frost & Sullivan, 2005 Table 21 - Current telecommunication characteristic s for the selected applications (2005)

Across most applications, there is a trend to more mobility and increased real-time reactivity. The evolution in bandwidth requirements by applications are addressed in details in TN3.

Tier 1: Canada, France, Germany, Scandinavia, UK

Tier 2: Austria, Benelux, Italy, Ireland, Greece, P ortugal, Spai n

Tier 3: new EU members

TELEMEDICINE IMPLEMENTATION

Source: Frost & Sullivan, 2005


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Satcom offers a quality of service comparable to competing terrestrial broadband technologies. Moreover, satellite constellations of at least three spacecrafts can provide almost global coverage and, using existing in-orbit capacity, can be deployed more rapidly than terrestrial networks. Satellite communication might appear to be the best solution to overcome the problems of access of telecommunication in rural areas. However, the cost of communications is still seen by the majority of users of telemedicine as being too high for a rural telemedicine initiative to be cost-effective. As of 2005, only 5% of the total transmissions of home monitoring are believed to happen via satcom. In addition, satcom may suffer from the competition of other mobile telecommunication applications such as GPRS or 3G, which can offer mobility and on some occasions broader bandwidth than over the plain old telephone service. Still, despite the propagation of cellular terrestrial communication services in the developed and less developed worlds, vast areas not covered by any wireless communication systems remain. Thanks to its wide-area coverage, satellite can serve to provide mobile wireless telemedicine services to locations not served. Sites such as on-board aircrafts, ships or offshore platforms that cannot currently be served by any other means are good examples. Telemedicine services in the maritime, aviation and offshore environments are relatively new concepts with business potential that has yet to be fully investigated and realised. An integrated solution for health services connected via satellite on-board ships is not readily available in Europe. The telemedicine equipment penetration rate within the maritime environment will increase driven by the market adoption of broadband satellite services used telecommunication.

5.3.5 Conclusions from the market analysis

A set of coherent findings emerge for this study. Conclusions and recommendations can be found in full in the last chapter of this section (TN3):

• selective market opportunities exist in e-learning / teletraining in particular, but also in rural medicine and home monitoring applications.

• the hierarchy of geographical opportunities for increased telemedicine uptake is made up of Canada, France, Germany, Scandinavia and the United Kingdom. Eastern Europe is perceived to be the leading emerging region.

• the key telemedicine market drivers are technological readiness, the increase in preventive medicine and cost-constraints of healthcare systems.

• the key restraints slowing the growth of telemedicine are perceived to be the lack of favourable or enabling legislation and/or adequate reimbursement, the fragmented nature of the market, the lack of integrated telemedicine solutions and some scepticism from end-users. The key restraints slowing the uptake of satcom-enabled telemedicine is the increased competition from terrestrial solutions and the (mis)perception of higher costs associated with satcom.


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• responding to these challenges will require affirmative action at structural levels (European institutions, national health authorities, regional healthcare systems etc) focusing on improving the reimbursement framework and the cost-benefits of telemedicine. At operational levels, solution-focused (and not technology-focused) initiatives are required to promote the benefits of satcom in particular, and ‘all-in-one’ service solutions linking patient, physician and service provider are required in order to facilitate uptake.


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6. Legal and regulatory issues in telemedicine (WP4 / TN4)

6.1. Introduction

The fourth and final Technical Note presented the results of a comprehensive review of the legal and regulatory framework affecting the delivery of telemedicine services via satellite and identified specific legal and regulatory issues that might constitute barriers to the delivery of these services, proposing strategies to minimise or remove these barriers where appropriate. WP4 was split into four tasks:

6.1.1 Identification of issues for review (WP4.1)

In order to ensure that WP4 fulfilled the aims of the study, a thorough literature review was undertaken which, together with historical analysis and the study team’s own professional experience, enabled a matrix to be prepared, showing the generic legal and regulatory issues that should be covered by the work package and the key actors and stakeholders affected.

Table 22 - Matrix identifying legal and regulatory issues for review

Issue Content

Issues that are fundamental to satellite telemedici ne services

Core bioethical and political principles

Autonomy and consent, confidentiality and other aspects of the

patient-professional relationship, nonmaleficence and

beneficence, justice and access.

Reimbursement, funding and access

National and cross-border reimbursement of patients and

professionals, national programmes and strategies, funding

and political direction.

