Smart specialisation report on the growth area of health care technology
Smart specialisation report on the growth area of health care technology
The introductory document to sector-specific reports is provided here. This document describes the smart specialisation process to date and presents the reasoning behind the choice of growth areas and their domains. Furthermore, it gives an overview of the structure of sector-specific reports, sector-specific objectives and indicators, smart specialisation measures and the methodology for determining the necessary activities.
The following analysis will explain which economic areas of the health care technology growth area could have the greatest potential in terms of increasing economic added value, and which areas of activity could be developed as a priority. It also suggests measures that would further increase added value.
Description of the sector
Health care technology includes various interventions in the health care sector that affect people’s health from medicines, diagnostics, treatment procedures and medical devices to public health programmes. The health care sector is like a medical industry, which with all its supply chains (pharmaceutical companies, medical technology, production of diagnostics, etc.) and related service networks (including logistics and catering services) may involve a large part of the economy (about 20%).
The health care systems in developed countries are facing constantly rising health care costs, ageing population, increasing chronic diseases, and problems related to the availability and quality of treatment. The great challenge of the health care system is the utilisation of technological possibilities and leaving behind old models. The ICT sector has horizontally brought big changes to many other sectors, but health care is a slowly evolving sector and major changes are apparently still to come.
Description of the current situation
There are rapid developments and changes in the health technology around the world with new technologies being developed and experimented in health care. As biomedicine is very capital intensive, it is difficult for Estonia to compete in the global market in this area. Therefore, we should be very carefully choosing the areas in which we want to invest.
It is realistic for Estonia to introduce locally (not to be a developer of them in the global market) new treatment methods with high added value, as well as to seek opportunities for exporting services (by importing patients). In Estonia, a growth area in health technology is e-health where development is affected not only by global trends but also by local opportunities. With the development of the existing e-technology and combining them with new technological possibilities (Internet of Things, telemedicine, e-health, sensor technology, etc.), Estonia could be a test model for the health care systems of other developed countries thanks to the prerequisites of its ICT infrastructure (ID-card, X-road, e-health system). In this context, the European directive on the cross-border movement of patients that came into force at the end of 2013 also presents a good opportunity.
Sector-specific problems in Estonia
The rapid growth of data and the speed and convenience of processing it is a great challenge for any health care system. There is a need for intelligent data management systems and multifaceted services for strategic decision-making – for doctors, nurses, social workers, people and other interest groups.
Another key question in the Estonian health care is how to ensure the sustainability of the system, maintain the achieved level of quality in treatment and improve it, introduce new treatment methods and limit the migration of young doctors. Most countries are searching for new health care business models, hoping to find solutions for the skilled implementation of technology (e-health and services related to big data analytics), involve additional private capital and make people to contribute more to the prevention of illnesses.
Objectives to be set in the sector
- Open the e-health information system to people and private capital;
- Actively involve people in the preservation of their own health and the prevention of illnesses;
- Free up the time of doctors and nurses, reduce mistakes and unnecessary examinations, and bring the services closer to people (improve availability) with the help of technology;
- Implement and export more scalable health care services (import of patients and export of services and products).
Estonia’s open e-health information system could be a part of the e-state sales portfolio by providing new services for the e-resident set as well as being an attractive testing platform for foreign companies. The piloting of the open services market provides the fastest results in the development of the open platform for the general practitioner system.
Solutions (activities) to alleviate the problems and achieve the objectives
In order to open the existing health information system to people and involve private capital in the development of the e-health services market, it is necessary to create an updated concept for the Estonian e-health:
- Opening the e-health information system platform so that secure access would be created for citizens to add data and for companies to develop secure services and products that can use the data contained in the central e-health information system as well as add new data. It is important that the platform would be able to administer health data in addition to the current illness data.
- Opening the health services market that involves the necessary changes in the legislation, organisation, division of roles among the concerned parties, and new requirements and rules, in order to implement the activities listed in the previous item.
In order to change the motivation and business model of the health care system, a thorough analysis is required that would take into account the motivation and behavioural patterns of every person, employer and health care provider. The following issues should be analysed: tax incentives for the employer, tax incentives for the citizens, reduction of the fringe benefit tax on health services, the movement of health insurance money with the patients, integration of private insurance into the system, rules for involving private capital in the development of e-health services, etc.
- Launch the necessary projects for activating the needed pre start-up and start-up activities specific to e-health and health technologies, in which the degree of maturity and specifics of the e-health and biomedicine ecosystem as well as the sector needs are considered by involving private capital at the earliest possible stage.
- Promote co-operation between enterprises and scientists as well as the health care sector through technology transfer and product development measures, promote the development of young companies through spin-offs at universities and HCPs, the introduction of integrated scholarships at universities, support for personal accelerators or the launch of incubators in co-operation with private capital.
- For the development of health technology, it is very important to replace grant-based measures with capital funds, where the key concerns are related to competent fund managers that are familiar with the nature of the sector and experts with business competence involving international co-operation network capabilities.
1.1 General data on the sector
1.1.1 General data on the sector and trends prevailing in it
The e-health related functions of health care technologies are influenced by several global and local trends, for example the new possibilities offered by technology (sensor technology, nanotechnology and biotechnology as well as information and communications technology (ICT)1), cost pressure on the health care system2, the ageing population3, the increasing role of chronic and lifestyle diseases, the activities of large corporations, the increased awareness of patients and changes in demand4. In the information age and in a situation where the average total health care costs make up approx. 8% of GDP across the world (considerably higher in some countries), it is clear that the health care system is at a crossroads5. Since the U.S. corporations are the main trend-setters in the global uptake of ICT solutions, their influence on people living outside the U.S. must not be underestimated6. People are increasingly interested in their own health and that of those closest to them, and it is estimated that there will be 500 million health app users worldwide by 20157, with the pressure on mHealth solutions having a decisive role.
The same critical challenges for health care systems are repeatedly mentioned in reports and analyses across the world8:
- the ageing population and an increase in chronic diseases;
- the availability and quality of treatment and cost pressure;
- utilisation of the possibilities offered by technology and replacing old models.
The concept of health care technology9 has not been unambiguously defined. It may include various interventions in the health care sector that affect people’s health from medicines, diagnostics, treatment procedures and medical devices to public health programmes. Only the right measures targeting the right people at the right time and in a right form are beneficial.
