Ihm Ecommerce

HEALTHCARE E-COMMERCE
OPPORTUNITIES
Data and Analysis for Building
and Growing a Business In
Digital and Mobile Healthcare
Sponsored by
HEALTHCARE E-COMMERCE OPPORTUNITIES INTERNET HEALTH
MANAGEMENT
EXECUTIVE SUMMARY
Risk and reward in

healthcare e-commerce
The potential annual market for e-commerce and web services technology
in healthcare is about $32 billion, per an estimate from Goldman Sachs. That’s
five times more than the $6 billion online retailers spend annually on all forms
of e-commerce technology and services, says Forrester Research.
Consumers as patients also are spending more on medical supplies and

drugs. For 2015—the latest year for which full statistics are available from
the U.S. Department of Health and Human Services—consumer retail
spending for durable medical equipment—a category that includes such
items as eyeglasses and hearing aids—reached $48.5 billion, up about 4%
from the prior year. Consumer spending for other nondurable medical
products including over-the-counter medicines, medical instruments,
and surgical dressings, also grew 3.7% to $59.0 billion in 2015, and
prescription drug spending grew year over year 9% to $324.6 billion,
says the federal government.
That healthcare product, services and prescription spending is opening new

opportunities for big pharmacy retail chains such as Walgreens and CVS
2
© Copyright 2017 Vertical Web Media LLC. All rights reserved.
EXECUTIVE SUMMARY | HEALTHCARE E-COMMERCE OPPORTUNITIES INTERNET HEALTH
MANAGEMENT
Health. Even Amazon.com Inc., whose healthcare Here are some examples of companies
revenue comes mainly from its Amazon Web expanding in healthcare.
Services cloud computing unit, reportedly
is looking at expanding into prescription  Walgreens and CVS are taking
selling and delivery, electronic health records their substantial e-commerce operations and
and telehealth. Healthcare also is opening transforming them into digital healthcare
new niche markets for web retailers such as delivery platforms that offer consumers a variety
PillPack.com, FSAStore.com, Orthoticshop.com, of services, including seeing a doctor online.
CapsuleCares.com and others.
 Orthoticshop.com is on track to grow
This digital evolution in healthcare presents online sales 30% this year and FSAStore.com
multiple risk and reward opportunities for has achieved a compound annual growth rate of
healthcare providers, says BRP healthcare 80% over five years by becoming leading niche
consulting vice president Don Gleason. Creating merchants in their respective specific segments.
and sustaining a viable business in digital
healthcare, requires organizations to create and  Salesforce.com and Akamai
execute a detailed strategy that includes proper Technologies are leveraging the customer
market research and due diligence. “Healthcare relationship management and content
is a very regulated market where any company development technologies and services they
expanding e-commerce and online capabilities developed for retailers and other consumer
needs to have a complete understanding of their facing markets successfully into healthcare.
customers and online information regulations,”
Gleason says. “From the beginning, your strategy A recent survey of e-commerce vendors by
and focus need to be right.” Internet Retailer found 68% of respondents
consider getting into the healthcare market a
Many online retailers and e-commerce “very important” or “important” priority. The
technology vendors fail when attempting to survey, which garnered a detailed response
expand their presence into healthcare by trying to from 29 e-commerce technology product and
go it alone. The need to understand unique data services companies, also found that 54% of those
requirements, privacy and security regulations, vendors not in the market plan within the next
and customer segmentation strategies makes six months to begin selling their products and
healthcare different from other e-commerce and services to healthcare organizations, such as
web services markets, Gleason says. hospitals, doctor groups and insurers.
The U.S. healthcare system is a $3.2 trillion This report explores the market opportunities,
market that breaks down into many segments, challenges and rewards in healthcare
including hospitals and health systems, e-commerce and seeks to inform online retailers
insurance companies, physician groups, drug and vendors how they can succeed with their
makers and pharmacies. own initiatives and strategies.
To succeed a retailer or vendor needs to know Mark Brohan

the healthcare customer it is targeting and to Editor and Publisher,
deliver products and services that will be unique. InternetHealthManagement.com
3
HEALTHCARE E-COMMERCE OPPORTUNITIES INTERNET HEALTH
MANAGEMENT
Contents
OVERVIEW
An Rx for specialized e-commerce . . . . . . . . . . 6
SPECIAL FOCUS
20% of Walgreen app users are 55 and older . . . . . . . . . . 19
SPECIAL FOCUS
CVS Health and Cleveland Clinic expand their relationship . . 21
SPECIAL FOCUS
Henry Schein relaunches a medical site
in its e-commerce group . . . . . . . . . . . . . . . . . . . . . . . . 24
AMAZON
Amazon isn’t targeting healthcare—
it’s already here and growing . . . . . . . . . . . . . 27
VENDORS
A larger dose of e-commerce . . . . . . . . . . . . . 34
SURVEY
Identifying opportunity in
healthcare e-commerce . . . . . . . . . . . . . . . . 44
SPONSORED SPOTLIGHT
Akamai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4
OVERVIEW
An Rx for specialized
e-commerce
More healthcare merchants are finding success
by identifying a niche and sticking with it.
BY MARK BROHAN
Overall healthcare costs are rising, and the healthcare industry is