Issues mostly affecting the use of satellite telemedicine services

Using and sharing health information

Consent to information sharing, confidentiality, privacy and

data protection, information security management.

Responsibility, liability and good practice

Duty of care, registration and training, indemnity insurance,

duty of quality, professional standards.

Guidelines, standards and protocols

Evolution, provenance and content of published guidelines,

standards and protocols.

International practice

Registration and licensure, indemnity insurance, jurisdiction

and choice of law, mobility of patients and professionals,

health in the internal market.

Issues mostly affecting the supply of satellite telemedicine services


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Marketing and selling healthcare ICTs

Directives on Electronic Commerce and Distance Selling,

advertising of medical and pharmaceutical products, media

and broadcasting regulations.

Standards and interoperability

“New Approach” Directives, standards bodies, obligations

relating to procurement by public bodies.

Product safety and liability

Medical Devices regulations, CE marking, FDA approval,

Directives on Product Liability and General Product Safety.

Intellectual property rights

Copyright, patents, trade marks, design rights, passing-off and

other infringements, exploitation.

In addition, WP4 was required to address the specific legal and regulatory issues arising from the delivery of the

five specific telemedicine applications selected in WP1 for further study.

6.1.2 Review of primary and secondary materials (WP 4.2)

The matrix prepared in WP 4.1 was used to guide the review of all the regulations, directives, decisions, acts,

statutes and case reports (“primary materials”) of relevance to the study. Relevant journal articles,

commentaries, papers and reviews (“secondary materials”) were also collected.

6.1.3 Evaluation and analysis of materials (WP 4.3)

The primary and secondary materials collected in WP 4.2 were then carefully analysed and evaluated for their

relevancy, accuracy, validity and usefulness. These materials are presented, described and evaluated in the

relevant chapter or chapters of Technical Note 4, which also describe how the identified issues affect each of the

five telemedicine applications selected for further examination by Technical Note 1.

6.1.4 Summary of results and preparation of country factsheets (WP 4.4)

Under this sub-workpackage the final draft of Technical Note 4 was prepared, including the appendices

containing chapter summaries, case studies and country factsheets for the 25 Member States of the European

Union, together with the EFTA States (Norway, Iceland, Liechtenstein and Switzerland), Canada and the United

States of America

6.2. Rationale for the topics address in WP4

Research into the legal and regulatory aspects of telemedicine has been taking place since the mid-1990s. One of the first attempts to describe the legal framework for telemedicine was that of Brahams (1995) who stated that:


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“… unforseseen medico-legal implications of telemedicine will be revealed by litigation as it arises”.16

She identified three core issues of concern: the responsibilities and potential liabilities of the health professional, the duty to maintain confidentiality and privacy of patient records and the jurisdictional and choice of law problems associated with cross-border consultations. Meanwhile in the USA these three issues were also receiving attention, with much concern being reserved for jurisdiction issues because the licensing of doctors in the USA takes place on a state-by-state basis, preventing health professionals from one state from providing care in another state via a telemedicine service. A fourth subject of concern – the reimbursement of care provided using a telemedicine service – was also first raised as a problem in the USA.17 The two principle landmarks in the development of telemedicine and e-health into a specific area of legal practice in Europe began with the publication of Stanberry’s The Legal and Ethical Aspects of Telemedicine by the Royal Society of Medicine Press in 199818 and the Green Paper Legal Aspects of Health Telematics, published by the European Health Telematics Association’s thematic working group on law and ethics, which was chaired by Stanberry and contributed to by lawyers from throughout the European Union, including Stefaan Callens of Belgium, Christian Dierks of Germany, Joseph McMenamin of the USA and Leif Erik Nohr of Norway.19 In his book, Stanberry categorised the laws and regulations affecting telemedicine under eight separate headings: confidentiality and the telepatient’s rights of access; data protection, security and European law; agreeing to telemedical treatment; telemedical malpractice; standards adopted by the General Medical Council, Royal Colleges and Professional Associations; telemedicine equipment; intellectual property rights and competition law and jurisdictional problems. A similar structure was used by the EHTEL working group in their Green Paper, which covered technical standards, protecting electronic patient information, best practice, cross-border practice, malpractice and product liability, reimbursement and equity and access: bridging the digital divide. These sub-topics within the broad subject of telemedicine and e-health law have since been validated through their adoption – almost verbatim – in the information brochures of the newly created e-health departments at major European law firms such as Lovells20, Eversheds21 and Mishcon de Reya22. These brochures define telemedicine and e-health law as comprising:

16 Brahams, D. The medico-legal implications of teleconsulting in the UK. Journal of Telemedicine and

Telecare 1995: 1: 196-201. 17 See, for instance, Grigsby, J. “Lack of coverage for telemedicine services: a barrier to implementation of

telemedicine”. Background Paper to Western Governors’ Association Telemedicine Action Report, June 1995 and “To pay or not to pay – that’s a lingering telemedicine question”. An article in American Medical News, 1 May 1995 at p. 30.

