Implementing a wireless infrastructure that can meet current and future demands for mobile health applications can be an expensive proposition. Finance officers should know their options.
By Dan Timm and Eric Abbott
With 500 million consumers worldwide expected to access mobile health applications via smartphones by 2015, a tidal wave of demand for mobile health is anticipated (Merrill, M., "Report: 500M to use mHealth apps by 2015," Healthcare IT News, Nov. 18, 2010). Mobile health applications have the potential to improve patient safety, increase the quality of care, and enhance workflow management by facilitating information flow among patients, caregivers, and clinical systems.
One of the challenges of implementing effective mobile health applications, however, is financing a robust wireless infrastructure to support a system that can meet these ever growing capacity demands and the needs of various users. Developing an appropriate wireless infrastructure presents a significant cost for a healthcare organization; how much money a CFO can allocate to finance the project will largely depend on the scope and requirements developed from a needs analysis. Determining the most optimal wireless infrastructure to support healthcare transactions is certain to be a critical consideration.
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Need for Wireless Technology
Unfortunately, many hospitals and health systems overlook investment in wireless infrastructure, which creates a reliance on a wireless carrier's outdoor signal to penetrate the facility. This approach is often unreliable, delivering mixed results because wireless signals fade and can be blocked by a building's walls and other construction materials. Using outdoor signals to provide indoor wireless service for healthcare transactions is a risky way to address mobile health implementations because it can result in inconsistent service levels and associated low levels of adoption. Given the reality that 94 percent of physicians already use smartphones, a lack of reliable and robust wireless service can severely impede internal healthcare operations (Merrill, M., "91 Percent of Physicians Already Use Smart Phones," Healthcare IT News, Sept. 8, 2010).
Additionally, there is growing demand for capacity that cannot be met by older wireless infrastructures, which were primarily designed for voice, not data transmissions. New mobile technology and modern usage (e.g., social media) are driving the need for more capacity to handle the explosion of data, images, and video. Although 17,000 mobile health applications already are available, the growth of mobile diagnostic services will continue to add to the demand for wireless capacity (Merrill, M., "91 Percent of Physicians Already Use Smart Phones," Healthcare IT News, Sept. 8, 2010). Furthermore, sending detailed images, such as MRIs, in real time requires significant digital bandwidth throughput, and requires that the data transactions be secure and directed to the intended recipient given HIPAA considerations and the substantial penalties for violation of patient protected health information.
In the aggregate, billions of dollars are being invested in this area to achieve this vision. It is generally agreed that a distributed antenna system is the preferred network technology for improving wireless coverage and capacity in both indoor and outdoor locations. A distributed antenna system requires that compact antenna nodes be placed in multiple locations and driven by a centralized source. This system moves the wireless signal closer to the user, increasing coverage reliability and throughput, which translates into a better user experience through reduced latency and quicker data exchanges. It is expected that expenditures on distributed antenna system installations alone for hospital and healthcare in the US will surpass $4 billion by 2015.
Who Should Pay for Mobile Service Improvements?
Determining who pays for improving a wireless network infrastructure is a complex proposition. One way to determine where the dollars will come from is to ascertain who benefits economically. Fortunately, financing options for hospitals are much more attractive when all stakeholders are poised to reap the benefits.
For example, hospitals benefit from an improved wireless infrastructure because they are able to deliver a highly desired amenity to staff, patients, and visitors, and an improved wireless infrastructure has the potential to support mission-critical operations. However, wireless carriers benefit as well from the substantial revenues generated by customers who use their service within a hospital. That economic fact is great news for hospitals, because carriers realize this and, therefore, are often willing to fund the costs of designing, installing, and maintaining the wireless network.
Ultimately, whether wireless carriers will fund a new network boils down to the market dynamics among wireless carriers providing service at or near the hospital's location. In fact, determining how many competing wireless carriers, if any, want to provide better service at the hospital could guide the hospital's approach in transferring capital expenditures and operating costs associated with a network technology build-out to the carriers. Such decisions also are influenced by the fact that the hospital's workforce receives service from their respective wireless carriers of choice, so multiple carriers potentially stand to benefit.
3 Potential Ways to Pay
In making a decision to provide an improved wireless network, there are three primary choices.
Hospital-managed approach. The hospital could go solo, hiring contractors to design and build a system. This is an option that some hospitals have chosen because it offers complete control. However, it is also the most expensive option because the hospital absorbs the entire capital and operating costs of designing, building, and operating the network. Another substantial risk with this option is obsolescence: There is no guarantee that what is built today will handle tomorrow's wireless capacity demands. The hospital may find itself having to spend more money several years out to upgrade the network, creating the risk of a future significant financial burden. Such upgrades may require complete replacement of the existing network, costing upwards of $3 per square foot of space.