consolidating. But for Orthoticshop.com, a niche online retailer in healthcare,
business is good. In business since 2005, Orthoticshop.com is on track to
sell $13 million online this year, up 30% from about $10 million in 2016,
says founder Matt Behnke.
To hit those numbers, Orthoticshop.com is redesigning its website and

adding more merchandise. “Now is a good time to be in healthcare,” Behnke
says. “Consumers are using the web to do a lot more managing of their own
healthcare, and that’s good for us because they go online for someone who
sells orthotics and they find us.”
The U.S. healthcare system is a $3.2 trillion industry and accounts for
about 17.2% of the country’s gross national product of $18.56 trillion in 2016.
6
OVERVIEW | HEALTHCARE E-COMMERCE OPPORTUNITIES INTERNET HEALTH
MANAGEMENT
Consumers are buying more medical products.

HHS 2015 data points:
Durable Nondurable
medical equipment medical product Prescription drug
spending reached spending grew to spending soared to
$48.5 billion $59.0 billion $324.6 billion

Year- Year-
over-year over-year
growth growth Year-
4.0% 3.7% over-year
growth
9.0%
Consumers also are spending more out of pocket—and over the counter—
on medical, health and wellness products and services in a variety of segments.
For 2015—the latest year available for full statistics from the U.S. Department
of Health and Human Services—consumer retail spending for durable
medical equipment—a category that includes items such as eyeglasses
and hearing aids—reached $48.5 billion, up about 4% from the prior year.
Consumer spending for other nondurable medical products including over-
the-counter medicines, medical instruments, and surgical dressings, also
grew 3.7% to $59.0 billion in 2015 and prescription drug spending grew year
over year 9% to $324.6 billion, says the federal government.
Data on how much consumers are spending online specifically on medical,

health and wellness products or services is hard to come by but there
are some clues. The 60 online health/beauty retailers ranked in Internet
Retailer’s 2017 Top 1000, which ranks web merchants on their annual web
sales, grew collectively year over year 18.3% to $9.17 billion. In comparison,
the U.S. e-commerce market grew 15.6% last year to $395 billion.
In a growing market, more web merchants are targeting certain healthcare

niches as consumers manage more of their healthcare online. They’re also
7
MANAGEMENT
increasingly using the web to research and buy health and wellness
products—as well as track their overall health online, says Amy Madonia,
founder and principal of Madonia Consulting, a New York business-to-
consumer e-commerce and digital marketing consulting firm.
“The healthcare industry is digitizing rapidly and the customer is getting

comfortable with going online for their healthcare needs by doing research
on symptoms or specific doctors, paying bills and buying products and
generally getting more educated about their options,” Madonia says.
“There is an opportunity for niche web merchants in healthcare to succeed.”
A decade of learning
Orthoticshop has spent more than a decade growing into—and learning—
its niche. Orthoticshop began selling online with a selection of men’s, women’s
and youth orthotics shoes. But over time Behnke has added more orthotic-
specific product lines, such as socks and insoles, as well as other specialty
merchandise such as gel-filled sleeves to relieve foot pain from bunions.
This year the number of available SKUs on Orthoticshop will grow nearly
43% to 200,000 from 140,000 as the online retailer adds more specialty
brands and suppliers.
The core Orthoticshop customer is age 45 and up and spends, on average, $75
per purchase. Originally customers came to Orthoticshop.com to buy shoes, but
over time core customers began asking for additional products, Behnke says.
Orthoticshop.com will increase

its available SKUs by
in 2017, from
43% 140,000 to 200,000.
8
MANAGEMENT
‘There’s a lot more healthcare happening

online with consumers these days.
We are the beneficiaries of that.’
—MATT BEHNKE, FOUNDER, ORTHOTICSHOP.COM
New shoppers coming from Google after searching for terms such as
“orthotics” often are looking for more than just shoes when they click on the
link to Orthoticshop.com’s home page, he says.
Buying anything orthotic—especially shoes—is a very personalized purchase

because they’re looking to relieve specific types of pain from conditions
that range from bunions, callouses or hammer toe to diabetes, Behnke
says. At the same time, orthotic shoppers also want to buy fashionable and
contemporary footwear.
Product king and subject matter expert

