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A Review of Telemedicine Business Models

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A Review of Telemedicine Business Models

Shengnan Chen, BS, Alice Cheng, BS, and Khanjan Mehta, MS Materials and Methods
This article presents business models and quantitative data for
Humanitarian Engineering and Social Entrepreneurship Program, eight telemedicine ventures. In order to effectively compare and
The Pennsylvania State University, University Park, Pennsylvania. contrast the ventures, it is essential to articulate them in a common
business model framework. However, a common conceptualization
of business models for telemedicine does not yet exist in the literature.
Abstract After reviewing 103 publications from 1975 to 2009 concerning busi-
Telemedicine has become an increasingly popular option for long- ness models, Zott et al.6 identified three distinctive conceptualizations
distance/virtual medical care and education, but many telemedicine of business models: (1) the business model as an archetype (such as for
ventures fail to grow beyond the initial pilot stage. Studying the e-business specifically), (2) the business model as an activity system (for
business models of successful telemedicine ventures can help de- strategic analysis of network activity), and (3) the business model as
velop business strategies for upcoming ventures. This article de- cost/revenue architecture (for economic analysis). They also found that
scribes business models of eight telemedicine ventures from different business model literature seemed to have shifted from an isolated firm
regions of the world using Osterwalder’s ‘‘Business Model Canvas.’’ view to a firm-centric, yet boundary-spanning, activity system view,
The ventures are chosen on the basis of their apparent success and and interest has also shifted from value capture to value creation.6
their diverse value chains. The business models are compared to We have chosen Alexander Osterwalder’s ‘‘Business Model Can-
draw inferences and lessons regarding their business strategy and vas’’7 as the basis for describing the following telemedicine business
contextual factors that influenced it. Key differences between tele- models because it addresses both activity systems and cost/revenue
medicine business practices in developing and developed countries architectures. Furthermore, it uses value creation as the central
are also discussed. The purpose of this article is to inform and in- starting point, followed by a systematic view of how the value is
spire the business strategy of the next generation of telemedicine delivered and captured, reflecting the current consensus in business
ventures to be economically sustainable and to successfully address model conceptualizations.
local healthcare challenges. Because of varied socioeconomic contexts between developed and
developing regions, emphasis may be placed on different values in
Key words: business models, developing countries, telemedicine order to facilitate revenue generation. For example, the lack of
transportation in developing countries places a higher emphasis on
Introduction critical access to basic healthcare, whereas the value proposition in a

A
s many as 75% of e-health programs designed for developed country would more likely emphasize convenience of
healthcare professionals fail during the operational stage.1 location. Thus, a breakdown and understanding of each component
Development of a comprehensive business model for tele- of the business model are necessary to assess the success of the tele-
medicine ventures during the conceptualization phase can medicine system. The ‘‘Business Model Canvas’’ is composed of nine
play a pivotal role in reducing risks and costs, while increasing their building blocks:
probability of success.2,3 Sustainable business models must be devel-
oped in order to create value for the company as well as the patient. 1. Customer segments. Customers are the individuals or organi-
However, rigorous research on telemedicine business models is sparse. zations paying for the telemedicine service. The customer
A review by Whitten et al.4 of over 500 peer-reviewed articles found paying is not necessarily the same as the consumer who uses
only 38 studies with quantitative data on the cost–benefit of tele- the service. Although one entity may purchase the service, the
medicine. Telemedicine and e-health have shown increasing promise benefit of the service may reach beyond the customer to a
in developing countries5 and would be strengthened further with the separate consumer.
development of a framework that identifies and distinguishes char- 2. Value proposition. Value is provided by the telemedicine
acteristics of telemedicine business models in varying contexts. Fur- system to the customer and the consumer. This encompasses
thermore, a better overall understanding of successful business models economic value as well as social value. What keeps the cus-
is needed to expand telemedicine practices in an economically sus- tomer coming back? The value proposition is the main focus of
tainable fashion. This article reviews eight different telemedicine the ‘‘Business Canvas’’ and is especially important in highly
business models, using Osterwalder’s ‘‘Business Model Canvas’’ to personal healthcare industries such as telemedicine.
understand value creation and enterprise operations in different 3. Channels. The primary interface is between the provider and
contexts and specifically in developed versus developing countries. the customers, where value is delivered. All of the telemedicine

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CHEN ET AL.