Estonia does not have a leading role in the global development of ICT and health care technology. Instead, emphasis should be put on looking for possibilities to introduce and swiftly implement new technologies and on developing references and practices. In this context, Estonia’s small size and mobility in putting fast nation-wide innovative ideas into practice should be turned to an advantage. Estonia has the opportunity to combine big data applications and new technological possibilities (Internet of Things, telemedicine, e-health, etc.) in the e-health system into a nation-wide model.
In parallel with the evolvement of ICT and the e-health technology, there are also developments in molecular biology, mainly with regards to the uptake of integrated technologies with the capacity for the so-called high throughput methods, as a result of which the time and cost of gene sequencing has decreased several times over the past 5 years. Detailed data on trends in biotechnology is provided in the biotech section of the enhancement of resources report.
Health care systems in most developed countries are looking for new technological solutions and business models in order to replace old models. Examples of such smart technological solutions can be found in Australia, the U.S. and in some European regions (the Basque Country, Sweden, Finland, etc.). For more details, please see Annex 2 of the report on global trends and examples of selected leading regions in the same Annex. Here, it must be stressed that the changes in introducing new technologies are not limited to technical innovations but encompass very complex themes in the entire health care sector from privacy to business models. The key words, given the impetus for change, are a people-centred approach and involvement of the patient10.
1.1.2 Overview of the sector in estonia: e-health and the health care system
The development of the Estonian health care system (from concept to implementation) started in 2002 within the framework of the Estonian Health Project 2015. In 2005, the preparatory work had reached the point that the Estonian e-Health Foundation was created11, the e-health judicial area was adopted and calls for a public tender was launched for the 4 largest e-health applications (electronic health record, digital prescription, digital image and digital registration), which also constitute the key components of today’s e-health system, i.e. the state health information system (the electronic health record, EHR12). The projects were launched with the help of the EU structural funds that was the driving force in building up the e-health system. In 2008, the attachment of health service providers to the system and the piloting of data exchange began. Today, the e-Health Foundation is an agency with its own budget, which manages the electronic health record and has initiated numerous e-health projects. People can access the data collected about them via the Patient Portal of the EHR central system13. As of 26 September 2014, the electronic health record contained data on almost 1.4 million people, the information collected about them contains more than 13 million episodes14. There is an upward trend in the use of the system.
The e-health system comprises various information systems that communicate with each other through the X-road, exchanging standardised digital documents using agreed data standards and transmitting some of the information to the e-health central system (EHR). The Estonian health service providers have four hospital information systems, four general practitioner information systems, dental software, various specialised software for private clinics, web solutions for transmitting data to the EHR and the prescriptions centre, several pharmacy information systems, the accounts and an insurance system of the Health Insurance Fund, laboratory solutions, hospital pharmacy applications and other specialised software as well as dozens of software programmes for medical devices, which communicate either with the hospital systems or the central systems, at their disposal. All in all, a few hundred systems that fulfil the same functions but apply different solutions are used at different levels of health care. Therefore, the key issue is to reach an agreement on standardised data models and the work processes that would enable us to compare and digitally exchange the data and information collected on patients, or on the quality indicators of work processes either for prevention, diagnostics, treatment, research or statistics purposes. This system would logically also contain all clinical and health registers, although data exchange for these is, to a large extent, still not electronic.
According to the Health Board16, there are 34 acute care hospitals and 39 nursing/rehabilitation hospitals, nearly 6,300 doctors (of whom 800 are general practitioners and 1,600 dentists), 33 emergency medical care providers as well as 12,500 nurses, 800 midwives, 950 pharmacists, 1350 dispensing chemists and other health care professionals (physiotherapists, psychologists, etc.) and all in all, nearly 1,500 health care providers17 in Estonia, the population of which is ca. 1.3 million people.
E-health horizontally surpasses the entire health care system and the related sectors, providing the ability to exchange information in a standardised way. Nowadays, the e-health system and the health care system form a part of each other and cannot be considered separately. On the one hand, e-health is a tool, on the other hand, it is an application that drives changes and offers new possibilities and services. E-health as a priority area has been discussed in a number of EU directives and regulations, two of which are worth mentioning as the most important ones in the context of the future: the EU directive concerning cross-border health care services and the recent initiative of the European Commission regarding the action plan on mHealth. They both address the critical international importance of the prompt implementation of electronic data standards.
The extent of the e-health system is also illustrated by the graph on the PRAXIS telemedicine study below (see Figure 1).
The document "National Health Plan 2020"18 points out the main trends in health care. They correspond with those of other countries: an ageing population, higher expectations, shortage of specialists and competencies, cross-border movement of people and other relevant factors. There are two issues that stand out in the development trends document: attention is being paid mainly to the institutionalisation capacity but there is no significant emphasis on the role of e-health and its potential to create new opportunities through innovative technologies.
There is no doubt that health care system is a complex issue. There is a need for various development plans, as well as a strategy combining different aspects that would help prevent the further aggravation of fragmentation (verticality or institutionality) and institutionalisation. The person who should be kept in mind when building up this system should feel comfortable operating within it. Different development plans and a person-oriented approach imply a single comprehensive system. A comprehensive approach would benefit the system itself, the parties operating within it as well as the person, i.e. the patient. Such an inter-connecting role could be taken up by e-health, which is capable of connecting various parties into a single information area and operate across institutions. Setting the priorities of EU funding for the new period should be guided by the changing trends and investments in the health care system, and should be focussed not so much on the traditional physical premises, but rather on the mobility of services, that is, on making services available through technology (for example, similarly to Finland, funds should be invested in health booths, telemedicine, virtual clinics or general practitioner buses). Annex 2 contains examples of e-health applications from the leading regions of Finland, the Basque Country, etc., whose developments Estonia should be monitoring.
The Estonian public health development plan, which lays down the general health objective – more healthy life years and higher life expectancy – describes in detail the interconnections between the development plans of the different national sectors and their effects19. This document does not provide for a real coherence with e-health either, although the overall understanding is that health is affected by numerous factors that horizontally reach beyond the remit of the Ministry of Social Affairs.
It is important to emphasise that the Government Office’s e-health task force does not consider e-health as a strategy that is separate from the rest of the health care strategy, as this would continue the fragmented and institutionalised health care system approach. The business model, work organisation and principles of the health care system can clearly not be detached from the functioning of the e-health system.