Key to Orthoticshop’s success has been establishing its site as a provider of
orthopedic-related content on such topics as common reasons for heel pain
and how it can be treated.
Orthoticshop in February launched a redesigned website that it worked

with e-commerce technology vendor X-Cart to develop. The revamped
Orthoticshop.com features a responsive design and product reviews, as well
as an improved site search. “The redesign gives us bandwidth to add more
content and products to keep growing,” Behnke says.
When Orthoticshop.com launched a dozen years ago customers with aching

feet became the retailer’s first repeat customers. Now loyal customers
are middle age and older and they want new ways to shop online—
including paying for orthotic products using their healthcare savings or
flexible savings accounts.
“There’s a lot more healthcare happening online with consumers these days,”
Behnke says. “We are the beneficiaries of that.”
9
MANAGEMENT
FSAStore.com has achieved an
80% compound annual growth rate

over the past five years.
Orthoticshop saw a niche for serving a certain type of consumer looking

for a specific type of healthcare good or service online and developed the
business and marketing strategy—and acquired the products—to go after
very focused groups of shoppers.
That’s a strategy many other big and small established retailers are adopting.
For example, FSAStore.com sells 4,000 healthcare products consumers can
purchase using their pretax flexible spending account or Health Savings
Account dollars. Health Savings Accounts, or HSAs, are individual savings
accounts that allow consumers to set aside tax-free dollars to purchase
medical products and services.
The 7-year-old FSAStore.com has grown at a compound annual growth rate

of more than 80% over the past five years, the retailer says. A large part of
FSAStore’s success has stemmed from the revenue-sharing deals the retailer
has with the flexible spending account managers at more than 200 major
employers, including payroll services and human resources management
company ADP LLC, says CEO Jeremy Miller.
Under the arrangements, flexible spending account managers incorporate

FSAStore.com into the company’s employee benefits programs and, in return,
the company receives an undisclosed percentage of the money employees
spend on the site.
In the past year FSAStore has added new features and functions to become
more mobile-friendly, attract a larger audience of employers and become
a bigger provider of content on healthcare savings accounts. In October,
FSAStore.com launched an updated learning center featuring educational
tools that enable site users and visitors to understand FSA benefits.
Tools include frequently asked questions, articles, videos and a savings
account calculator families can use to estimate how much money to
put into an account.
10
SPONSORED SPOTLIGHT
Creating a healthy flow

How hospitals can provide faster and more secure access to electronic data
T
he lifeblood of today’s healthcare industry is data. Just and availability. This enables them to maintain the highest
as blood courses through the human body to keep it quality of service for their customers.
healthy and functioning, data that flows through elec- Healthcare organizations now have the same opportunity
tronic networks at hospitals and health systems is crucial to take advantage of such cloud-based services.
for clinicians to properly diagnose sickness or disease and For example, content delivery networks, when used in con-
provide adequate care. junction with load-balancing and network-monitoring tools, can
In a healthcare system that’s increasingly consumer help a hospital better connect workers, partners, clinicians, and
focused, patients also want more convenient ways to access patients to a web-enabled enterprise. This can provide staff and
data to better manage their health and wellness, commu- patients with faster, more secure, and more consistent access
nicate with their doctors, and conduct online transactions to vital electronic data like medical records. “In a hospital,
such as scheduling office visits, checking lab results, or availability is of paramount importance, and the performance
renewing prescriptions. of digital applications in areas including cardiology, neurology,
But compared to industries like banking and retailing— pediatrics, and trauma is essential, with little to no room for
which are much more electronically connected to error,” Weil says. “Everyone connected to the web-enabled
consumers—healthcare largely remains behind the curve. enterprise expects instant, secure, reliable access.”
But it’s not for want of data. As much as 30% of the world’s A pharmaceutical or life sciences company also can use
stored computer data is generated by the healthcare indus- a content delivery network with application load balancing
try, according to an estimate from McKinsey & Co. And just and monitoring tools to speed up the exchange of large
one patient electronic medical record contains 80 megabytes volumes of data, which could include hundreds of thousands
of data—the equivalent of two entire encyclopedia volumes. of research findings, medical images, or clinical trial data.
But this healthcare data isn’t universally integrated, and Many health systems still have reams of data locked away
many healthcare websites have yet to adopt technologies that in older legacy systems used to support clinical, financial,
could allow faster access to patient data. Services that can administrative, and supply chain operations. But such
help healthcare organizations—especially hospitals and health systems can be costly and time-consuming to maintain.
systems—deliver data faster and more securely include: The move to newer cloud-based enterprise network
 Content delivery networks (CDNs) services gives healthcare organizations the chance to
 Application load balancing reinvent how they maintain data—and offer faster, flexible,
 Web application acceleration and more secure access to electronic information.
 Cloud security solutions “Businesses in the healthcare space have access to
“The healthcare industry is going digital, but healthcare proven technology and services that have transformed busi-
also faces big challenges in getting there,” says Ari Weil, nesses in other heavily regulated industries—ones that rely
a strategic product and marketing leader at Akamai, a on establishing trust with their partners and consumers,”
leading provider of CDNs and cloud security solutions. Weil says. “Enterprise cloud solutions have the power to
“As healthcare becomes more consumer-centric, organiza- drive digital transformation by providing complete control
tions will need faster and more consistent network services over how a healthcare organization’s services are designed,
to maintain trust while keeping up with patient, provider, built, operated, and secured.”
payer, and employer expectations.”
Banks and retail companies consistently use cloud
security solutions to gain and retain the certifications and Sponsored by:
attestations of compliance that establish trust with their
customers. They also take advantage of content delivery
networks to speed delivery of digital content via websites,
mobile applications, and APIs to their consumers. Business
customers are also increasingly integrating cloud-based
application load-balancing and acceleration technologies
to maximize website and mobile application performance
EMPOWER PATIENT EXPERIENCES
ACROSS YOUR DIGITAL ECOSYSTEM
WITH THE CLOUD.
Fast, seamless access to medical data isn’t just a convenience for healthcare
providers and patients — it may determine the level of care your organization
can deliver.
Optimize your organization’s web experiences and applications with Akamai’s
cloud-based delivery services, so you can deliver data and rich experiences
quickly and securely.
To learn more visit Akamai.com/healthcare