ventures discussed in this article utilize either the Internet, the Health Service, Navajo Nation, state health agencies, public
telephone infrastructure, or both. schools, and urban and private hospitals.
4. Customer relationships. Types of relationships are maintained 2. Value proposition. The ATP offers reduced costs for members
with customers directly and indirectly. How is a positive re- because of higher bargaining power compared to individual
lationship generated between the provider and the customer? buyers. This is done through the application service provider
5. Revenue streams. These are sources of income generation. model, where costs are shared among the members of the
6. Key resources. These are important technology, infrastructure, program. It also has a broad array of educational offerings,
or human resources that sustain the venture and are essential including training for high school teachers, grand rounds
for delivering the value proposition. broadcasting, and continuing medical education programs.10
7. Key activities. These are activities that the venture needs to 3. Channels. The membership program is managed and adver-
undertake to deliver the value proposition to the customer. tised primarily through the telehealth business office staff at
8. Key partnerships. These are normalized relationships with the University of Arizona.
other entities besides the customer to create, deliver, and 4. Customer relationships. Membership can be inclusive of all
capture the value. benefits or specific to one service. A legal contract protects
9. Cost structure. This involves the costs of all business opera- members from malpractice through teleconsultations but does
tions for the venture. not cover clinical services provided in-person.
5. Revenue streams. Full membership is $5,000 per year, and each
The eight telemedicine ventures selected for this study were sub-
service separately is $1,500. During the 2003–2004 fiscal year
divided into ventures in developed or developing countries: ventures
(latest numbers available), memberships contributed 30% of
in developed countries include Arizona Telemedicine, Myca Nutri-
ATP’s total income, along with state funds (45%), extramural
tion, and Tactive Telemedicine; ventures in developing countries
grants (24%), and the University of Arizona (1%).
include Telenor TeleDoctor, Apollo Telemedicine, Aravind Tele-
6. Key resources. T-1 and T-3 lines are the physical infrastructure
Ophthalmology, SkyHealth, and People’s Liberation Army (PLA)
of the network and are leased from Arizona’s utility companies.
Telemedicine. These eight ventures were chosen with a focus on
Specialty healthcare services and distance education rely on
varying service types, revenue streams, and value propositions. Each
specialized clinicians and professors. ATP also facilitates legal
venture has adapted its service and business model to different social,
advice, quality assurance, and clinical protocol development.
geographic, and economic contexts. Ventures were also chosen to
7. Key activities. A full membership includes services such as site
represent a variety of healthcare fields that address either the general
assessment, equipment selection, purchasing services, network
public or specific demographics. This review frames each tele-
design, installation, and management, training, coordination
medicine business model within the ‘‘Business Model Canvas’’ and
of continuing education, and technical services and support.
discusses the similarities and differences between telemedicine
8. Key partnerships. Apart from institutional memberships, the
ventures in developed and developing regions of the world.
Arizona state government is a partner that continues to remain
financially supportive. Partnerships with utility and telecom-
Telemedicine Ventures in Developed Countries munications companies are formed to maintain low costs.
Arizona Telemedicine, Myca Nutrition, and Tactive Telemedicine
9. Cost structure. ATP must pay for the telephone lines, database,
from the United States, Canada, and The Netherlands, respectively,
and software maintenance.
have successfully been in operation for at least 5 years. Each offers a
unique value proposition for a target demographic of patients. Summary. Arizona Telemedicine has a unique value proposition
in that it reduces the cost of shared resources for very broad medical
ARIZONA TELEMEDICINE SYSTEM applications. Not only does the system facilitate doctor–patient ses-
In 1996, the Arizona State legislature established the Arizona State sions, but it also provides distance education for groups of patients as
Telemedicine Program (ATP)8 with a $1.13 million federal grant.9 By well as groups of doctors. This exchange of information and technical
2012, more than 1 million teleconsultations had been completed support is critical for creating a streamlined process for the relatively
using the system.10 ATP uses the application service provider model, new program. According to Barker et al.,8 the model’s success was
which acts as a purchasing agent for member institutions’ equip- largely due to the financial contribution of the government.
ments and telecommunication infrastructures. The goal of ATP is to
MYCA NUTRITION
facilitate clinical service but not to provide it.8 ATP also provides
Myca Nutrition is a Web and mobile video communications plat-
support for telemedicine project development.
form, started in 2007 in Canada by Myca Health Inc., designed to
1. Customer segments. The ATP covers eight telemedicine sites connect nutritionists with their clients. The nutritionist needs only a PC
connecting 55 healthcare organizations throughout the state of and Internet access, and the client needs only a cell phone or a PC that
Arizona, mostly in areas outside urban Phoenix, Tucson, and has video-calling capacity. A video consultation can be carried out on
Flagstaff. These are for-profit and non-profit entities, such as the nutritionist’s own Web site, replacing traditional face-to-face of-
the Arizona Department of Corrections and jail systems, Indian fice visits.11

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 A REVIEW OF TELEMEDICINE BUSINESS MODELS