Taking into consideration the fact that the e-health system was created approximately ten years ago and the technological possibilities have undergone major changes during that period, it is now time to review the possibilities, the role and the functioning of the system and to draw up a new agenda according to the current situation. Therefore, it is absolutely necessary to prepare a new strategy20, but it must be linked to other plans in the field of health care. Otherwise, it will create barriers to the implementation and synergy of all plans. It is strongly recommended to merge health care, e-health and personalised medicine into a comprehensive scheme and not to launch new parallel plans.
It is worth emphasising that regardless of the low costs, Estonian medicine is generally considered to be of a high quality21. Taking into account the free movement of patients and their mobility, Estonia could have an important opportunity to export medical services and promote the inflow of patients from neighbouring markets, such as the Nordic countries, Russia and the Baltic States22.
Overall, Estonia has the potential to add to its e-state image – besides the e-citizen component – also an e-health account (the EHR patient portal with an updated platform).
The health sector makes up quite a large part of the Estonian economy. The total health care costs in Estonia are estimated to account for 6.4% of GDP (in 2012). In terms of money, two-thirds of the health care sector is, in turn, taken up by hospitals (see Annex 3, Figure 1). Therefore, they also have a significant influence on the sector’s added value, while the financial share of other parties (general practitioners, emergency medical care, dentists, pharmacies, etc.) is secondary.
Added value created by health care providers as a percentage of GDP (black solid line in Figure 2) adequately reflects the developments in total health care costs. This is obvious, considering that the vast part of Estonian health care is financed by the Health Insurance Fund.
The third indicator in Figure 2 (see the right scale, marked with a grey solid line) depicts the share of research and development costs in total health care costs. As seen in the figure, the proportion of research and development costs in health care have been increasing since 2005, but still form quite a modest part of them (in 2012, they accounted for only 0.24% of total costs). When comparing Estonia’s total health care costs with those of other European countries, it appears that our expenditure on health care is rather moderate, regardless of whether the comparison concerns old or new EU Member States (see Annex 3, Figure 2).
One of the scarcest resources in the field of health care provision is the workforce. In general, the number of health care professionals in Estonia has remained stable. The same can be said about their share among the employed population (see Annex 3, Figure 6). Workforce problems are deepening not only in health care, but also elsewhere. The added value of the sector is relatively low and investments in R&D activities are small (forming less than 1% of turnover). Training more doctors and nurses or increasing investments in technology manifold do not constitute a solution. Changes must be structural, not linear, and a combination of several simultaneous changes is necessary.
A greater role must be given to nurses and other health care professionals instead of doctors (i.e. work processes and roles have to be restructured).
New technological possibilities and services (incl. new specialists providing health care services, new services to use possibilities offered by big data, collecting pre-filled information from patients, delegating doctors’ and nurses’ duties related to data processing to smart solutions, etc.) must be integrated into the existing system.
There is a need to free up the time of doctors and nurses.
Services must be brought closer to people, i.e. into their homes.
Continuing education and basic training must be brought into accordance with the new possibilities and requirements.
There is a big contrast between expectations and reality. The Estonian health care system must look for a way out of the traditional comfort zone, where the state and hospitals have an important role (similarly to large corporations in other sectors; see sleeping giants23).
Extensive investments are needed before technology starts to bring benefits and increase added value. E-health solutions should not be confused in reducing health care costs. Rather, the investments and structural changes enable to better control the growth of costs in the future. As long as labour costs in Estonia remain relatively small compared to the cost of technology (in the field of health care, medical devices and the introduction of technologies is very expensive compared to the salaries of doctors and nurses), this inhibits the movement towards cost-efficiency.
Companies active in Estonia
The sector of e-health companies in Estonia is small. No official national statistics are collected on e-health companies. To present data, either expert opinions, an analogy with the ICT sector or periodic studies can be used. In the context of this report, the second method combined with expert opinions has been used due to high time pressure. Future plans foresee the periodic integration of the mapping of e-health companies and interview based studies into the development monitoring carried out by the Development Fund.
Currently, the largest ICT companies providing services to the health care sector (which usually does not make up 100% of their turnover) in Estonia are Nortal, Helmes, Cybernetika, Fujitsu, Quretec, Innovaatik Grupp, ITBS Group, MindWare, Opus, Girf, Sunside Innovation, Affecto Estonia, Ignite, Gennet Laboratories, Medisoft, Raintree, Apteekide Infotehnoloogia OÜ24.
In line with the overall ICT “tidal wave” of recent years, new starting companies, such as IoT Technologies, LabToWellness, Cognuse, Diestbooster, Dermtest, Motionchart, etc. are emerging in the field of e-health who are looking to place themselves either in the existing networks and incubators in Estonia, or immediately head for foreign markets. A definitive list of e-health companies cannot be provided in this report. Mapping of the e-health sector and companies operating in it must become a regular exercise in future development monitoring. A correct methodological basis, a definition and links with existing codes must be established in order to ensure dynamically consistent data records as a reference base.
There are networks involving the medical sector, research institutions and ICT, such as the Healthtech Cluster, the Medical IT Cluster, Medicine Estonia, the Health Tourism Cluster, the competence centres STACC and ELIKO, and partially also the CCFFT and the centre of excellence CEBE.
Universities and their sub-divisions are important scientific co-operation partners with great potential. The most outstanding co-operation is carried out between the EMIF and the Faculty of Medicine of the University of Tartu (TÜ) and its Department of Public Health, and its Genome Centre and the Institute of Computer Science. Other important co-operations are established between the Tallinn University of Technology’s (TTÜ) and CEBE, Mectory, as well as the PRAXIS Centre for Political Studies, the IT College and others.
Several science parks and incubators are evolving – the Tartu Science Park, the Tartu Biotechnology Park, the TTÜ Science Park Tehnopol, the Incubator Tallinn – who wish to be the driving force in developing the health care technology ecosystems.
Similarly in the e-health companies’ sector, the biotechnology companies’ sector is also small and in the process of developing, accounting for a marginal share of the economy. Among biotechnology companies, the competence centres (CCs) have a significant share (the Competence Centre for Cancer Research, the Competence Centre of Food and Fermentation Technologies (CCFFT), the Competence Centre on Health Technologies (previously CC Repro)), but there are also companies offering drug development, cell therapy or laboratory services with a great potential, such as IcosaGen, Protobios, TBD BioDiscovery and other evolving companies. Often, biotechnology companies move to the peripheral areas of this field, into such areas as natural products, home care products or plant and animal breeding, looking for better opportunities and mitigating their risks. A more detailed analysis of biotechnology companies is provided by Lauri (2014), as well as in the chapter concerning the biotech smart specialisation area of the enhancement of resources report.
