Tag Archives: competition

Medical Outsourcing

In examinations of globalization and outsourcing there has often been a case made that certain categories of jobs will be less likely to be outsourced to markets with lower costs.  Medical services have often been included on that list by commentators such as Thomas Friedman.  Two trends that I have been reading about make me question this notion.  Medical tourism and online prescriptions are two options that lead me to believe that outsourcing and globalization will eat at the edges of even the medical field.  We’ll all be better off for it in the end.

Medical tourism, like the name suggests, is traveling to a different location (usually a foreign country) for medical procedures usually in a lower cost environment.  Medical tourism has moved from sneaking off to Bogota for a nip and a tuck and now involves patients traveling to advanced facilities in “developing” countries for life-saving treatments.

Medical insurance companies often have very complex criteria for the coverage of certain procedures.  Elective procedures have a long-history of not being covered by medical insurance.  Some potentially lifesaving procedures have either been excluded from covereage or are covered only with very high deductibles.  Some of these procedures are available in advanced medical facilities in other countries for costs (including travel) that are well below the deductible charged by American insurance providers.  This lack of true medical coverage may lead some Americans to question the need for traditional insurance policies and look for alternative insurance products that reflect the possibility of travel for many medical treatments in non-emergency situations.  Certainly employers concerned about the runaway costs of healthcare are going to be desperate to find some sort of alternative.  Since employers are technically the consumers of health care we should look to companies large and small to take up this mantra for products that incorporate the realities of medical tourism to gain access to lower costs health care.

This trend injects a level of competition into the market for medical services that is long, long overdue in the United States and elsewhere in the developed world.  New facilities in places like India and Thailand have leapfrogged established health care institutions in terms of technology.  It’s not just lower labor costs but also more effective use of information technologies that make health care more affordable in these markets.

Another interesting trend is online prescriptions.  This is not ordering your herbal Viagra over the Internet.  Rather, this is a medical practitioner that receives inquiries from patients, often in off-hours.  Based on the (admittedly limited at the moment) ability to consult on the patient’s condition remotely a doctor can offer prescriptions and advice to patients.  Consultation will get better as we have ever-improving communications devices such as high-resolution web cameras and specialized medical diagnostic devices in our homes and more of our medical records will be in a digital format that is readily accessible yet secure. This is more immediate and flexible than a visit to one’s primary care physician, and also saves patients from the need to resort to an emergency room visit.  The emergency room has become the after-hours catch all for all medical needs immediate or otherwise.

In the near term there will be winners and losers in these shifts in the market.  Near term medical facilities that cater to the rich and upper middle class will likely lose business to medical tourism.  Insurance companies are going to need to change their offerings to meet the needs of these consumers or run the risk of losing customers to non-traditional medical insurance schemes that reflect the new market realities.  Whenever you remove a segment of the customer population from an insurance pool the harm of that migration is pushed down to those who rely most heavily on the insurance, so their costs to retain coverage are likely to increase in the short term.  Small medical practices will have an opportunity to reform their businesses to move some of the day-to-day work to online offerings and save the office time for more serious cases, extended consultation between doctor and patient and delivering an altogether higher caliber of service.  Reforms to health IT will push the costs of health care management down.  Patients in the destination countries for medical tourism will benefit from improvements to their own local health care infrastructure, the influx of cash paid by medical tourists, and the job opportunities that the industry will create.  In the United States our current model of medical licensing is going to need to change to reflect the new realities.

Many of the benefits of these transformations will come from having a mechanism that suits the patient/customer need– appropriate tools for the job.  Mis-use of emergency rooms for after-hours care and care of the uninsured is beyond disturbing.  Emergency rooms are being asked to handle a workload for which they were not originally intended, and their intended patient base pays the consequences for that.  If we’re really concerns about things like quality healthcare and being able to respond to disasters this is a situation we cannot accept.  Note to Republican politicians: the ability to go to an emergency room does not constitute “access to healthcare” for the uninsured.

Rural Telcos Block Cable VoIP

This is a very interesting situation being described in this article in USA Today. It seems that rural incumbent telephone companies are seeking relief from state public utility commissions to prevent local cable companies from offering voice-over-Internet services as a component of their cable service package in their overlapping service areas.

The rural telcos are withholding the leasing of local telephone exchanges and interconnection to prevent cable VoIP providers from being able to offer a service which would be of use for local calling within the local community. I can speak from real experience of 15 years living in a very small rural town that the difference between a local and a long-distance call can make a big difference in your ability to remain connected to your family and neighbors. In such an environment even the likes of Vonage, Skype or GizmoProject would be challenged to succeed with voice services (except second-line offerings) resulting from the inability to have local numbers provisioned. This is also a class of carrier which is largely excused from requirements for local number portability, so the monopoly on local telephone numbers has a substantial stifling affect on these rural markets.

The parallels between this issue and the issue of providing franchises to incumbent telcos attempting to offer cable television services should not be lost on anyone. In both instances it is incumbents and amicable local and state officials that are actually acting as the roadblock to competition in both the voice and television service market the very customer and constituent bases they are supposed to serve.