1. Customer segments. Myca Nutrition’s service is targeted at USD). An online tool allows asynchronous interaction between
doctors. The platform is sold to the medical sector, but the counselors and patients. Aid workers for recognized mental health
service is used by both doctors and patients. services conduct treatments on a franchise basis. The length of the
2. Value proposition. Video feedback, videoconferencing, and treatment averages 12–16 weeks.13
graphic food journals combine to create an engaging experi-
1. Customer segments. Tactive aims to reach individuals with
ence for the clients. They become more aware of their dietary
addictions as well as companies that need to address their
habits and medical conditions and receive periodic reminders
employees’ addiction problems. Tactive addresses behavioral
and feedback from the nutritionist. Myca Nutrition also allows
problems like gambling, eating disorders, and drug addiction. It
nutritionists to reach more customers by gaining search re-
also provides services to other countries through franchising.14
ferrals through the Myca Nutrition Web site. The nutritionists
2. Value proposition. Approximately 8% of the Dutch population
can also bill directly through the Web site by paying a 5% fee.
drinks excessively, but only 10% of these people receive ap-
3. Channels. All the services are facilitated through the Myca
propriate support. Tactive has found that 96% of its users
Nutrition Web site.
prefer the anonymity feature in its online service. Tactive es-
4. Customer relationships. Myca provides an interactive platform
timated that the need of professional counselors had declined
that enables nutritionists to create stronger relationships with
from 650 to about 25 because of the asynchronous counseling
their clients.
technology, which had led to increased efficiencies and sig-
5. Revenue streams. Doctors are charged a monthly premium for
nificant reductions in cost.
use of the service: $29.95 for up to 5 patients and $89.95 for
3. Channels. Tactive delivers its service to clients through a front-
up to 100 patients. Patients may cover the service cost by
end information technology system over the Internet. This
paying $12 per month. The payment model has been compared
replaces the previous face-to-face communication between
to Netflix.12
professional assistants and clients.
6. Key resources. Myca’s platform utilizes Web space, HTML
4. Customer relationships. In the online treatment system, a
coding, and a secure network for storing and transmitting data.
permanent worker is dedicated to one client throughout the
7. Key activities. Along with providing the platform for doctors to
program.13 On the other side, the informative Web site sustains
engage their patients, Myca Nutrition also offers a search on its
a self-service relationship with customers. An online forum for
Web site that allows users to find doctors in a particular area of
patients creates a community that supports recovery.
health expertise. Secure online billing, merchant accounts, and
5. Revenue streams. Revenues are e2,000 ($2,604 USD at the time
online shopping carts are also provided by Myca for the nu-
of this publication) per patient, with a e200 ($260 USD) per
tritionists and their clients.
patient profit. Additional revenue is gained from franchising
8. Key partnerships. Myca Nutrition is branded in the United
and reselling the application to other countries.
States as Hello Health. It has partnered with major corpora-
6. Key resources. From 20 to 25 professional assistants are em-
tions such as Qualcomm and Google, serving 16,000 and
ployed, along with specialists in diagnostics and behavioral
50,000 employees, respectively.11
change. Maintenance and development of the platform require
9. Cost structure. The maintenance of the online platform incurs
information technology personnel.
the major cost.
7. Key activities. Besides the main consultation activities, main-
tenance of the Web-based platform and continual research
Summary. Myca Nutrition’s main value proposition is time and
into effective intervention methodologies are conducted.
convenience. For clients, immediate feedback is provided on eating
8. Key partnerships. Local, regional, and national governments
habits directly via the patient’s cell phone or computer. This helps
provide partial funding in exchange for societal change evi-
curb unhealthy eating habits early, instead of waiting for health
denced by addiction statistics. FactorE is a technology partner.
symptoms or weight gain to appear. For nutritionists, Myca Nutrition
Tactus, the parent company, interacts with individual health-
provides access to real-time client data and helps them reach a
care insurers through Tactive.
broader client base. Receiving immediate updates of dietary intake
9. Cost structure. Professional assistants, education, and training
increases accuracy and provides a more comprehensive view of the
incur the major costs, with additional costs for coaching on
patient’s lifestyle, creating a positive feedback loop that garners
digital treatment, information technology application, devel-
better counseling from the doctor. Thus, both parties are willing to
opment, and maintenance. Tactus invested e4–4.8 million
pay for the convenience and real-time feedback that the Myca Nu-
($5.21–6.25 million USD) to cover start-up costs, whereas the
trition platform offers.
Dutch government provided e885,000 ($1.56 million USD) to
support scaling-up.15
TACTIVE TELEMEDICINE
Tactive is the e-health component of Tactus Addiction, a company Summary. Although the focus of Tactive Telemedicine is to pro-
based in The Netherlands. More than 5,500 units of care per year are vide a convenient way for patients to recover from addictive be-
performed, with an operational budget of e1.6 million ($2.31 million haviors, the advantage of this system over traditional methods is that

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CHEN ET AL.