18 Stanberry, B. The legal and ethical aspects of telemedicine. London: Royal Society of Medicine Press Limited, 1998.

19 European Health Telematics Association. Legal aspects of health telematics. Brussels: EHTEL Association, 2000.

20 See further http://www.lovells.com, accessed on 19 October 2004.


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• public policy;

• data protection, privacy and security;

• the duty of confidentiality and the patient’s right to consent to the use of their records;

• professional responsibility and liability;

• jurisdiction and choice of law;

• contractual and supply issues;

• standards and interoperability;

• product liability and medical device regulation; and

• intellectual property rights.

In this document we have therefore taken the classification developed over the last decade or so and used it as the framework for reviewing and evaluating the generic legal and regulatory issues associated with the delivery of telemedicine services via satellite under ten chapter headings. Within each chapter we have also examined, where possible, how these issues should be taken into account in the five specific telemedicine applications that have provided the basis for the case studies in both this technical note, as well as Technical Notes 2 and 3 (i.e., disaster relief telemedicine, rural area telemedicine, home monitoring, e-learning / tele-training and maritime / offshore / aviation telemedicine). Readers should note, however, that this is not an analysis that it is always helpful, or even possible, to conduct in relation to these five different telemedicine services, because in many cases the application of law and regulation is exactly the same for each of them. This is the case, for instance, as regards data protection and the duty of confidentiality, which does not change at all in either its nature or scope as one moves from consideration of one telemedicine service to another, As respects e-learning / tele-training, there are no specific data protection or confidentiality issues of note. Likewise, the impact of cross-border issues depends upon whether the telemedicine service crosses the borders of nation states, but not on the type of service crossing the border. Satellite regulation, technical standards and interoperability, medical device regulation, product liability and safety and intellectual property rights also affect telemedicine services independently of whether they are targeted at users in rural areas, at sea, in the air or in their own homes. It is only in respect of the political, cost and efficacy issues surrounding different services, as well as the responsibilities, liabilities and risks involved in their provision (and the guidelines developed for managing those risks) that it is meaningful or worthwhile to draw distinctions between types of telemedicine service and examine them each in some detail.

21 See further http://www.eversheds.com, accessed on 19 October 2004. 22 See further http://www.mishcon.co.uk, accessed on 19 October 2004.


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6.3. The fundamentals

The ten chapters have been grouped into three separate parts. In Part I: The Fundamentals we consider the core ethical principles and political drivers that effect all the stakeholders in telemedicine and which provide the necessary foundations for any further examination of its legal and regulatory framework.

6.3.1 Ethical fundamentals

Ethics is a generic term for the various ways of understanding and examining the moral life. Moral dilemmas in medicine and healthcare tend to be drivers for legal and regulatory responses, including healthcare professionals’ and institutional codes of conduct, government guidelines and public policy. The four principle threads running through all these responses are the four clusters of fundamental ethical concepts in healthcare: respect for autonomy, nonmaleficence, beneficence and justice. Delivering a safe, effective, profitable and enduring telemedicine service requires all involved in the supply and use of that service to understand the risks, responsibilities, liabilities and obligations involved. These are articulated in detail in TN4, but are all ultimately derived from the moral direction provided by healthcare ethics.

6.3.2 Political fundamentals

Regional and national governments in Europe and North America are politically driven to provide better and more effective healthcare for their citizens using information and communication technologies, though they are responding to this driver in different ways. The creation of funding and reimbursement processes for telemedicine services is widely acknowledged as being a vital condition for the stimulation and growth of this market. There is a tremendous variation within the USA and Canada in state or provincial policies towards the reimbursement and funding of telemedicine services. While some health systems, such as Nova Scotia in Canada, will reimburse or fund almost all types of telemedicine services, others, including some insurance and managed care schemes in the USA, have yet to recognise telemedicine services as a reimburseable means of healthcare delivery. This situation is changing all the time, however. Generally speaking, telemedicine services are reimbursed when there is a compelling, evidence-basis for their clinical appropriateness and cost-effectiveness and sufficient political goodwill. This is an ongoing need for further, large-scale research studies in order to provide better evidence that telemedicine services are a cost-effective and responsible means of delivering healthcare, as a precursor to more extensive funding and reimbursement of these services.