MANAGEMENT
Big box pharmacies specialize

While 38 of the health and beauty web retailers ranked in the Internet
Retailer Top 1000 are smaller merchants with annual internet sales under
$91.6 million, bigger online healthcare retailers such as CVS Health and
Walgreen Co. are also becoming more specialized to serve distinct customer
segments—especially mobile consumers who want fast access to healthcare.
In May 2016 in Hawaii, CVS introduced a digital tool that allows patients
to view wait times at most locations and hold a place in line using their
smartphone, computer or tablet.
To use the digital tool, patients start by viewing current wait times online at
the clinic they’d like to visit. They then enter the reason for their visit and
provide an email address or phone number in MinuteClinic’s secure system to
receive a confirmation code and reminder messages via email or text. Patients
are given an estimated time to arrive at the clinic. Once at the selected clinic,
they sign in at the kiosk and enter their confirmation code. They are then
ready to be seen as soon as the practitioner is available based on the order in
which the confirmation was received. The service is now available at all clinics.
CVS is committed to digital and mobile healthcare, says Brian Tilzer,

CVS Health senior vice president and chief digital officer. More than
19 million customers have downloaded the CVS mobile app, which among
other features lets customers store their payment information and then
check out with their smartphone at the pharmacy or in the checkout line.
More than 41 million customers also are enrolled in the drugstore chain’s
pharmacy text messaging program, a mobile tool that provides users with
medication refill reminders and enables easy prescription refills.
‘Mobile devices have

19 MILLION
customers have
completely changed the
downloaded the way we manage our lives—
CVS mobile app. and that includes how we
41customers
MILLION
are
manage our health.’
—BRIAN TILZER, SENIOR VICE PRESIDENT
enrolled in the CVS AND CHIEF DIGITAL OFFICER, CVS HEALTH
pharmacy text
messaging program. 13
MANAGEMENT
“Mobile devices have completely changed the way we manage our lives—
and that includes how we manage our health, so that’s why we’ve made
significant investments in digital over the past few years, including opening
a digital innovation lab dedicated to advancing the role digital technologies
play in our customers’ lives,” Tilzer says. The retailer focuses on developing
new tools that help customers find easier and better ways to manage their
health wherever they are.
CVS, which operates about 9,700 stores, in