Individual carrier-managed approach. The hospital can sign a long-term contract with an individual carrier to design, build, and operate the wireless infrastructure system. With this approach, the hospital would negotiate the financial terms with a single carrier. This option keeps the process fairly simple, and it makes sense if one carrier is servicing all of a hospital's personnel. However, because a single-carrier network is proprietary, other carriers won't help with financing because they lack a direct benefit from it. As a result, service for visitors and guests-and even other hospital staff using other carriers-may not improve. Indeed, pursuing such an approach ignores a significant portion of those who use a different carrier. Thus, pursuing such a strategy obviates the intended benefits.
Third-party-managed approach. Another option is to build an open, standards-based network infrastructure that can be used by multiple carriers and their customers. This option minimizes the capital investment and operating expense borne by a hospital because the costs of building and operating the network can be shared among many carriers. In addition, the participation of a neutral third-party vendor to design and build the open network ensures that the network is carrier-agnostic.
This approach is more like buying a service rather than financing a capital expenditure. The neutral vendor integrates multiple wireless service providers onto one network for the healthcare organization and provides ongoing operational services such as 24/7 monitoring. As with any technology acquisition project, strategies to pursue include issuance of a request for proposal based on defined requirement and pursuing domain experts/vendors that provide such services, bearing in mind that a neutral, third-party is one that hosts any number of different wireless carriers without any preferences.
Using a Neutral Third Party for Wireless Infrastructure: Can It Work?
The third-party approach does have its challenges, such as managing disparate views from within hospitals and carriers. But there are benefits, as well. Tapping a knowledgeable, neutral third party to build and manage a distributed wireless network inside a hospital offers three distinct financial, operational, and technological advantages.
Financial. A neutral party could complete its own analysis of the economic benefits of a particular network and uses that analysis to help make the key financing decisions. The neutral party also understands the economics of the various network technologies and can suggest the best options for the particular environment. For example, building a distributed network with technology that uses small antennas placed inside the facility's heating, ventilation, and air conditioning metal ductwork is very cost-effective because it can be installed quickly with minimal impact on workflow or ongoing delivery of health care.
Operational. Leveraging its relationships with the carriers, a neutral third party could provide technical monitoring and control of the network, maintaining the service at optimal levels for current demands and adding levels of controls and upgrading capabilities for future expansion. This operational know-how helps avoid the risky and expensive issue of obsolescence.
Technological. Finally, a third party could provide expertise that could be leveraged by a hospital regarding the availability and effectiveness of the technology. For example, it's important to know that a wireless local area network does not scale as cost-effectively as a distributed antenna system, nor does it provide the throughput required from increased capacity demands. Having a third party guide the hospital through technology options like this could help a hospital avoid costly mistakes. Finding neutral third parties is a straightforward process that involves enlisting consultants, providing invitations to bid, accessing industry forums, and researching association groups for such entities.
Finding the Right Options
CFOs have a variety of solid options when crafting a plan to finance mobile health applicaitons, including some that could reduce costs for the organization. The CFO, working in partnership with the chief information officer, should take control of the process as soon as the indoor wireless coverage and capacity needs are identified to ensure optimal decision making.
Dan Timm is CFO and executive vice president, ExteNet Systems, Inc., Lisle, Ill. (email@example.com).
Eric Abbott is director of product management, ExteNet Systems, Inc., Lisle, Ill. (firstname.lastname@example.org).
Keys to Success in Building a Wireless Infrastructure
When contemplating wireless infrastructure needs, keep in mind these key management tips.
Try to stick to an open, standards-based distributed network so that the cost is spread among several parties. Increasingly, hospitals are working with more remote service providers such as radiology centers and affiliated physician group practices with multiple offices and application providers. All parties that benefit from the improved network can share the cost of building, operating, and maintaining a modern wireless infrastructure.
Bring in expert advisers whose core competency is distributed wireless networks. These experts can help design a network that fits current requirements while minimizing future obsolescence, which drives up costs over time.
Reevaluate the financial model. Consider investment in a wireless infrastructure as the equivalent of buying a service, rather than making a capital expenditure. This shift in thinking dramatically changes how a hospital approaches obtaining a high-quality integrated service, frequently enabling a more cost effective way to give clinicians real-time access to information to monitor and direct clinical work.
Publication Date: Wednesday, June 13, 2012