6.4. Using telemedicine

In Part II: Using Telemedicine we look at the legal and regulatory framework as it regulates the operational aspects of telemedicine services and the specific responsibilities and liabilities that the telemedicine service provider and the healthcare professionals involved owe to the ultimate beneficiary of the service: the patient.


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6.4.1 Using and sharing health information

Anyone involved in providing a telemedicine service should try to reach both an understanding of their obligations in respect of health information and also a standard of behaviour that builds on existing best practices. Using information and communication technologies to facilitate the delivery of healthcare does not remove or diminish the patient or citizen’s rights to confidentiality and autonomy over their health information in any way whatsoever. The European Union’s Directive on data protection (95/46/EC) provides for the harmonised pan-European protection of personal information, including health information and creates responsibilities for anyone involved in obtaining, recording or processing health information. The European Convention on Human Rights gives every European citizen a qualified right to respect for their family and private life. There may be circumstances where it is lawful for health information to be shared outside of the team of health professional involved in the provision of healthcare to a patient, for purposes connected with clinical audit and quality assurance activities as well as for commercial and epidemiological research. However, in such circumstances health information may have to be anonymised or the patient’s consent obtained.

6.4.2 Responsibility, liability and risk management

A telemedicine service, in common with a conventional medical service, owes patients a duty to exercise reasonable care in providing treatment and advice. A health professional delivering care through or for a telemedicine service will be negligent if they fail to act in accordance with a practice accepted as proper by a responsible body of similar professionals skilled in that particular art and, if harm occurs to a patient as a result of that negligence, the telemedicine service and the health professional may be liable to the patient for tortious or contractual damages. Independent research has shown that poor communication is a major cause of medical malpractice litigation. The utmost care should be taken by satellite telemedicine services in responding promptly and sympathetically to patient complaints. Telemedicine services should adopt a positive, retroactive approach to clinical risk rather than allowing the commencement of litigation to be a barometer for the quality of their service. Telemedicine will bring with it some specific clinical risks that should be guarded against by health professionals and telemedicine services but on the whole should be seen as reducing most of the risks associated with conventional healthcare delivery.

6.4.3 Guidelines, standards and protocols

Evidence-based clinical guidelines have an important role to play in promoting best practice and improving the consistency and efficiency of healthcare. As a relatively new concept, telemedicine has not yet produced a critical mass of such guidelines and those which do exist show great variance in their scope and quality. Approximately twenty-five telemedicine guidelines can presently be identified, covering applications such as teleradiology, teledermatology, teleophthalmology, telepathology,


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telesurgery, telepsychiatry, telehomecare, minor injuries telemedicine, health professional / patient communication by e-mail, health-related websites and videoconferencing. Experience suggests that guidelines for best practice work best when developed nationally but appraised and adopted locally by the stakeholders directly involved in the delivery of a telemedicine service.

6.4.4 Cross-border practice

Where telemedicine services delivered via satellite cross the borders of one or more nation state, each nation state may have an interest in regulating an aspect of that service. Hence a telemedicine service may be the subject of a number of conflicting and contradictory legal and regulatory demands. In cross-border situations, the jurisdiction and law applicable to a telemedicine service can be decided by a number of localisation triggers, including the place of commission of a tort or place of injury resulting from the tort, the place of supply of the telemedicine service, the place where the customer took steps to form a contract with the telemedicine service, the place with the telemedicine service’s offices are located or the place targeted by the telemedicine service. The healthcare professions are supervised and regulated on a state-by-state basis and a professional must register in each state in which they intend to practice. In the European Union the Directive on the recognition of professional qualifications (2001/19/EC) provides for the mutual recognition of healthcare qualifications but not for mutual automatic registration. There are several ways in which the present system of registration and regulation of health professionals is inadequate for dealing with professionals who are mobile within the European Union or who wish to use a telemedicine service. These include the lack of formal schemes for the exchange of information about disciplinary procedures, lack of harmonisation of training standards, continuing education and professional development, language and cultural differences, bureaucracy, limitations upon malpractice liability insurance and problems with reimbursement. The increasing ubiquity of telemedicine services and the mobility of health professionals demands an urgent review of the present system of registration and regulation in favour of greater procedural harmonisation and sharing of information.