In the case of the contractor (buyer of the service or product), the largest partners are the health care providers (mainly hospitals; general practitioners and others to a far lesser extent) and government agencies active in the health care sector. As regards the government sector, the import agencies shaping the sector that should be mentioned are the Estonian e-Health Foundation, the National Institute for Health Development, the Health Insurance Fund, the Agency of Medicines and the Health Board (in addition to the Ministry of Social Affairs).
The health care sector has to be considered as a branch of the economy (medical industry25), comprising on top of the health care provides (HCPs) also large corporations, such as the manufacturers of medical devices and medicinal products and the numerous other companies in their supply chains. In the Estonian context, the majority of these parties are located in the global market, therefore, the state and HCPs have an even bigger role in healthcare.
Similarly to global networking, there is networking going on within the health care system itself. Services are bought in to a wider extent in the case of laboratory services (e.g. Quattromed HTI on the laboratories’ market), diagnostics and telemedical services (e.g. Mammograaf Ltd., the PET bus, the Estonian Health Image Bank) as well as in the case of the wholesale and retail sale of drugs and partners in the field of medical technology, ICT, etc.
The government sector and the HCPs participate in the market mainly through public procurement. However, the public procurement practice today does not support the offering of new solutions in the market. The primary factor determining the winner of the tender is price, not targeted solutions that would give preference to novel innovative solutions; on the other hand, the criteria are not conducive to the qualification of newcomers (requirements related to turnover and experience).
This could be solved by a practice of dividing the tenders in (at least) three general groups (often called innovative public procurement, which has been used in different areas, including 10 years ago while launching the e-health projects).
Firstly, a design contest is held and in screening then solutions, several partners screened out are collaborated with.
Secondly, the methodological work is carried out, which mostly entails the design of new work processes, algorithms, data models and standards, after that, the services are designed.
Only then, as a third step, the public procurement of an IT solution is organised which forms the smallest part of the final solution.
Evidently, this requires resource and R&D intensive preparatory work that includes a concept, a strategy and the necessary legislation that must be changed simultaneously with carrying out the tenders.
Taking into account the barriers in medicine set by the specificity of technologies (health care technology and e-health do not constitute an ordinary IT project) and the additional requirements (requirements for medical devices, need for certification, long testing period and validation), fast success and expansion are more difficult to achieve than in the financial sector and elsewhere. For more details, see Chapter 4 of the report on barriers, as well as Table 1 in Annex 6 concerning the obstacles faced in every business phase.
Currently, a large part of the e-health services market is closed to the e-health companies, i.e. the only possibility is to participate in public tenders. The general public cannot be the client because offering services to them means competing with the public sector, which is a very big obstacle. The most commonly used alternative is to go immediately to foreign markets without getting a reference base in Estonia, and without leaving new technological applications here.
Thus, the growth of the e-health business sector is directly linked to the behaviour and decisions of the public sector and health care sector regarding whether or not to open the local e-health services market to private capital and innovation. This is a decision to be made via government policy: a concept to integrate e-government and the e-health system in order to shape the economic environment. Here, the Government of the Republic has an opportunity to show the world a new e-health model and bring more capital that is private into the health care sector.
Opening up the services market and laying down rules for the introduction of innovative services (incl. pharmaceutical research and e-services) helps people to become more active in valuing their health and improves the availability of new services or treatment methods.
Achieving the export of treatment services (import of patients and medical tourism) is a long process, whereby the quality and trustworthiness of services is sold mainly into neighbouring countries: the Nordic countries, the Baltic States and Russia. The cluster Medicine Estonia is beginning to reveal its first results.
The market for e-health services is yet to be created. An open market concept and a judicial area are the starting point for this. As a first key solution and pilot project, it is most appropriate to start by modernising first-level solutions and developing a suitable prototype in co-operation with general practitioners, because at the first level, it is possible to achieve quickly a win-win situation that would bring about initial changes:
Highly motivated and healthy individuals, young people and target groups using e-services can be involved in the introduction of services in the framework of preventive actions;
Compared with the clientele of medical specialists, it is easier to involve a larger part of the population in first-level services;
The pressure of and demand for innovations is initially targeted at the first-level, therefore the motivation is mutual;
A greater effect can be achieved with considerably smaller resources (compared to acute care hospitals);
Thanks to the target group, the risks are lower and because of higher motivation, changes can be implemented more rapidly;
Due to the lower risks, it is more realistic to involve the private sector and private capital in addition to state funding.
A people centred data management, the two-way movement of data and the technical solution of the first-level basic platform have a key role in the pilot solution model (see Annex 4).
1.1.3 Position of the growth area in the value chain
In the field of health care technology, trends are set by solutions that combine different technologies. Convenient, fast and mobile solutions must be ensured, i.e. mobile, multi-functional diagnostics, prognostics and monitoring devices that use various technologies from sensor technology and nanotechnology to ICT. ICT technologies have an impact on the e-health system and health care, and medicine is influenced also by biotechnologies. Bolder estimates predict a significant growth in the importance of artificial intelligence. It is even argued that in the near future, 80% of the work of doctors27 can be delegated to miscellaneous software and hardware (for more details, see Annex 8.1.).
A notable sector producing medical devices or health care technology (incl. red biotechnology) has not yet evolved in Estonia. It is also not realistic that such a sector could grow into a competitive player on the global market in the near future. As regards the entire value chain in the health care sector, then most of it is located in the global market. Estonia is characterised by a high level of education and science, high quality HCPs, strong biotechnological research as well biotech and e-health companies that are just starting their activities.
Estonia can profit from its abilities in implementing big data solutions for processing health data (e-health). There is a constant increase of data (data from diagnostic devices, health behaviour data collected on the initiative of people, laboratory diagnostic data, etc.). Thus, the utilisation of possibilities offered by big data26 in health care is realistic specifically as a result of the e-health system functioning in the country. In the case of data collection, voice recognition and sensor technology, but also different analytical and intelligent solutions may be of use.
Estonia has the opportunity to develop into a pioneer of renewed health care, making use of its current abilities. The implementation of personalised medicine in a broader sense would benefit people, science, business as well as the entire society. Taking into account the shortage of funding, and if only the genetics part of personalised medicine is implemented, there is a risk that no real effect will be achieved282930.