Tactive provides complete anonymity to its users. Patients who re- Telenor Group of Norway, founded in 1855 to provide telegraph
ceive treatment and counseling may still ask questions and form a services initially.16,17 It has now become the second largest GSM/
support group, but they have the option of remaining anonymous cellular services provider in Pakistan, having 26.1 million subscrib-
through the online forum. This discretion provides another level of ers.18 TeleDoctor aims to connect anyone in Pakistan to a doctor by
security for users, especially if treatment is sponsored by their em- dialing one number. Callers have the convenience of being able to
ployer. This secure and effective online treatment and counseling call 24 hours a day, 7 days a week. TeleDoctor provides secondary
method provides a convenient way for both individuals and large medical advice only, but promotes discussions regarding lab inves-
corporations to discreetly resolve addictive behaviors. tigations, treatment, symptoms, and health awareness. Service is
available in eight local languages.16 Since its establishment through
REVIEW 2009, 500,000 unique users have used the TeleDoctor service.
Although they utilize different business models, the three tele-
1. Customer segments. TeleDoctor serves all customers in Paki-
medicine ventures chosen from the developed world—Arizona Tele-
stan that use Telenor as their mobile phone service provider. It
medicine, Myca Nutrition, and Tactive Telemedicine—have broad
is a ‘‘mobile network operator’’–sponsored hotline.
underlying principles that make them successful. All companies were
2. Value proposition. TeleDoctor saves customers, especially
started with initial funding from a financially stable, closely related
those living in rural areas, travel time and cost to see a doctor.
funder. Arizona Telemedicine received funding from the Arizona
It offers accessibility and convenience through the use of
state government, whereas Myca and Tactive were funded by their
multiple languages and direct access to a doctor through a cell
respective parent private companies. However, all ventures were able
phone.
to become self-sustainable without additional external funding.
3. Channels. TeleDoctor is advertised through Telenor’s mobile
The stability and success of these ventures are closely related to the
service advertisements, utilizing Telenor’s infrastructure to
value propositions provided to their customers. Arizona Telemedicine
connect callers with doctors. Bill payment is shared through
facilitates telemedicine for doctors to patients, doctors to doctors, and
Telenor’s cell-phone usage payment structures.
institutions to institutions. Operating on a broad scale allows Arizona
4. Customer relationships. Callers are more familiar and loyal to
Telemedicine to share expensive resources among several entities. This
the overall TeleDoctor brand and logo than to a specific doctor.
value is passed directly to institutional customers in the form of re-
TeleDoctor increases customer satisfaction by providing reli-
ducing costs and indirectly to society in the form of easier access to,
able service. Callers may choose personalized doctors based on
and more equitable distribution of, clinical services. Myca Nutrition
gender, language, and specialty preferences.
allows nutritionist/doctors to communicate with patients frequently
5. Revenue streams. TeleDoctor charges callers 8 PKR ($0.08 USD)
on a more personal level. Doctors and patients are willing to pay for
per minute. These charges are in addition to the customer’s
this service because of increased communication without having to
basic calling fee from Telenor. TeleDoctor receives, on average,
meet in-person. This also holds true for Tactive Telemedicine, which
1,000 calls per day. It is estimated that reaching 10,000 calls
incorporates a privacy aspect that may be considered of highest value
per day will bring in enough revenue to cover all costs.
for clients recovering from addictions. All of these telemedicine ven-
6. Key resources. TeleDoctor utilizes the customer base and
tures in the developed world have strong value propositions that
physical infrastructure of Telenor’s wireless network to reach
emphasize convenient access to healthcare and health information
its callers and to connect them with doctors.
security, which contribute to their financial long-term success.
7. Key activities. TeleDoctor engages in advertising through
Telenor to increase the number of callers.
Telemedicine Ventures in Developing Countries 8. Key partnerships. Partnership with the Telenor wireless net-
Although it originated in the developed world, the concept of
work builds brand recognition, and the infrastructure of Tele-
telemedicine has been quickly integrated into developing countries.
nor provides easy retail access to customers. Endorsement
Five ventures—Telenor TeleDoctor (Pakistan), Apollo Telemedicine
from the Sindh Ministry of Health also strengthens the credi-
(India), Aravind Tele-Ophthalmology (India), SkyHealth (India), and
bility of the TeleDoctor service.16
PLA Telemedicine (China)—were chosen for discussion based on their
9. Cost structure. Platform costs associated with infrastructure
large reach and longstanding success. These telemedicine systems
are embedded in the caller’s subscription to the mobile service
emphasize the value of saving money and time through reducing
provider Telenor. Outstanding revenue charged per minute to the
transportation costs rather than simply making healthcare more
customer (8 PKR/minute) covers marketing and doctors’ fees.
convenient. Faster access to medical care through telemedicine is
particularly valuable in developing countries because of the high Summary. TeleDoctor’s main strength lies in its personalization,
patient-to-doctor ratio compared with developed countries. particularly by connecting patients to medical specialists who speak a
variety of languages. In developing countries such as Pakistan, many
TELENOR TELEDOCTOR rural communities speak a dialect, and the community members are
TeleDoctor is a service started in March 2008 by the Telenor Tele- not fluent in the national language. For gender-specific medical
communications Company in Sindh, Pakistan. It is owned by the questions, women may be more comfortable speaking with a female