6.5. Supplying telemedicine

In Part III: Supplying Telemedicine we consider that framework as it applies to the technical and commercial aspects of telemedicine service delivery. The issues dealt with in this part will be of limited significance for healthcare professionals or patients but highly important for the actual owners and operators of satellite telemedicine systems.

6.5.1 Supplying telemedicine services

There is a great deal of enthusiasm regarding the commercial potential of telemedicine. The European Commission believes that by 2010 the telemedicine and e-health industries could account for 5% of the total European health budget. Although business and competition law in the European Union are


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subject to harmonisation efforts, there are still some small variations between national laws relating to the law of contract and tort. Three European Union Directives on distance selling (1997/7/EC), electronic commerce (2000/31/EC) and electronic signatures (1999/93/EC) have created a harmonised regime in respect of business that is conducted electronically in the European Union. Although there are fewer and fewer differences between them, the Member States of the European Union have varying rates of corporate and value added tax, as well as variations in the levels of income tax and social insurance which may need to be taken account by a telemedicine business in choosing a geographical location in Europe from which to do business. Telemedicine services that use satellite telecommunications are affected by the political and strategic directions that have been adopted by the European Commission in this domain and, in particularly, by the Commission’s commitment to liberalising areas currently under a monopoly provider, opening access to telecommunication networks and services through harmonisation and the development of minimum standards and full application of the European Union’s competition rules. One result of the extensive deregulation and liberalisation of the satellite telecommunications sector has been that the international satellite organisations that were previously intergovernmental treaty organisations – such as Intelsat, Inmarsat and Eutelsat – are now public limited companies and their shares are quoted on stock exchanges. The privileged positions that all three organisations formerly held in relation to the satellite telecommunications market (e.g., immunities from competition and other regulatory schemes, tax exemptions etc) have all been eroded or destroyed completely and the “exclusive” and “special” rights that they previously enjoyed have been removed or severely curtailed. The principles of free movement of goods services under Articles 28 – 31 of the Treaty establishing the European Union apply to all satellite telecommunications terminals and equipment and are can only be limited when terminals or equipment fail to conform with “essential requirements” for features such as health and safety, electromagnetic compatibility and data protection and security. The display of a “CE” mark is evidence of this conformity and conformity assessment can usually be carried out through the manufacturer’s own declaration and surveillance. The Licensing Directive has been in force since January 1998 and provides a general framework within which authorisations and licenses may be granted by national administrations to telemedicine services wishing to operate telecommunications networks or to offer telecommunications services in the European Union. Some, but not all, Member States of the European Union have created “one-stop-shops”, under the co-ordination of the CEPT, for the granting of authorisations for certain satellite services to satellite network operators and service providers. The granting of authorisation is one of the very few elements of satellite telecommunications regulation in the European Union that is not fully harmonised.

6.5.2 Standards and interoperability

Standards and common technical specifications are necessary for telemedicine to thrive. The lack of standards and accreditation mechanisms for telemedicine products and services are widely recognised as a barrier to the greater deployment and implementation of these technologies. The majority of standards that are relevant to telemedicine (e.g., DICOM and HL7) have been produced by national, non-governmental bodies rather than international or European standardisation bodies.


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Individuals and organisations supplying telemedicine technologies to public bodies in the European Union are required under Council Directive 87/95/EC to conform to relevant European Standards or Prestandards. There is significant variation in the European Union as regards awareness and fulfilment of this obligation, however. In the European Union, so called “New Approach” directives that contain essential requirements for particular classes of products may have considerable utility in relation to the development of harmonised standards for telemedicine.