May announced plans for major changes to as
many as 70 new and existing stores this year,
with plans to expand the program to several
hundred more in 2018.
In select stores CVS says its “new, health-

focused formats” have 100 more square feet
dedicated to health, beauty and healthier food
products. The new products include a broader
selection of vitamins and supplements, more
natural ingredient health and beauty products,
and food products that are gluten-free, sugar-
free and organic, among other health-related
criteria. Each revamped store also features
what CVS calls a “discovery zone” that groups
products such as natural health and beauty
on store shelves so customers can find specific
merchandise more easily, the retailer says. CVS is introducing “discovery zones” that
group products such as natural health and
beauty on store shelves.
While the products CVS will offer in its newly
designed stores will not be available online,
CVS continues to roll out e-commerce initiatives that tie e-commerce and
stores closer together, Tilzer says.
For instance, CVS Health in October expanded a pilot project for mobile
payment for prescriptions by rolling it out nationally. And in April 2016,
the retailer added CVS Pay to its pharmacy mobile app. CVS Pay enables
customers to refill prescriptions, manage prescriptions and pick up and
pay for prescriptions, all within an Apple or Android app. CVS Pay also lets
customers use the mobile app to check out in a CVS drug store and to pick up
and pay for a prescription from a drive-through lane.
CVS is also rolling out to its stores a way for customers to more quickly
reorder for curb-side pickup. The CVS Express program was launched in April
14
MANAGEMENT
2016 and lets customers using the CVS app order items online and pick them
up at a nearby CVS store in less than an hour. The newest upgrade lets users
see a list of items from past purchases and reorder those products without
having to create an entirely new shopping cart.
Broader digital healthcare business

Walgreens also is working to transform the company’s e-commerce strategy
into a broader digital healthcare business plan as an online retailer and a
web-based delivery platform of medical services, says Greg Orr, vice president
of digital health.
Walgreens’ digital healthcare program already includes many of the

types of walk-in services patients can schedule at their primary doctor’s
office, a walk-in clinic or an urgent care center. Now Walgreens is moving
into more advanced digital healthcare offerings that build off of the first
wave of consumer-driven digital healthcare that focused on the types of
straightforward care patients typically see their doctor about, such as a
strained muscle, cold or flu and other conditions.
The next round of digital offerings will focus on more specialized

applications such as seeing a dermatologist online or, for chronic disease
management, an integrated care approach to managing more serious
conditions that includes screenings, checkups, monitoring and coordinating
treatment and patient education from a number of diverse healthcare
organizations, Orr says.
For example, Walgreens in September 2016 added a program that enables

consumers to see a dermatologist online. Walgreens is working with
DermatologistOnCall, a specialty telehealth program operated by Iagnosis, to
offer the online dermatologist.
With DermatologistOnCall, users can schedule an appointment and consult

with a certified dermatologist for more than 3,000 medical conditions
affecting the skin, hair and nails, typically within 24 hours of the patient
3,000
Medical conditions affecting the skin,
hair and nails that can be diagnosed
online by DermatologistOnCall.
15
MANAGEMENT
Consumers who would be

78% interested in receiving healthcare
virtually some or most of the time.
Source: Accenture
submitting a preferred time to see a provider. Patients who create an online

profile may upload photos of their skin condition via the DermatologistOnCall
platform, receive answers to medical questions and select to receive care from
a provider licensed in their state. The cost per online consultation is $59.
The digital service can be accessed through Walgreens.com and the

Walgreens app. DermatologistOnCall providers also have the ability to write
prescriptions that patients have processed through Walgreens.com and
schedule for pickup at a nearby Walgreens pharmacy.
In addition to DermatologistOnCall, Walgreens also features

information about common skin conditions such as acne and eczema on
Walgreens.com and in its app through a content agreement Walgreens has
with WebMD.com. Basic skincare and product recommendations also are
available through the Walgreens pharmacy chat feature, which offers live
online chat conversations with members of Walgreens pharmacy staff.
Walgreens aims to offer patients a single source for digital healthcare

services, the chain says. “Specific digital offerings can bridge a lot of areas in
healthcare, which is very segmented,” Orr says.
Consumers want digital health tools

Healthcare e-commerce companies are targeting specific groups of consumers
and patients overall as a growth opportunity because consumers in general
are using the web more to manage—and pay for—more of their healthcare,
says Frances Dare, managing director of virtual health services at Accenture,
a consultancy. For example, more than 12 million consumers research and
buy their insurance online through Healthcare.gov, the health insurance
e-commerce system operated by the Centers for Medicare and Medicaid
Services, a part of the U.S. Department of Health and Human Services.
A recent Accenture survey of about 1,600 consumers also finds that 78% of
consumers would be interested in receiving healthcare virtually some or
most of the time—and that includes researching and buying more healthcare
goods and services online. ”Technology-enabled services will be equally
16
MANAGEMENT
important as traditional in-person services, allowing the modern patient to

choose when and how they receive health and care services,” Dare says.
In particular, more niche web merchants are launching to provide more