290 TELEMEDICINE and e-HEALTH A P R I L 2 0 1 3

 A REVIEW OF TELEMEDICINE BUSINESS MODELS

doctor. This personalization provides a secure and accessible plat- equipment, Wipro for hardware, and GEMSIT for software.
form for effective communication. The 24-hour access to the system Cisco’s technology enables the doctors to connect with patients
is also of great value, particularly for those who are unable to travel on a laptop supported by an Internet connection and Web
long distances to an emergency room or hospital after hours. camera.22
9. Cost structure. The startup cost for an Apollo telemedicine
center is $10,611 USD.23 At least 1,500 consultations per
APOLLO TELEMEDICINE
center per year are necessary to cover operational expenses.
Apollo Telemedicine Networking Foundation (ATNF) is a non-
profit organization started in 1999 by Apollo Hospitals Group, the
Summary. Apollo Telemedicine utilizes a strong local network
largest private healthcare provider in Asia. It connects Apollo sec-
and customer base to maintain a successful operation at each center.
ondary care hospitals with Apollo specialty centers in India in order
Although the program does receive external funding to subsidize
to mitigate the shortage of specialists in rural areas. The ATNF has
consultations for certain areas, centers are also utilized and finan-
become India’s largest telemedicine provider, with 40 medical spe-
cially supported by patients who pay. Its social bottom line attracts
cialties in over 100 peripheral centers in India with additional centers
both patients and external funding sources, which collectively con-
overseas.19
tribute to the success of its business model.
1. Customer segments. Apollo primarily serves rural areas or lo-
cations with a shortage of specialists. It also works with gov-
ARAVIND TELE-OPHTHALMOLOGY
ernment entities and private companies to provide quality
Aravind is the largest eye care system in the world, founded in
healthcare to residents and employees.
1976 in Madurai, India. Since its inception, Aravind has been
2. Value proposition. Reduction of time and costs associated with
working to eliminate needless blindness. Aravind started to imple-
travel is especially important for rural areas that have reduced
ment primary vision centers in 1996 in Theni, India, in order to
or poor transportation.20 Patient confidentiality and security
provide quality and affordable eye care to people living in rural
of data transmitted are guaranteed by ATNF’s adherence to all
villages.24 The primary vision centers are connected to higher-level
legal and patient security laws and security technologies.
vision hospitals via tele-ophthalmology. An ophthalmologist inter-
ATNF also achieves social impact internationally by providing
acts with the patient sitting at a remote location through videocon-
teleconsultation and tele-education to 53 countries of the
ferencing, aided by a local doctor who uses ophthalmic diagnostic
African Union.21
equipment to transfer the images.25
3. Channels. Apollo offers specialty consultations to patients
through its telemedicine consultation centers. The service can 1. Customer segments. Aravind teleconsultation offices serve
be bought by a regional government for its residents or by a rural and low-income areas of India.
company for its employees. 2. Value proposition. Sixty-three percent of blindness in India is
4. Customer relationships. Apollo strives for social impact along a result of cataracts. The Aravind model tackles that issue by
with economic benefits. Through its philanthropic efforts, providing affordable, quality eye care to patients regardless of
ATNF has established a good reputation among patients, which their income or status. For example, two-thirds of the outpa-
attracts more clients through publicity and referrals. tient visits and three-quarters of the surgeries performed at
5. Revenue streams. The cost for a teleconsultation varies from Aravind eye centers between April 2009 and March 2010 were
$20 to $30 USD, usually resulting in a $10 profit per consul- provided free of charge. If the patient is referred to one of the
tation. Revenue is also generated from governmental and main Aravind hospitals, transportation is provided for a small
commercial entities that utilize ATNF’s service. Patient record fee, saving the patient time and money. Furthermore, the
management provides another line of revenue. External system provides an opportunity for doctors to share their
funding has allowed ATNF to provide 6,000 free tele- experiences.
consultations to financially disadvantaged individuals in and 3. Channels. Aravind has established three telemedicine vision
around Aragonda, India, from 2000 to 2009.20 centers in Theni, India, and plans to open at least 10 more.
6. Key resources. Software, hardware, and dedicated satellite Patients receive real-time teleconsultations at the centers with
connectivity are provided free of charge by the Indian Space an optometrist from Aravind Hospital. Each center covers a
Research Organization.20 Medical centers, professionals, and population of 45,000–50,000 people. Other telemedicine
equipment are also essential. strategies have also been implemented. Internet kiosks use
7. Key activities. Continued medical education programs are held store-and-forward technology to reach doctors. Mobile
frequently to improve the quality of Apollo physicians. Soft- screening vans can reach remote areas and utilize a wireless
ware development, construction, and upkeep of consultation database system to record doctors’ feedback.24
centers and specialty hospitals are essential. 4. Customer relationships. Teleconsultations are performed by the
8. Key partnerships. ATNF has a partnership with the Indian same ophthalmologist who would examine the patient in-
Space Research Organization for bandwidth, GE for medical person. An explicit objective is to convert non-customers to

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CHEN ET AL.