6.5.3 Medical devices, product liability and safety

In the European Union the law relating to medical devices, product liability and general product safety has been harmonised by a number of Directives. The regulations in the USA and Canada are very similar to the European regulations in this area. All telemedicine technologies that fall within the definition of a “medical device” must comply with the provisions of the Directive concerning medical devices (93/42/EEC) under which they must comply with the essential requirements of the Directive and obtain a “CE mark” as evidence of compliance before being placed on the market for the first time. Not all telemedicine technology falls within the terms of this Directive. The Food and Drug Administration (FDA) in the USA and the Therapeutic Products Directorate in Canada enforce similar regulations. European Union law provides for responsibilities on the part of any individual or organisation involved in the telemedicine service value chain under the Directive concerning liability for defective products (85/374/EEC) and the Directive on general product safety (92/59/EEC). Under the Directive concerning liability for defective products the producer or supplier of telemedicine technology will be strictly liable under civil law for any harm caused by that technology. They may also be liable under contract law to someone with whom they have contracted for the sale or supply of telemedicine technologies or services and under tort law to anyone who might foreseeably be harmed by their negligence. The Directive on general product safety provides for criminal liability for placing an unsafe consumer product on the market. The Directive on unfair terms in consumer contracts (93/13/EEC) prevents producers or suppliers of telemedicine technology from excluding liability for death or personal injury caused by their technology. Nor can they use unfair contractual terms and conditions when dealing with a consumer.

6.5.4 Intellectual property rights

Telemedicine technologies and services may be protected by a number of different intellectual property rights, most of which have been harmonised throughout the Member States of the European Union. Software and databases may be protected by copyright law that protects a work against unauthorised copying for the lifetime of the author plus an additional period of 70 years after their death. Protection is provided under the Berne Convention and the Directive on the harmonisation of certain aspects of copyright and related rights in the information society (2001/21/EC) as well as the Directive on the


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legal protection of computer programs (91/250/EEC) and the Directive on the legal protection of databases (1996/9/EC). The European Patent Convention provides for a single system of patent registration and protection for telemedicine technologies that demonstrate the required level of novelty, inventiveness and a capacity for industrial application. Protection lasts for 4 years and may be renewed annually for up to 20 years. Trademarks relating to telemedicine technologies or services, consisting of words, designs, letters or numerals, may be protected under the Directive to approximate the laws of the Member States relating to trade marks (89/104/EEC). Once registered they are protected indefinitely. A design right automatically subsists in an original design and protects the outward shape and appearance of an article. A registered design is a monopoly right for the outward appearance of an article or a set of articles that lasts for a maximum of 25 years. A registered design is additional to any design right or copyright protection that may exist automatically in the design. Use of intellectual property rights in such a way as to restrict the importation of telemedicine technologies into one Member State from another Member State will be contrary to EU competition law unless it is carried out on the grounds of the bona fide protection of industrial and commercial property.

6.6. Appendices

Three appendices are provided to Technical Note 4:

6.6.1 Chapter summaries

The Chapter Summaries in Appendix A provide a brief overview of the most important points and issues covered in each of the ten chapters.

6.6.2 Country factsheets

The Country Factsheets in Appendix B contain specific information on the health systems of the twenty-five Member States of the European Union. The members of the European Free Trade Association – Switzerland, Liechtenstein, Norway and Iceland – are also included, since their laws have been harmonised with those of the EU 25 in order to ensure they enjoy the same trading freedoms and privileges as the rest of the Union. Canada and the United States of America are included, though the information presented describes the federal (as opposed to the state, provincial or territorial) situation, a more detailed analysis being beyond the scope of this study. Information is presented in each factsheet regarding:

• Country facts, including population size, capital city, average life expectancy for men and women, GDP per capita, total healthcare expenditure (as a percentage of GDP) and, where available, the number of doctors and hospital beds per 100,000 people. This information has been sourced from the most up-to-date statistics available from the World Health Organisation.


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• A brief description of the healthcare system of the country in question.

• The status of e-health, telemedicine and electronic health cards, including whether there is any accreditation system for these services and the name of a contact person who can provide further information.

• The national laws regarding data protection and the contact details for the national data protection office.

• The procedures for professional registration by foreign doctors, the status of Continuing Medical Education and the contact details for the national registration authority.

• The national medical device regulations, together with the contact points of the national competent authority for medical devices.

6.6.3 Case studies

The Case Studies in Appendix C summarise the most important legal and regulatory provisions covered in each of the ten chapters, as they apply to the five satellite telemedicine services identified for closer examination in this study.


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7. Conclusions and recommendations

7.1. Characteristics of the telemedicine market:

The study allowed us to draw some general characteristics of the telemedicine market in Europe and Canada:

� There is a wide range of applications and products addressing the healthcare sector telemedicine needs but only few of them are mature to reach commercialisation or operational phase.

� Although the technology is mature telemedicine services are not so well diffused. There are, compared to other telecommunications applications, for instance, very few service providers for all the identified applications. We identified a lot of products providers (manly providers of systems either hardware of software) but very few providers of turn key solutions providing end-to-end services to the end-users.