1.2 The role of education and R&D in the sector
Compared to the average of other EU countries, the share of total health care costs in GDP are modest in Estonia. The same is true for the proportion of research and development costs in the total health care costs (see Annex 3, Figure 6). It is necessary to increase the R&D expenditure, both with the help of smart specialisation measures as well as other measures (the EU average is two to three times higher). As shown in the figure comparing the total health care costs and R&D costs in paragraph 2.1.2, the share of R&D expenditure in total health care costs has been increasing since 2005, but still forms quite a small part of them (in 2012, R&D expenditure accounted for only 0.24% of total costs).
The main misconception about e-health applications is that these constitute an IT project. This is completely misleading: IT is the last and a very important component, but before that, a significant amount of work related to the interlinking of the data model, work processes and work organisation or treatment schemes has to be done. On top of that, there are the legal aspects to be taken into consideration. Hence, we are talking about the prior methodological work, which results in a detailed data model, algorithms to link medical decisions with the data, the performance and design of work processes that the services offered to users can, in turn, be based on.
Another important aspect of R&D that needs to be specifically emphasised is the fact that even though Estonia is an e-state and progressive minded as concerns e-health, we lack the necessary analyses on the cost-efficiency of e-health and the related impacts (e.g. the impact of implementing the digital prescription on work processes and cost savings in health care, the impact assessment of the cost-efficiency and work processes model of the digital image, etc., but also the development of an assessment methodology necessary for analysing or forecasting future applications). This weakness precludes assessments as well as selling e-health solutions outside the country. In order to present e-health related applications to the rest of the world, evidence-based referable articles and analyses are necessary.
In all, there are six major lines of activities where R&D should contribute.
The design of the data model and evidence-based links and the development of service standards (the approach towards the system must be profession-specific).
An impact assessment and a methodology of delegating nurses’ and doctors’ activities to ICT solutions.
An impact assessment of the services that can be brought closer to people’s homes thanks to technological solutions (as opposed to people coming to hospitals or health centres).
Participating in the development of curricula and new interactive teaching aids.
Implementation of a cost-efficiency methodology for the existing e-health solutions and the assessment and analysis of existing applications.
Development of in-service training course for medical professionals in line with the new requirements and problems.
Since a large part of the practical solutions in e-health function currently on a voluntary basis, an illusion has been created that this work is immaterial and free. In reality, this work is carried out in addition to professional or research work, out of free time and a sense of mission. If to add these resource costs to the budget of ICT projects (the pre-condition for their success), the cost of such projects would increase considerably. Hence, the practices of other countries should be followed and funds should be allocated to finance, besides the standardisation of applied research, also the so-called innovation vouchers for doctors, scientists and companies: for the former, in order to participate in ICT projects, and for the latter, in order to grant them access to clinical competencies to ensure a high-quality preparation of their projects and the involvement of the necessary specialists.
An analysis carried out in the framework of drawing up the Academy of Sciences’ RD&I strategy in the field of health shows that from 2006 to 2014, about 33% of the entire funding for research went to health-related research. Considering the context, this is a very large amount also in absolute terms. Biotechnologies and natural sciences account for about 60% of the total research financing, with genetics alone making up 17% of all funds31. ICT and electronic sciences received only around 4%. The question is how to carry basic science capacity over to the economy. In the fields of medicine, biotechnology and health, the share of people with a doctor’s degree is an important indicator to assess the technology-intensiveness of the economy. In Estonia, it is very small, even though our science is world-class. Another question that needs to be answered concerns the future perspective of these young scientists with a doctor’s degree (every year, about 50 of them gain a degree in natural sciences): whether to engage in research or to go abroad? Co-operation between different sectors should also create a third option – to proceed into business. This potential is not utilised in health care, neither in the field of e-health, nor in technology-intensive companies, and in the economy as a whole.
Thus, it is important that co-operation between the various directions of basic science and applied science would increase and that a suitable technology transfer model would be found for Estonia in collaboration between the research and business sectors. Promoting the capability of universities and HCPs to establish more spin-offs would also help create possibilities for the emergence of a medical industry in Estonia.
1.3 Strengths, weaknesses, competitive advantages
Estonia’s strengths and weaknesses have been discussed in the previous chapters, but the more important aspects of the e-health business environment are repeated below.
The main strengths of Estonia are the infrastructural prerequisites of the new ICT solutions (X-road, ID-card, personal identification code, opt-out, Patient Portal of the electronic health record system), but also the open-mindedness of the majority of the population about innovative ideas. Estonia’s small size makes it possible to quickly introduce new applications, make changes in them and correct any errors. The country also has the necessary specialists, the R&D potential and experiences in using and introducing new applications.
The most outstanding weakness or shortcoming is the fact that the health care system is monopolistic and closed, aggravated further by a general conservatism in a broader sense. In addition, besides the small domestic market, there are a vast number of monopolistic and powerful institutions, and the need to reach agreements between them as well as the fragmentation of resources exaggerates the barriers even more.
In the context of smart specialisation, the shortcomings and the potential of e-health have been thoroughly explained in Chapter 4 of the Development Fund report 2013, pp 15–1732.
Estonia’s potential lies partially in combining its strengths: small and fast, plus innovative and decisive. Estonia has an opportunity to be the test bed for e-health or a nation-wide prototype of the e-health system. The important factors in opening up the e-health services market are an integrated structure and requirements that enable to find new solutions in three health-related fields:
Create better possibilities for the medical system to use data and automated solutions to support decision-making;
Create the prerequisites for integrating completely new services into everyday medicine, for example, services related to e-health, regenerative medicine, treatment methods based on molecular level data, etc.;
Create the prerequisites for making private services available on the market in addition to state-provided services, thereby increasing people’s participation in retaining and improving their health.
The strengths and weaknesses of the biotechnology sector are detailed in the resources report. The critical issues will be:
Creating possibilities to involve private capital and the capability to combine it in synergy with research activities in the business sector;
Coordinating technology transfer on the state level in co-operation with universities and the business sector;
Implementing integrated curricula and team scholarships;
Intensifying the state’s role in the introduction of new technologies in different areas;
Supporting networks to increase their administrative capacity and competence.
2 Sector-specific objectives and indicators
In the years to come, the activities in the health care technology growth area should be targeted at achieving four important objectives, which, in turn, contribute to the general health policy goal – more healthy life years.