customers through eye problem screening. These patients are 2. Value proposition. In India, there is one doctor for 1,700
marginalized individuals who would normally not receive people, and high concentrations of doctors in large cities leave
checkups because of time, distance, or financial constraints. a lack of quality healthcare in rural areas.31 Community
5. Revenue streams. Patients pay about $0.50 USD for an members who use the system are able to have their health
eye exam. Extra costs are incurred when patients are sent to the recorded and receive feedback without traveling long distances
hospital or when prescription medication or glasses are ordered. to a doctor or spending a lot of money. SkyHealth also enables
6. Key resources. Over half of the Aravind vision centers use female entrepreneurs to make money.
wireless technology (Wild-net) for their online vision consul- 3. Channels. SkyHealth equips rural health providers in the
tations. Using Wild-net allows for information to be trans- communities with training and low-cost mobile solutions that
ferred 100 times faster than dial-up. allow them to perform diagnostics, symptom-based treat-
7. Key activities. Along with providing teleconsultations, Aravind ments, teleconsultations, and referrals to the TPCs. They are
also participates in distance education and connects eye hos- often the first and only point of contact for the majority of the
pitals around the world. ADRES version 3.0 software for patients. When the patients are referred to the TPCs operated
reading and grading diabetic retinopathy has also been de- by female franchisees, their information is transmitted via the
veloped by Aravind.26 online database (using dial-up) to doctors who provide feed-
8. Key partnerships. Wild-net, the wireless long-distance net- back and assist with prescription drug delivery.
work, was produced by the Technology and Infrastructure for 4. Customer relationships. Rural health providers are essential in
Emerging Regions research group at the University of Cali- maintaining personal customer relationships. Entrepreneurs at
fornia, Berkeley, CA. This group started collaborating with the TPCs are responsible for collecting and forwarding patient
Aravind vision centers in 2005. data to the doctor.
9. Cost structure. Video towers cost $2,200 USD to build, but very 5. Revenue streams. TPCs are franchised for $3,000 USD, which
little to maintain.27 Local nurses and staff are trained in order include a computer, furniture, satellite, generator, promotional
to eliminate the cost of hiring highly educated nurses for materials, technical support, and training for the entrepreneur.
secretarial duties. This also allows specialists, such as hospital Each patient is charged 50 INR (about $0.90 USD) for a consul-
surgeons, to focus on their areas of expertise. tation.
6. Key resources. Female entrepreneurs who are trusted commu-
Summary. Aravind has a unique model that utilizes revenue from nity members and possess at least a high school degree fran-
paying patients to subsidize disadvantaged patients.28 To achieve this chise the TPCs. Rural health partners are also engaged as
social value, volunteers and local hiring strategically reduce costs. entrepreneurs and trained to determine whether or not to refer
Aravind also has a streamlined and efficient operating system, which patients to the TPC. For each successful referral, the rural health
allows for increased number of operations and decreased staffing cost. partner will receive a part of the patient’s consultation fee.
7. Key activities. SkyHealth franchises TPCs to local female en-
trepreneurs in rural India. It provides the information, adver-
SKYHEALTH
tising materials, medical devices, and training to run the
SkyHealth is a pilot franchise telemedicine program started in
centers and to conduct consultations with clinics in the city.
2008 that combines family planning and female health in rural areas
The SkyHealth network connects female entrepreneurs, pa-
around New Delhi, India. SkyHealth operates under the non-gov-
tients in rural communities, doctors, and pharmacists.
ernmental organization World Health Partners. In an 18-month pilot
8. Key partnerships. SkyHealth partners with doctors and phar-
period, SkyHealth provided 25,000 teleconsultations and 188,401
macies. Doctors are able to view patient information from the
couple-years of protection (estimated protection provided by con-
rural health centers and provide feedback. Pharmacies are key
traceptive methods during a 1-year period)—effectively preventing
partners because they supply various means of birth control.
107,658 unwanted pregnancies. SkyHealth has a hierarchical net-
9. Cost structure. With each 50 INR ($0.90 USD) charged to the
work of 1,200 SkyCare rural health providers, 120 telemedicine
patient per consultation, 20 INR ($0.36 USD) is given to the
provision centers (TPCs), 16 franchise centers, 9 diagnostic clinics,
TPCs, 20 INR ($0.36 USD) is given to the rural health providers,
and 1,400 rural pharmacies.29,30 SkyHealth TPCs serve as tele-
and 10 INR ($0.18 USD) goes to World Health Partners for
diagnostic centers and SkyCare support and coordination hubs and
administrative activities and salaries for the doctors.
are situated in more centrally located villages. They connect patients
with doctors at central medical facilities via the ReMeDi system and
Summary. The extensive supply chain of SkyHealth creates jobs at
can either refer patients to franchisee clinics or provide transporta-
different organizational levels. This franchising system in turn pro-
tion to a hospital. Each SkyHealth center has 7–10 SkyCare providers
vides much more publicity for the program than advertising alone.
underneath it.
Each part of the supply chain is able to capitalize on its relationship
1. Customer segments, SkyHealth is targeted toward women in with other customers. This triage system makes processes more ef-
rural India as it focuses on family planning and female health. ficient by reserving time for important medical problems. Specialized

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 A REVIEW OF TELEMEDICINE BUSINESS MODELS

cases that are referred to the TPC will receive more attention from a of the program also means strict regulations, which contribute to the
doctor, whereas basic problems can be resolved with the rural health consistency and high quality of care, allowing PLA telemedicine to
provider. Having hierarchical levels in the supply chain increases remain successful.
revenue and value for the entire business model.
REVIEW
PLA TELEMEDICINE Although the number of telemedicine systems in the developing
The People’s Liberation Army (PLA) of China established a world is growing, the ventures discussed in this article are well
telemedicine network in the early 1990s that covers more than known and have a large reach of customers. It is interesting to note
100 bidirectional satellite stations in the army, military hospitals, that in the case of Aravind, the costs for customers who cannot afford
and some rural army clinics.32 In 2009, 2,956 teleconsultations to pay are covered by a large group of middle-class paying cus-
were conducted, including 100 emergency and specialty cases. Ad- tomers. The phenomenal success of Aravind has proven that ventures
ditionally, 60,000 people attended distance education sessions.33 that rely on a large market base and community support to subsidize
1. Customer segments. The telemedicine network of PLA serves expenses for the most marginalized populations are possible without
military personnel, especially those in remote areas, free of significant administrative and financial burden.
charge. It also serves civilians for a fee. Telenor and PLA are both interesting case studies in that health
2. Value proposition. The PLA telemedicine system saves patients service was not originally the priority of the company or the gov-
the time and money necessary to travel to a doctor,32 provides ernment, but was rather an addition to the existing infrastructure.
experts for advanced medical cases, and provides military However, the strong infrastructure allowed for value creation by
personnel healthcare access at a low cost and with increased augmenting core services through telemedicine. In all the developing
efficiency. Through telemedicine, army doctors can avoid country ventures, existing telecommunications networks were uti-
going in-person to dangerous environments like battlefields or lized to provide services, whether through the telecom company itself
highlands.32 or through a partnership. In this way, costs can be reduced for both
3. Channels. The patient’s medical data are sent to a medical the venture and the customer/consumer. Affordability and accessi-
expert, and a consultation time is scheduled by the Military bility are two major value propositions for telemedicine ventures in
Telemedicine Network Management Center according to the developing countries.
workload of the entire network and the severity of the medical
condition.33 Discussion
4. Customer relationships. Civilian clients receive quality spe- A chart comparing the business models of the eight telemedicine
cialty consultations that are not locally available. ventures discussed in this article is shown in Table 1. An additional
5. Revenue streams. Soldiers in service can receive PLA tele- column detailing start-up funding is included as a valuable reference
medicine service for free. In the PLA’s 208 hospitals, civilians for early-stage ventures and is an indicator of the private or public
pay $104–119 USD per consultation.34 nature of the venture. The trends in each business canvas category
6. Key resources. More than 100 experts in the Advanced Medical from the value proposition to start-up funding are discussed in this
Research Center, 100 satellite earth stations, 1 satellite main section.
station, and a unified Web site serve the program.33 A specialty Although convenience is a primary value proposition in developed
healthcare database and an online library have been estab- countries, reducing travel time and expenses are the primary value
lished for all healthcare workers.32 propositions in developing countries. These value propositions apply
7. Key activities. The Military Telemedicine Network Manage- to both the customer and the consumer (whether they are the same or
ment Center and the Technological Support Center are re- different). Information storage is also valued by customers because of
sponsible for management, software development, and the convenience, reliability, and reduced costs. Other value propo-
maintenance. The stations are managed directly by local sitions, listed in decreasing rate of appearance are, accessibility,
healthcare departments that need telemedicine service from a improving the cost–quality ratio, reducing financial and institutional
higher-level center. All healthcare workers involved in the risk, education, and space efficiency.
telemedicine network are required to be trained and certified.33 An interesting trend to note in the customer segments is that the
8. Key partnerships. The network hardware and StarNet network telemedicine ventures in the developed world mainly target com-
management system are imported from foreign countries. panies and organizations, whereas those in developing or economi-
9. Cost structure. PLA is funded by the Chinese government, and cally disadvantaged areas mainly target individuals. Arizona
specific costs are not available to the public at this time. Telemedicine only sells memberships to health and governmental
institutions, whereas ventures such as TeleDoctor and Aravind are
Summary. PLA has a basic business model that is funded for the focused on individuals within marginalized populations. Arizona
most part by the Chinese government, although some revenue is also Telemedicine and Myca Nutrition enable their customers to offer
generated by civilians, who pay a premium for treatment. This allows telemedicine services to their end consumers. Tactive does offer di-
the program to focus on military needs. Strong government support rect telemedicine service to individuals, but it also sells it to