� Telemedicine activities are still in major cases limited to the local level, which prevent them to reach the critical mass necessary to turn out a pilot activity into an operational and profitable service. The market is thus very fragmented. We saw in the comparative analysis held in TN2 that even if the telemedicine services showed to be very cost-effective on a local experience (Cf. Norway case study), when the scale of the service coverage is to small it can prevent the potential investors (services providers but also healthcare authorities) to decide to invest for the implementation of such services.

� There are multiple actors involved in the telemedicine service value chain. The necessary combination of their interests and benefits are not always easy to reach in order to deliver the services in the right way to the end users. For example, we saw in the cost-effective analysis of the telemedicine services held in TN2 that the beneficiary from the telemedicine services are not always those taking decisions to invest for the implementation of the services.

� In general, both in Europe and in Canada it appears that the majority of the telemedicine initiatives are funded by academic research, government subsidies, EU- or federal-level programmes or as part of local government development plans. As such, it is generally perceived by industry players across the market that telemedicine is ‘on life-support’ through this non-organic funding, which has been made available over the last 10 years and that is set to continue to be made available at least over the next 3-4 years. This funding is perceived to be a double-edged sword. On the one hand, it is seen as a necessity in order to allow the benefits of telemedicine to be fully assessed and evaluated in what is a relative commercial vacuum. On the other hand, it is perceived as not allowing the fundamental laws of supply and demand to operate, postponing the ‘reality check’ that the level of demand for telemedicine remains low and dissimulating the real difficulties associated with implementing self-sustaining business models in this market.


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� Nevertheless, major industry players and key opinion leaders interviewed during the course of this study are in majority very optimistic about the future of telemedicine in Europe and in Canada. The general feeling is that telemedicine has great prospects and – after years of pilot projects not being rolled out into up-and-running applications – is ready to develop to its full potential.

7.2. Main barriers:

Telemedicine, and ultimately satellite-based telemedicine, must overcome several barriers and challenges before being considered as a suitable alternative to traditional healthcare. The analysis made in TN2 and TN4 (Analysis of regulatory issues related to telemedicine) also enabled us to identify the main regulatory and cultural barriers to the widesp read diffusion of the telemedicine services and to the market demand :

� Local licensure rules may prohibit a physician from consulting in another area.

� Reimbursements are slow to come through because of complicated rules and requirements.

� Compliance to patient privacy laws such as HIPAA and the Data Protection Act.

� Cultural and organisational resistance to changes.

� Fear of malpractice.

� Absence of widely accepted standards allowing interoperability.

� Lack of a consolidated demand.

7.3. Main recommendations for telemedicine service providers:

From these findings we learnt and identified the following recommendations for a telemedicine service that would better feed the healthcare sector requirements and specificities:

� There are crucial requirements for the development of scalable and adaptable telemedicine services that can be easily replicated on a wider scale;

� Telemedicine services should make use as much as possible of standard solutions and avoid proprietary systems that could prevent wide scale deployment.

� The telemedicine service providers in their target identification have to be careful to identify the right investor, not mixing the one who benefit from the one who pays.

� Efforts should be focused on tier 1 countries (Canada, France, Germany, Scandinavia and UK), where the highest number of conditions are met in order to succeed in large scale implementation of telemedicine. However, it is important to stress the fact that Eastern European countries are eager to develop their healthcare infrastructure, and this situation might be a fertile ground to develop the most advanced telemedicine solutions. The burgeoning re-organisation of local healthcare systems in Eastern Europe makes it useful to consider promoting telemedicine


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initiatives short-term, through funding of initiatives and extensive communications with government and healthcare professionals.

� Offer of services have to be turn-key end-to-end solutions:

o Horizontal integration of telemedicine service with the offer of equipment (hardware and software), broadband satcom/telecom services, and even medical services (whether clinicians expertise or e-learning/teletraining courses, etc);

o Vertical integration with major medical equipment and healthcare IT solutions providers. Integrating telemedicine service providers with major medical equipment companies would facilitate reaching the critical size necessary to implement telemedicine applications on a large scale.

� Work with private insurance companies to demonstrate and spread the benefits of home monitoring in particular. Helping insurance companies understand and evaluate the savings home monitoring will allow (reduction of costly hospitalisation, reduced physician visits etc) will be key in order for insurance companies to in turn incentivise their clients (patients) to monitor regularly. Existing programmes in the US, for example, allow patients reduced private health insurance annual fees in return for registration in a Disease Management Programme, most usually involving more regular monitoring.