Its also worth noting how this issue runs head-long into the issue of the Universal Service Fund. In my past reviews of the various drafts of the new telecom bill, Ive expressed my disappointment that there has been no re-examination of the USF. These same local telcos which are fighting the deployment of cable VoIP are the recipients of USF subsidies.

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IPTV = Cable, requires franchise? AT&T says “No,” Cable Trade Group Says “Yes”

As I continue to make my way through the latest draft of the new telecom law, one of the principle items of concern for the next round of the telecommunications revolution is going to be the issue of requirements for local franchises.

The bill creates a class of services called Broadband Video Services. Within the text of the latest draft, these services and those who provide them are defined as:

BROADBAND VIDEO SERVICE.The term broadband video service means a two-way service that

(A) is offered, with or without a fee, to the public or to such classes of users as to be effectively available to the public, regardless of the facilities used;

(B) is offered in a manner that enables subscribers to integrate

(i) a video programming package, with

(ii) customizable, interactive voice and data features, functions, or capabilities, which may include caller identification, call management, and the ability to access information derived from the Internet; and may be included or offered with, but shall not be treated as subsumed in or subsuming, VOIP service or BITS.
BROADBAND VIDEO SERVICE PROVIDER. The term broadband video service provider means any person who provides, or offers to provide, directly or through an affiliate, a broadband video service that is delivered directly to subscribers over facilities the service provider or its affiliate owns or controls.

 

The definitions do not address the question of protocols or facilities with respect to two-way transmission of the broadband video, nor any other place in the bill. In fact, the only real details to hang your hat on are the specifications that the service be two-way and include a video programming component. For our purposes we will assume that IPTV falls into the category of a Broadband Video Service. Would it be possible for Comcast to argue that their video services are “two way” based on the ability to access on demand programming?

The section of the bill devoted specifically to the question of franchise does not indicate that Broadband Video Service providers will be required to register with local franchise authorities. My assumption is that since they don’t specify this requirement it does not exist. Likewise, the bill does not indicate that traditional cable companies will be freed from the requirement to seek local franchise arrangements. How about as the cable companies make legal arguments that their services are actually TV How about when cable companies introduce services delivered through new mechanisms that clearly are IPTV

I acknowledge that this post is asking a lot more questions than it answers, but these are some good questions that are going to define the future of both broadband and video programming. Some battle lines are already being drawn.

In California, a cable trade group has claimed that AT&T’s plans to roll out IPTV in San Ramon is illegal because AT&T haven’t received a franchise from the local franchise authority. Comcast is the incumbent multi-service cable operator in San Ramon. The trade group claims that AT&T’s IPTV service is an equivalent offering to cable television, and therefor is required to have a franchise agreement.

The arguments on each side are:

Jeffrey Sinsheimer, vice president for law and public policy for the California Cable and Telecommunications Association, insisted to the council that Project Lightspeed is a cable system, which would require a franchise agreement under federal law.
Shiyama Clunie, an AT&T manager, responded that Project Lightspeed is not a cable service as defined under the municipal code or state or federal law. It would deliver video programming over a switched, two-way interactive IP-based network, which is different than a cable system, Clunie told council members.

 

I have to come down on the side of AT&T on this one. The whole franchise requirement is a joke that has helped ensures that cable video services in the vast, vast majority of the country are monopolies and helps contribute to the fact that broadband in the United States is basically a duopoly.

Now, unfortunately the new telecom bill gives franchise authority over rights of way and easement, including enforce use of easements and rights of way as well as defining allowable time, place and manner for installation and maintenance of infrastructure in rights of way. My suspicion is that local franchise authorities will use these powers to put the screws to competing video and broadband providers.

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Can You Hear Me Now?

The New York Times has a piece (you have to pee in a cup, show your passport and pee in a cup again to read it) about how Verizon Wireless are running ads specifically to target AT&T Wireless customers following the AT&T Wireless – Cingular merger. I havent seen the ads, and I cant really tell from the copy on the graphic carried on the Times web site, but it doesnt appear there are any mentions of needing to buy new phones to access both networks, take advantage of rollover minutes and so on.

According to the article, the copy focuses on the problems AT&T Wireless had last year when number portability became a reality. Thats not the best move on Verizon Wireless part. Thats old history and whoever suffered through it was moving away from AT&T Wireless, and its old history anyway. Customers wont have really known about it unless their telecom dorks like me. Hearing about the fact you wont get to take advantage of one of the better contract options Cingular have available without going through a pain-in-the-ass, expensive migration is where customers need to know theyre going to feel real pain and frustration. This is where the customer starts to think Well, if Cingular are going to make me BUY a new phone and move all of my information over, I might as well consider all of my options.

Not too many days after the merger closed we were in an AT&T Wireless store because Barry is in the market for a new phone. The sales clerk kept trying to sell him on certain models and didnt mention ANYTHING about the impact of the merger. Finally I had to speak up and ask, If he buys a phone here today will he be able to get rollover minutes.

The answer was a very sheepish, No. The guys on the retail front are really botching this up, because theyre not telling customers about these issues, and presumably not telling them at any point before the sale is made. Youre going to have a lot of very pissed off people who may or may not be under a service contract, but who are going to leap to other wireless carriers the first chance they have.