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Table 1. Comparison Among Eight Telemedicine Business Models from Diverse Geographic Regions and Revenue Streams
VALUE CUSTOMER PRIMARY CUSTOMER KEY KEY KEY REVENUE COST START-UP
PROPOSITION SEGMENTS CHANNEL RELATIONSHIPS RESOURCES PARTNERS ACTIVITIES STREAMS STRUCTURE FUNDING
1. Arizona Reduce equip- Private and Governmental Arizona Telemedi- IT platform, Arizona state Infrastructure $5,000 per Shared data- $1.13 million
ment and tele- public hospitals, and cine acts as a Internet, government, purchasing, annual mem- base and com- federal grant,
communication prisons, schools institutional purchasing agent database utility and platform bership or munication Arizona state
network cost network and consultant for and storage telecommuni- management, $1,500 per network grant
for institution customers infrastructure cation training, service
companies consulting

2. Myca Timely and Nutritionists Mobile phone Automated service IT and cell Doctors, Platform Monthly sub- Platform Myca Health
Nutrition accurate diet and doctors platform phone nutritionists management scriptions, $30 development, Inc.
monitoring in Canada infrastructure for 5 clients, marketing
platform $90 for 100
clients

3. Tactive Improve Companies and Internet Dedicated personal IT platform, Government, Platform $2,604/ IT develop- $5.21–6.25
productivity individuals assistance, self- medical FactorE management, patient, ment and million by
in employees, with addiction service through professionals (technology), professional estimated maintenance, Tactus Equity
confidential problems information insurance counseling profit $260/ personnel, funding
personal companies, patient education,
assistance franchisees training

4. Tele- Saves travel Rural Pakistani Mobile Non-dedicated Wireless Telenor wire- Platform Pay per Pay for doc- Telenor
Doctor costs to doctor, patients, phones personal assistance network, less network, management, minute, $0.08/ tors, opera-
24/7 accessibil- doctors doctors endorsed medical minute tional costs
ity, multilingual, by health consultation
confidentiality, ministry
increased
revenue

5. Apollo Reduced travel Organizations Secondary Non-dedicated IT platform, Specialty Platform $10 per Data trans- Apollo Group
expense, spe- and individuals care hospitals personal assistance healthcare Apollo health- management, patient mission,
cialized care, in rural India specialists, care centers specialty consultation, peripheral
continued med- satellite com- consultations, government centers,
ical education munication medical and company consulting
education pay total fees
network
usage fees

6. Aravind Accessible and Rural and low- Rural care Non-dedicated IT platform, Volunteers, Platform Pay per Research, Dr. G. Venka-
affordable eye income areas centers, personal assistance medical the TIERS re- management, consultation product taswamy’s
care of India mobile clinics devices, search group care center manufacturing personal funds
transportation operations, and distribu-
services training, tion
education,
research

7. Sky- Women entre- Rural teleme- Dedicated local IT platform, Women entre- Platform $3,000/ Consultation World Health
Health preneurs make 10,000 villages dicine provi- personal assistance medical preneurs, rural management, franchise, income: 40% Partners NGO
money, patients in India sion centers devices health part- care center $0.90/consul- to entrepre- grant
save travel costs ners, doctors, operations tation neurs, 20% to
to doctor pharmacists rural health
partners

8. PLA Accessibility to Military person- Military base Centralized service IT platform, Chinese Platform Government Unavailable Chinese
specialized care, nel, civilians care center, allocation, personal >100 medical government, management, pays for mili- government
safety of mobile clinics assistance experts, satel- military specialty tary, civilians
healthcare lite, database hospitals consultations, pay $104/
professionals and online training consultation
library

IT, information technology; NGO, non-governmental organization; PLA, People’s Liberation Army; TIERS, Technology and Infrastructure for Emerging Regions.