Opening up the existing health information system for people and for private capital.
Involving people in the improvement of their health.
Freeing up the time of doctors and nurses, reducing errors and unnecessary medical examinations and bringing services closer to people (improving their availability) through the use of technology.
More scalable services and companies (e-health and biotechnology).
Export of treatment services or import of patients;
Introduction of innovative treatment services with high added value;
Opening up the market for new e-health services;
Enabling the testing of innovative services in Estonia and drawing up the relevant rules.
The most important task is to ensure that all people take care of their health from an early age, prevent diseases, keep risk factors under control and restore their health. The attitude that a doctor will cure one’s health is not acceptable. In addition to significant actions to improve health awareness, the health care system and the creation of pre-requisites for recreational sport and fitness, the behavioural patterns of people today also make it possible to offer various mobile services and e-health solutions.
Due to the emigration of a vast number of nurses and doctors, their colleagues who have remained in Estonia, are under increasingly excessive stress. Another problem is that no one is able to use the growing amount of data any more. New technologies enable the transfer of a considerable amount of duties of nurses and doctors to intelligent information system solutions and free up their valuable time for one-on-one interaction with the patient. It should be clearly understood that the implementation of the possibilities offered by technology does not make doctors and nurses redundant, but rather allows the over-burdened medical staff to deal with activities that are irreplaceable, i.e. decision making and communicating with people. One possible method for that is the Markov concept33.
Technologies that enable us to improve the availability of services offered to the elderly and those in low-density areas, without forcing them to go to the increasing centralising hospitals (urbanisation) or medical centres (transport, costs, time, special requirements regarding people with disabilities, etc.). Since treatment in hospitals is expensive, the aim is to keep people in hospitals for as short a time as possible. However, it is also expensive to bring people from their homes, whether for monitoring and assessment at a general practitioner’s office or for social care in the context of the social welfare system, but partially also for rehabilitation or other consultation services.
The opening up of the services market will allow us to bring additional capital, new services, and positive competition into the health care system, as well as new possibilities to solve the accumulated problems through the progressive introduction of new models and patterns. The business sector and other sectors (tourism, employers, civil society, schools, local authorities and others) have demonstrated their willingness for partnership. Start-ups are emerging in the field of e-health, and there are several barriers that could be overcome in order to speed up their development.
In the case of the health care system, we cannot overlook the importance of hospitals and their potential to be a partner in the business sector, the creator of new companies (by promoting spin-offs) and, in collaboration with the research field, also the introducer of new treatment services and methods. In order to test new treatment services and build up references and an evidence base, an appropriate legislation, as well as co-operation, to include new services in the Health Insurance Fund’s pricelist (for example, telemedicine services, regenerative medicine, cell therapy, various biobanks, molecular biology diagnostics methods, etc.) is needed. For more details, see the red biotechnology part of the resources report.
Since the e-health business sector is very young, it is difficult to establish the indicators for this growth area. Unlike the more traditional sectors, predictions cannot be made based on the existing business volumes. Therefore, the creation of products can be considered an appropriate objective in the case of e-health – these products might give Estonia an important opportunity to achieve global competitiveness. Scalable services should also be classified as products; in the context of e-health, scalability can be considered one of the most important key words. The products market can be expanded by private services offered to the people as well as by global services and services offered via HCPs.
Indicators for the assessment and monitoring of the four objectives mentioned above:
The legislation necessary for the existence of an open e-health information system has been established;
Involving people in the improvement of their health;
The two-way account exists and is possible (requires a concept and legislation);
40,000 users in three years (based on the utilisation of the mobile-ID);
Freeing up the time of doctors and nurses, reducing errors and unnecessary medical examinations and bringing services closer to people (improving their availability) through the use of technology;
Every change must be preceded by an impact analysis forecasting the resources estimated to be freed up. It should be 20–40% compared to the time spent currently (time, financial gains);
More scalable services and companies (e-health and biotechnology);
E-health businesses and added value – see Annex 3 to this report
Red biotech companies and added value – see Annex 4 to the biotech part of the resources report
An important pre- requisite is the existence of the appropriate legislation;
Increased export of health care services (increased share of non-Health Insurance Fund (health insurance budget) revenue in the turnover of HCPs (statistics of the National Institute for Health Development))
It is important to emphasise that the achievement of the indicators determines whether the strategic political decision to open up the services market will be taken and when the pre-requisites related to the legislation will be fulfilled.
3 Explanation of the choice of the growth area and the domains
3.1 General explanation of the domains
The basic documents adopted by the European Commission34 emphasise that in the case of smart specialisation, it is important to choose domains that are not broad enough to cover the entire sector. At the same time, the domains should not be so narrow as to turn the innovation policy into a horizontal project-based approach. Therefore, for all the growth areas, distinct domains should be specified where the potential for the growth of added value is the highest, as well as activities that would help trigger this growth.
Besides the appropriate size, the domains must also spring from the so-called entrepreneurial discovery process. The domains chosen will support the existing and potential strengths of the business sector. Entrepreneurs in the broad sense (innovative companies, research leaders at universities, inventors, etc.) are the ones to identify the smart specialisation (SS) domains in Estonia. As regards domains, it should also be mentioned that over time, these can be changed through the entrepreneurial discovery process.
Choosing domains in a flexible way through the entrepreneurial discovery process allows you to achieve the following in the SS processes:
Emergence and development of new activities with a potential to positively influence innovation;
Diversification of regional innovation systems;
Creation of critical mass/networks/clusters within the diverse system.
The domains vary greatly from the economical point of view. The activities needed to advance these domains are also very different. The activities are described in more detail in the following chapters of this analysis.
For the small regions, it is critical to choose key areas where the use of limited resources is expected to bring the greatest gains and where there is a competitive advantage compared to other regions. Defining region-specific areas is a process of exploration (not top-down imposition) that occurs in co-operation between business and science, taking into account the associated areas35. Estonia as a whole makes up one small region.
Smart specialisation has a central role in the Europe 2020 strategy, on which the National Reform Programme "Estonia 2020"36 is based (approved by the government on 25 April 2013). One of the nine reforms planned in Estonia, besides the higher education reform and the upper secondary schools network reform, is the preparation of smart specialisation-based support programmes for research development and growth enterprises, that is, new measures that are focussed on a limited number of preferential growth areas selected according to their economic and social impact.