ways for consumers to buy and fill their prescriptions online. In 2016
consumers spent an estimated $322.7 billion on prescription drugs at a chain
or independent pharmacy or other retail channels, including by mail order
or online, says healthcare research market research firm Quintiles IMS Inc.
That’s up 5.1% from $307.1 billion in 2015, according to Quintile IMS.
While there are no hard numbers on how many

prescriptions consumers are buying and selling online, Consumer
online pharmacies such as PillPack Inc. and Capsule Corp.
are rolling out digital services they contend will make
spending on
filling prescriptions online quicker and easier.
prescription drugs
(at chain or independent phar-
macies or other retail channels)
For example, since co-founder, CEO and pharmacist
T.J. Parker launched PillPack in 2013, the company has
raised $93 million in funding to build a digital pharmacy
base that now operates in 49 states.
PillPack manages multiple prescription medications $322.7

BILLION
for customers by pre-sorting, packaging and delivering
the drugs—all with a 24/7 pharmacy staff that can be
$307.1
BILLION
contacted either online or via phone. Every two weeks,
customers receive a personalized roll of pre-sorted
medications, along with a recyclable dispenser and any
2015 2016
other medications that cannot be placed into packets, like
Source: Quintiles IMS Inc.
liquids and inhalers. Each shipment includes a medication
label that explains what each pill is and how it should be taken.
In addition to pre-sorting medications, PillPack coordinates refills and

guarantees the shipment of all medications on time. Online tools allow
customers to track their shipments, refills and co-pays. Customers can e-mail
or call a PillPack pharmacist any time to ask questions.
PillPack employs about 200 workers between its New Hampshire fulfillment
center and its engineering, design, and marketing office in Somerville, Mass.
And it plans to add 300 employees at its western fulfillment hub in Salt Lake
City over the next few years.
PillPack is also adding more insurers to its business base. In February,

Aetna Inc., which provides prescription benefits to 15.2 million Medicare
17
MANAGEMENT
and commercial plan members, added PillPack to its national network of

preferred pharmacies. Members of Aetna’s Medicare Advantage Prescription
Drug plans and of standalone Part D prescription drug plans can use
PillPack while paying Aetna’s preferred pricing for prescription drugs, Aetna
says. Existing PillPack customers who are Aetna Medicare members will
automatically receive these lower co-pays—in some cases $1 in some plans—
as part of their Aetna benefits, the insurer says.
In New York, another digital pharmacy startup—CapsuleCares.com—is

attempting to build a lasting e-commerce business. The company launched
in May 2015 with former investment banker Eric Kinariwala as the CEO and
Sonia Patel, a pharmacist, as the chief pharmacist.
Capsule won’t disclose details about its first year in business, including
web sales, prescription orders or how many doctors the online pharmacy
is working with. But in New York, a state with 4,300 licensed pharmacies
located in independent pharmacies, hospitals, clinics, chain drugstores,
discount and warehouse retail outlets and grocery stores, Capsule is
promising consumers it will deliver prescriptions in about two hours for
free to customers living in Manhattan and the other boroughs.
Capsule has its own courier network of employees that undergo background
checks and have passed a commercial bicyclist safety course and undergo
HIPAA security training for patient privacy, the company says.
Capsule says it wants to use the web to make fulfilling prescriptions faster and
easier for consumers—the company claims its e-commerce and prescription
management system can switch over a prescription from an existing pharmacy
in about 30 seconds. The latest version of Capsule’s Apple app also lets users
switch between saved addresses and credit cards at checkout.
For now Capsule will look to grow its business and add more payers, doctors
and other providers to its network, Kinariwala says. “Pharmacies are the
front line of healthcare but there are inefficiencies,” he says. “We will build a
better digital ecosystem.”
Building a niche web retail business in healthcare isn’t easy, but attracting
and retaining customers for the long run is improved the more specialized an
e-commerce site can be, Orthoticshop’s Behnke says.
More than two-thirds of all shoppers at Orthonicshop.com are repeat

customers, Behnke says. “We had two bigger competitors come and go and
we are still here and doing fine,” he says. “Our customers told us to become
specialists and that’s what we did.”  18
MANAGEMENT
SPECIAL FOCUS
20% of Walgreen app

users are 55 and older
Older consumers are often viewed as less appealing

targets for digital and mobile healthcare programs
because of presumed lack of interest in digital technology
and low use of smartphones and the web. Some studies
show older patients often prefer dealing with healthcare
providers by traditional phone and mail.
But retail pharmacy chain and healthcare delivery services company