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 A REVIEW OF TELEMEDICINE BUSINESS MODELS

organizations in a wholesale manner. We postulate that the tele- All but Myca Nutrition and TeleDoctor receive direct or indirect
medicine market is more mature in developed countries than de- support from the government.
veloping countries because of the digital divide. Therefore, All eight ventures have comprehensive value chains achieved by
telemedicine ventures in developed countries target organizations peripheral activities in addition to their primary services. The Arizona
instead of individual customers because of the economy of scale and Telemedicine Program provides a wide array of membership benefits,
higher profits. At the same time, ventures and customers in devel- and Myca Nutrition helps doctors expand their customer base. Sky-
oping countries are more attuned to the idea of just-in-time micro- Health, Aravind, and Apollo, all located in India, provide ‘‘end-to-
payments for telemedicine services. Nevertheless, the trend of end’’ solutions for the entire supply chain, from patients to doctors:
targeting organizations is gradually spreading into developing SkyHealth provides employment for women and trustworthy mem-
countries. For example, Apollo Telemedicine in India has also begun bers of the community in a tiered system; Aravind provides trans-
offering services to organizations and companies.23 portation for the patients to reach the hospital and arranges for
Information technology and Internet access are crucial enablers of follow-up appointments as well as eyeglass delivery to rural areas;
customer channels, and without them many of these ventures would and Apollo connects hospitals with specialty care centers but also
not exist. In developed countries, information technology is the works at the primary care level by using mobile telemedicine centers
front-end primary customer interface, whereas in the majority of the to reach patients in rural areas. Six of the ventures (all except Myca
developing world ventures there is a rural care center (brick and Nutrition and TeleDoctor) utilize readily available telemedicine
mortar location) that fulfills the value proposition and acts as the platforms for educational purposes. In most cases, patients or doctors
patient interface. This is due to limited Internet access in rural areas are receiving education; in the Arizona Telemedicine Program, in-
as well as the customer’s preference for interacting with the system formation and data are shared among partners. The types of sup-
through a trained and reliable official. This helps rural economies by porting activities are determined by local needs. In developed
creating jobs for workers that interact with the customers. Such countries, the ventures help customers reach more clients in a con-
ventures might target their marketing efforts at the end-users but venient way, whereas in developing countries, the ventures address
design their user interfaces and concept of operations for their geographical and infrastructural constraints. The educational com-
trained officials. ponent, which is valued in both developed and developing countries,
Personal assistance-based customer relationships are common further strengthens the companies’ social mission and leads to more
across most ventures. However, there is a distinction between effective communication between all parties.
dedicated and non-dedicated assistance. Telenor offers personal There is a noticeable trend to develop telemedicine as a com-
assistance—patients are able to have personal interaction with a plementary part of other services. The telemedicine department of
doctor—but the same doctor is not assigned to the same patient every an organization and other departments can form a mutually ben-
time. However, systems like SkyHealth provide dedicated personal eficial relationship. TeleDoctor is a subset of the Norwegian telecom
assistance service that consistently connects the same female entre- company, Telenor. Although TeleDoctor had not started generating
preneur or rural health partner to the patient. Non-dedicated personal enough revenue to cover all costs, having stable revenue from
assistance is easier and less expensive to provide uniformly. Dedi- Telenor helped protect against financial deficits. Tactus uses its
cated personal assistance has the advantage of providing a personal telemedicine platform Tactive to attract clients with its anonymous
connection, which contributes to customer retention. It is essential service. Aravind successfully provides a comprehensive care model
for telepsychological treatment programs like Tactive to retain pa- for the patients, with telemedicine being just one arm of the larger
tient trust, which is attained by patients receiving progressive feed- system.
back and having treatment consistency. Whether a venture chooses Four models of payment are prominent, each appropriate for the
dedicated or non-dedicated assistance depends more on the need of nature of service provided: pay per service, pay per membership, pay
the specific healthcare provision than on whether it is based in a per treatment period, and franchising. There are also diverse ways for
developing or developed country. optimizing revenue streams. Telenor makes the payment process
Portability and accessibility of the telemedicine system are equally convenient by charging directly through the phone company. Tactive
important in developed and developing countries. Ventures operat- broadens its revenue stream by developing group services to com-
ing in rural and remote areas have portable technologies because pany employees. It also provides statistics on addiction problems to
mobility of the telemedicine units is crucial to their success. Delivery the Dutch government and promotes social change in exchange for
of clinical consultation services relies on medical equipment, infor- funding.
mation technology infrastructure, and the employment of medical In three of the four case studies in developing nations (excluding
experts. However, Telenor and Myca Nutrition require only a simple SkyHealth), telemedicine ventures are privately held. This contrasts
cell phone and medical experts on the other end. The rapid prolif- sharply with both Arizona and PLA, which are partially or completely
eration of cell phones, especially in the African continent, opens up government subsidized (here, China is considered as part of the
tremendous opportunities for cell phone–based telemedicine sys- ‘‘second’’ world or transitional country in terms of development). This
tems. In terms of key partnerships, the ventures save expenses by shows a strong push by the private sector in observing the needs of a
maintaining partnerships with government and private companies. community and taking action to mitigate the problem. It also

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