� For applications such as airlines, maritime and offshore, telemedical equipment needs to be better promoted to airlines, maritime and oil companies. A dedicated sales force aimed specifically at these customers, with the expert back up of leading clinicians in the field of remote medical assistance would be a critical step towards the increase in awareness of telemedicine. The experience, expertise and client base of established companies such as MedAire could be leveraged in order to promote telemedicine on board planes and ships

� Increase the volume and quality of marketing efforts whilst individualising marketing messages and promotion to individual end-user groups (e.g. European Society of Cardiology, Canadian Diabetes Association, nursing associations for CME etc ) focusing on the benefits of telemedicine. This is perceived as most effective if offering an end-to-end service solution to these groups.

� Adapt the cost of telecommunications to the specificity of the service as this cost is perceived to be a major limitation by telemedicine users.

� For direct-to-patient services such as home monitoring, providing a bundle of services in addition to telemedicine could be a solution. Patients could then access not only a broadband internet network, but also may be interactive TV, voice communications, home security services, etc.

7.4. Recommendations to satcom services providers: Telecommunications providers have limited direct influence on the uptake of telemedicine, and telemedicine is only one of the numerous applications supported by their networks. Telemedicine is seen by most telecommunication providers as a way to promote their broadband connection and increase the number of end-customers.


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Recommendations for driving uptake could nonetheless include:

� Reduction of the costs incurred by satellite communication would help lift one of the major barriers

to satcom adoption in telemedicine. The answer from the interviewees showed that satcoms are often perceived as being more costly that other solutions, although it is not systematically the case.

� Promotion of broadband satellite transmission is necessary in order to inform all the stakeholders of the capabilities that broadband could bring, not only in terms of telemedicine, but also related to other applications - such as internet access for passengers - used by airlines and cruise companies to enhance the service to their customers.

� It would also be necessary to inform and educate the potential users about the advantages of satellite over terrestrial telecommunications. Many acknowledge the superiority of satellite in remote areas when no other network is available. However, capabilities such as multicast, security of transmission and transmission quality are rarely quoted by potential patients and clients.

� Articulate the communication of the advantages of satcom vs. terrestrial more around end-user needs and priorities, and less around the advantages as perceived ‘in-house’ by satcom players.

� Vertical integration by satcom players and telemedicine service providers in order to be able to deliver an end-to-end service.

7.5. Recommendations to public bodies

Some recommendations can also be drawn for public bodies, such as ESA, wishing to support the development of the telemedicine market:

� Although telemedicine seems to be gaining momentum among many health professionals in Europe and Canada, there is still reluctance from governments to legislate on telemedicine applications. Therefore, it is desirable to reinforce the promotion of the benefits of telemedicine, not only in terms of costs compared to traditional delivery of healthcare, but also in terms of qualitative benefits for the patients, whose lives can be improved by home monitoring, teleconsultation or emergency tele-expertise.

� Promoting telemedicine applications directly to the end-user (patient, traveller, etc) could help speed up the regulatory process by creating a need and therefore greater demand. So far, public funding and telemedicine initiatives have been aimed mainly at healthcare professionals, in order to demonstrate the benefits of telemedicine or technologies used in telemedicine. Now that these benefits are beginning to be more widely accepted, the time is ripe to create a need that will ensure the value of telemedicine is felt by the population at large.

� Financing criteria for pilot projects should take considerations of the recommendations drawn in the section 7.3.


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For more details on the study or access to the technical notes please contact the study team members or ESA officers:

Contact coordinates of the study team:

� Eutelsat S.A.

Lydia Gaillard Faghihy

European Projects Coordinator

Tel. +33.1.5398.48.37

[email protected]

� D’Appolonia SpA

Fabio Bagnoli

Tel. +39.010.362.81.48

[email protected]

� Avienda Ltd

Ben Stanberry

Tel. +44 (0)29 2050 4085

[email protected]

� Telemedicine Technologies S.A.

Yoani Matsakis

Managing Director

Tel. +33.1.55.20.08.07

[email protected]

Contact coordinates of ESA team:

� Francesco Felliciani

Tel. +31.71.565.41.09

[email protected]

� Nathalie Ricard

Tel. +31.71.565.61.22

[email protected]

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