Walgreens says nearly 20% of the consumers that use its app are 55 and
older. Walgreens didn’t break out specific numbers, such as the total
number of downloads or details of use by age group, but 37% of all Walgreen
customers over 55 also use the pharmacy chain’s mobile pharmacy tools,
the retailer says.
Those tools include TouchID, a fingerprint identity sensor for Apple phones
and tablets, secure automatic log-ins, simplified menus and daily pill
reminders. Other features include an optimized site design that lets older
consumers choose bigger fonts when using the Walgreens app and the
pharmacy chain’s Balance Reward customer loyalty program that rewards
members with points if they use the Walgreens app to track walking, weight,
blood pressure and other health and wellness metrics.
19
MANAGEMENT
Older Pharmacy industry

average for app usage
consumers, among consumers

age 55 and older.
new tricks 10%
Walgreens app users

20% who are 55 and older. 37%
Walgreens customers over
55 who use the chain’s
mobile pharmacy tools.
Sources: Walgreens, Forrester Research
“One of the things we repeatedly hear is that customers really value

their connections with individual pharmacists and staff,” says Walgreens
divisional vice president for loyalty Mindy Heintskill. “We wanted to
replicate that connection digitally, so customers can get a high-value,
personalized experience even when they can’t make it into a store.”
The number of older consumers using its app is double the pharmacy
industry average, which Forrester Research notes is 9% to 10%,
Walgreens says.
“You know you’ve got a differentiator in the marketplace with this kind of
traction,” Heintskill says.
Other web features popular with older consumers are pharmacy chats, which
enable app users to communicate via live chat with a Walgreens pharmacist
or technician. They can also print a transcript of the chat or receive it in
an email, and refill by scan—an app feature that lets the consumer scan a
prescription label and pick up the refill at a store.
“We created Pharmacy Chat, which enables customers to have access to

trusted experts through our site or mobile app anytime of the day or night,
wherever they are,” Heintskill says. “We’ve also seen opportunities for tools
like individual pill reminders and prescription alerts to help our customers
simplify their daily lives.” 
20
MANAGEMENT
SPECIAL FOCUS
CVS Health and

Cleveland Clinic expand
their relationship
CVS Health and Cleveland Clinic have expanded their

eight-year-old clinical affiliation agreement in ways that
broaden and streamline electronic communication between
healthcare providers in both organizations.
With patient consent, CVS Health and Cleveland Clinic will share messages
and alerts about such things as prescription information, visit summaries,
diagnoses and treatment protocols, directly between the treating physicians,
CVS Pharmacy and MinuteClinic, via electronic health records (EHR)
systems. CVS Pharmacy is the retail pharmacy division of CVS Health, while
MinuteClinic, also a CVS unit, operates more than 1,100 walk-in medical
clinics, mainly in CVS stores.
CVS Health and Cleveland Clinic also will share standard protocols and
quality metrics and review population health data through integrated,
secured systems. Patients will continue to use a secure portal account to
access their information.
21
MANAGEMENT
The new arrangement expands a clinical collaboration between Cleveland

Clinic and MinuteClinic, the walk-in clinics operated by CVS Health, which
began in 2009. Under that arrangement, Cleveland Clinic provides clinical
consultation to nurse practitioners at 32 MinuteClinic locations in Northeast
Ohio and 15 in Florida.
Louis J. Capponi, chief medical information officer at Cleveland Clinic,

says all information transferred between electronic health information
systems will be done in a manner compliant with the Health Insurance
Portability and Accountability Act (HIPAA), which governs medical
data privacy and security.
“Cleveland Clinic puts patients first and as such we take patients’ privacy
and the security of their health information very seriously,” Capponi says.
“Cleveland Clinic ensures the security of its patients’ health information by
complying with all applicable laws and regulations, including but not limited
to, the HIPAA Privacy and Security Rules. We have policies and procedures
for our caregivers to ensure compliance, and we provide ongoing education.”
As part of the expanded relationship, CVS Health has joined Cleveland