3.2 Explanation of the smart specialisation domains in e-health
Resulting from the synergy of global and local trends, the e-health system faces the same pressures as the entire health care system: a shift from an institutionalised system to a person-oriented system, from treatment to prevention and towards a more extensive involvement of, and participation, by people. Thanks to the existing e-health system solutions, Estonia has fulfilled the necessary pre-requisites. The decisive focus is on a person/patient-oriented data management, making use of the modern ICT (especially big data) and personalised medicine solutions and enabling a two-way data exchange: making the data available to people and the transmission of data by people themselves via their personal health account.
Thus, three domains of the e-health growth area can be highlighted:
A person-oriented data management that entails three important components:
An integrated platform, which enables a two-way data exchange and services based on big data both for the doctor and the person (incl. clinical data, health behavioural data as well as molecular/genetic data);
An open structure to enable the access of people and service providers (incl. the business sector) to various services;
The capacity of health care providers and social welfare institutions to exchange standardised data.
Applications supporting the decision-making process by clinicians, as well as the users of modern big data and data-mining solutions (possibilities related to both health care and welfare services).
Remote administration and diagnostics services for different target groups (young people, the elderly, children; to be used in hospitals, social welfare institutions, homes, and everyday life) and for different indications or purposes (health maintenance, risk screening, treatment, diagnostics, rehabilitation, nursing and other purposes).
It should be stressed that the person-oriented data management platform is an integrated e-health solution and, at the same time, a key domain and pre-condition for further major changes in the e-health growth area. Therefore, it is also a pre-requisite for the other two domains. If the government does not facilitate an open architecture, the private sector will find it very difficult to compete with the state and build a separate service platform to offer its services to interested private customers. People lose the opportunity to manage their data in a complex way and are forced to divide it between the databases of large corporations.
4 Sector-specific barriers and activities
Sector-specific barriers are the main impediments to achieving sector-specific objectives. They are based on sector-specific problems and the weaknesses pointed out in the SWOT analysis. Several activities (measures) are devised to remove these barriers and to take advantage of the sector-specific opportunities.
The activities (measures) can be divided in two: smart specialisation (S3) measures37 and measures with a broader scope. Within each group of measures, this report briefly explains the possibilities to implement S3 measures in the health care technology growth area. To make it easier to distinguish the S3 measures from among the numerous activities, the focal points of S3 measures are repeated at the end of each group of activities. A more detailed description of smart specialisation measures is provided in the general part of the reports.
The activities needed to achieve the four objectives will be described below. The first of them is the most important, and a pre-requisite for fulfilling the other objectives.
OBJECTIVE 1: to develop an open e-health information system
BARRIER: the market of the health information system (electronic health record, EHR) and e-health services is closed and it focusses mainly on illness data.
The current e-health platform does not allow the citizen or third parties (e.g. private companies) to access citizens’ data. This hinders the development of new services and products by private companies. The other problem is that the information system contains currently mainly data on illnesses, not health. Thirdly, citizens cannot add illness or health data to the system themselves (e.g. via services offered by third parties). As a result, it is impossible to use new business models in health care, bring private capital into the sector or make the service market more active through diversified competition and choices.
Opening up the e-health information system to enable a secure access that ensures privacy for the citizens to add data and for private companies to develop secure services and products. These services must be able to use the data contained in the central e-health information system and add new data to this system. It is also important that the platform would be able to manage health data, besides the current illness data.
Opening up the health services market. This must be accompanied by the necessary changes in the relevant legislation, the organisation and division of roles, as well as new requirements and rules to enable the activities mentioned in the previous paragraph to be carried out.
Opening up the platform and the market will enable:
All citizens to access the data collected on them contained in the Patient Portal and add new data;
Companies to offer contemporary services to the people and the health care sector;
To raise motivated private capital to achieve common goals: to develop the services necessary for providing higher quality health care services and also continuously bring new services to the market.
S3 MEASURE: demand side policies (DSP)
OBJECTIVE 2: involving people in the improvement of their health.
BARRIERS: the health care system does not motivate people to actively contribute to their health, but rather creates a dependence on the system ("the doctor will fix it"). The state should motivate people to stay healthy, enable them the transparent examination of the actual costs of services rendered and the quality indicators of service providers, choose their service provider and electronically transmit their data to the health care system. The awareness of people about the security risks of the apps offered on the free market and their impact on privacy is low.
In order to change the motivation and business model of the health care system, a thorough analysis is required that would take into account the motivation and behavioural patterns of people, employers and health care providers (tax incentives for the employer, tax incentives for the citizens, reduction of the fringe benefit tax on health services, the movement of health insurance money with the patients, integration of private insurance into the system, rules for involving private capital in the development of e-health services, etc.).
The public must be made more aware of the risks (related to privacy, data security, technologies). The risks deriving from transmitting one’s data to various service providers to whom the state has not given powers or guarantees, must be taken into account as well.
Integrating the Patient Portal solutions with the open platform solutions; raising awareness and presenting the requirements and responsibilities of service providers who have access to the open architecture; health awareness raising; presenting the different possibilities.
A pilot project could be the development of an integrated general practitioner platform. The integrated general practitioner information systems platform (that could offer personal health account services related to the two-way data management and support for decision-making) entails a structured data model, standards for work processes as well as modern data management services directed at different target groups, i.e. services to people and HCPs. In order to reach a solution that all parties need – a pilot platform and a nation-wide prototype of the e-health system – some substantial steps need to be taken.
Create an appropriate legislative base for the open architecture of the e-health information system, the two-way data exchange and the concept of a person-oriented platform: change and supplement the regulations related to the Health Services Organisation Act, the Health Insurance Act, the Medicinal Products Act, the Public Health Act and other acts, bring the existing organisation and the roles and responsibilities within it into accordance with the new conditions, reassess the funding models and the levers for the compulsory implementation of the electronic data transfer standards, impose rules and requirements concerning the services allowed to the market and the health care providers (MSA + MEAC).
Develop the central system standards (standards relating to the human life span and the compulsory data model, Estonian e-Health Foundation) and integrate them into the state administered platform; lay down the conditions for the disclosure of open market services and standards as integrated with the Estonian e-Health Foundation and the Administration System for the State Information Systems (the service level should be planned in stages).
Make the open standard principles available to all companies providing e-health services (in co-operation between the Estonian e-Health Foundation, the Information System Authority and the State Information Systems).
Develop the standards, services and methodology for the pilot platform and come up with a first-level prototype for piloting (Estonian Family Doctors Association, MSA, MEAC).
S3 MEASURES: DSP, applied research
OBJECTIVE 3: freeing up the time of doctors and nurses, reducing errors and unnecessary medical examinations and bringing services closer to people (improving their availability) by the use of technology.
BARRIERS: the health care system is in a difficult situation due to its inertness (financial constraints, shortage of new doctors, an increasing pressure on services, a need for changes, etc.). On the one hand, rules and requirements are constantly being established and reports required (i.e. information is constantly being produced). On the other hand, the data controller does not provide a proportional and parallel contribution to the reasonable management of information so that it would achieve a positive impact. The capacity for horizontal co-operation is poor. For instance, treatment guidelines, schemes to monitor chronic patients, quality systems for general practitioners, data requirements of registers, etc. are established (which are, undoubtedly, necessary and right), but the applications for information systems (incl. standards) and the necessary funding are not promptly planned for. As a result of this, the necessary information does not electronically reach the different parties nor can it be used system-wide.
The previous paragraph also contains the solution: health care needs to take a decisive step from form filling to the information age. Data needs to be synchronously transformed into a digital form in the place where they are created, so that the user could utilise them as such. Each rule needs to be accompanied by the necessary budget and an electronic solution that would be linked to the doctor’s and the nurse’s desktop and that would manifest itself in one or more services in their decision-making solutions.
A part of the RD&I budget needs to be allocated to drawing up impact assessments regarding the implementation of technology and the development and establishment of the necessary structured data models, algorithms and standards so as to achieve the objectives mentioned above (by service, profession or field of activity in both health care and welfare).
The principle according to which the information needed for offering the services foreseen in the Health Insurance Fund’s price list must be electronically manageable throughout the entire work process has to be adhered to (introduced in regulations and information systems).
Standards must be disclosed and introduced in both the place of data creation (in the information systems of the HCPs) as well as the central system, they have to be integrated into the existing standards and the relevant legislation needs to be changed accordingly (compulsory data requirements in the EHR and the registers but also in the regulations concerning medical documents).
The order of succession of the rules, requirements and phases of the development and introduction of open e-health services according to the service level has to be established, disclosed and made compulsory for all market players.
Co-operation projects and design contests to find new business models and create services should be launched in collaboration between the health care sector, local authorities, the private sector and researchers.
Advance research and technology transfer into the health care sector, support co-operation with the business sector (participation in CCs, clusters, research projects, studies), collaborate with companies and promote the creation of spin-offs by health care providers, boost the involvement of clinicians in co-operation projects funded by private capital (using the innovation vouchers, applied research or RD&I strategy programmes).
Integrate the teaching of ICT, technology and health technology skills into the curricula for nurses and doctors and promote the opportunities to engage in entrepreneurship and utilisation of new technologies already in universities or during doctoral studies (through scholarship programmes, technology transfer measures).
Find the means to develop modern interactive teaching aids in universities and institutions of professional higher education (in the curricula for nurses and doctors, so that the first contact with the possibilities offered by e-health would not occur only when employed) as well as for the continuing education of practising doctors and nurses.
S3 MEASURES: DSP, applied research, CCs, clusters, SuE, scholarships.
MEASURES: RD&I strategy, the programme TerVE, innovation vouchers, ICT measures, the family health centre measure, development programme.
OBJECTIVE 4: more scalable services and companies (e-health and health care technology)
BARRIERS: the creation of new services and products is hindered by the extremely high requirements and standards in health care. In addition, new companies do not often have access to all information. In the case of the innovation process, several profession-specific requirements, best practices and requirement related to the legislation have to be taken into account38. For example, medical devices need to be certified and verified, and the production of medicinal products needs to comply with good manufacturing practices (GMP)39 and their respective requirements. The standardisation of the e-health work processes and data models is also time consuming as well as R&D-intensive40, and so on. Product development is made even more R&D and capital-intensive by the longer development cycle, which requires raising considerably more capital compared to other sectors. It is difficult for companies to get into contact with health care providers and to involve clinicians in business activities (due to the limited motivation on the part of the health care sector). There are shortcomings in the legislation that would enable the testing of new technologies in Estonia for the purpose of building up an evidence and reference base.
The availability of private capital and a favourable business environment for starting companies are critical for the development of health care technology. Therefore, it is important to give priority to e-health and biotechnology when creating state investment funds and business accelerators. The criteria to be used for such funds are portfolio managers with a competence in e-health and medicine or medicinal products, who are able to provide investment opportunities at the earliest possible stage together with support services (as concerns customer and market research, team development, increasing entrepreneurial know-how and capacities, professional networks). This would be imperative for private companies, starting companies as well as for providing support to spin-offs created by HCPs that are not directly related to their main activity. When private capital availability is limited in Estonia, international partners need to be found, in collaboration with the state, in order to raise these funds.
Launch the necessary projects for activating the needed pre start-up and start-up activities41 specific to e-health and health technologies, in which the degree of maturity of the e-health ecosystem as well as the necessary support services (workshops, trainings, networks) is taken into consideration, in case private capital is motivated to participate in the capital investments for the e-health incubators (Startup Estonia).
Promote co-operation between enterprises and scientists as well as the health care sector (technology transfer and product development measures).
Promote the development of young companies and the creation of spin-offs by HCPs via information related support provided by universities as well as the integrated scholarships at universities and personal or business accelerators.
Promote, in co-operation with researchers, the technology transfer to, and the uptake of, technology-intensive product development by the business sector (applied research targeted at the business sector, but also CCs).
Support businesses with regard to the improvement of market research, customer research, marketing, product design and capital raising skills through various measures, support access to networks both domestically as well as for the purpose of internationalisation (to gain access to the networks of external actors and business information databases, to increase capacities related to intellectual property, etc.).
Find opportunities in the health care sector to involve doctors and nurses in ICT projects.
Prepare the necessary legislative base in Estonia necessary for testing new treatment methods and conducting studies in order to build up international evidence-based references.
Incorporate the e-health pilot prototype into the e-government portfolio and, in collaboration with the private sector, find suitable business models to market it externally.
S3 MEASURES: SuE, DSP, applied research, CCs, clusters, scholarships
MEASURES: development programme, innovation vouchers, RD&I strategy