Clinic’s Quality Alliance, a network of healthcare providers that collaborate
on quality measures that focus on chronic disease management.
CVS Pharmacy operates about 9,700 stores. In April CVS announced plans for
major changes to as many as 70 new and existing stores this year, with plans
to expand the program to several hundred more in 2018.
The affiliation between Cleveland Clininc and CVS Health is part of a larger digital push
by CVS, which includes its CVS Pharmacy app.
22
MANAGEMENT
The CVS Express program lets

customers using the CVS app order
items online and pick them up at a
nearby CVS store in less than an hour.
CVS has put a lot of resources into electronic communications and

e-commerce over the past few years. In October, for example, CVS Health
expanded a pilot project for mobile payment for prescriptions by rolling it
out nationally.
In April 2016, CVS added CVS Pay to its pharmacy mobile app. CVS Pay
enables customers to refill prescriptions, manage prescriptions and pick up
and pay for prescriptions, all within an Apple or Android app. CVS Pays also
lets customers use the mobile app to check out in a CVS drug store and to
pick up and pay for a prescription from a drive-through lane.
More than 19 million customers have downloaded the CVS mobile app, which
among other features lets customers store their payment information and
then check out with their smartphone at the pharmacy or in the checkout
line. More than 41 million customers also are enrolled in the drugstore
chain’s pharmacy text messaging program, a mobile tool that provides users
with medication refill reminders and enables easy prescription refills.
Another upgrade CVS is rolling out to its stores allows customers to more
quickly reorder for curbside pickup. The CVS Express program was launched
in April 2016 and lets customers using the CVS app order items online and
pick them up at a nearby CVS store in less than an hour. The newest upgrade
lets users see a list of items from past purchases and reorder those products
without having to create an entirely new shopping cart.
Cleveland Clinic is the top-ranked institution in Internet Health

Management’s recently introduced Digital Hospital 500. CVS is No. 106
in the Internet Retailer Top 1000, which ranks North American retailers
by their online sales. 
23
MANAGEMENT
SPECIAL FOCUS
Henry Schein relaunches

a medical site in its
e-commerce group
Henry Schein Inc. is a distributor of more than

120,000 products as well as business management software
and services to medical offices, clinics and laboratories.
And now it has redesigned e-commerce sites for all
of those customers.
The distributor, which reported $11.6 billion in 2016 sales, relaunched its
e-commerce site for Henry Schein Medical, a site where physicians and
their support personnel can order such products and services as medical
supplies and equipment, pharmaceuticals and office supplies. The site,
HenrySchein.com/us-en/medical/, also provides software and professional
services for managing such operations as finances, marketing and
medical waste removal.
“The new medical website is part of Henry Schein’s digital transformation

and represents our commitment to create an exceptional customer
24
MANAGEMENT
experience for health practitioners,” says Bridget A. Ross, president,

Henry Schein’s Global Medical Group.
The publicly traded company doesn’t break out e-commerce sales, but it has
said in recent financial statements that online competition was forcing to
it operate more efficiently. The redesign of its five e-commerce sites, while
providing for improved self-service ordering by customers, has coincided
with recent efforts to cut operating costs. Last year it eliminated about
900 employee positions, or about 2% to 3% of its workforce, it said in its
quarterly financial statement for the period ended April 1, 2017.
Henry Schein Medical is the fifth e-commerce site the Melville, N.Y.-based
company has redesigned since February. The others are Henry Schein Dental,
Zahn Dental Laboratories, Henry Schein Animal Health and Henry Schein
Special Markets. Henry Schein did not immediately return a request for
information about the e-commerce technology it has developed its sites on,
though the company refers in its financial statements to its “proprietary”
e-commerce technology.
The redesigned sites include such features as a new site search function that
lets customers search by product-specific attributes, including size, color and
manufacturer; and compare up to five products side by side. 
25
AMAZON
Amazon isn’t targeting
healthcare—it’s already
here and growing
Since CNBC broadcast a story citing unnamed sources as saying

Amazon.com had a team code named “1492” working in secret on
healthcare, there has been wide speculation that the world’s biggest online
retailer has big ambitions for digital healthcare.
But the biggest question isn’t when Amazon.com will enter digital and
mobile healthcare, say healthcare and e-commerce analysts that cover
Amazon. The bigger question is just how far and in what directions Amazon
will take its already substantial investments in healthcare.
In a series of stories, the latest of which ran in late July, CNBC reported that
Amazon.com has quietly assembled a research and development staff named
1492 and is looking at developing a slew of digital healthcare applications
that may include electronic health records designed for easy sharing and
telemedicine applications that digitally connect patients and doctors. In
27
AMAZON | HEALTHCARE E-COMMERCE OPPORTUNITIES INTERNET HEALTH
MANAGEMENT
‘I suspect as they do more

B2B commerce, you will also see
Amazon offer increasing selection in
healthcare products for businesses.’
—COLIN SEBASTIAN, ANALYST, ROBERT W. BAIRD & CO.
May, CNBC reported that Amazon.com also was developing possible plans to
get into the online pharmacy business, which would put the leading online
retailer in direct competition with the likes of Walgreen Co. and CVS Health
Corp. or new startups such as PillPack.com.
Amazon hasn’t said anything publicly about what it may do in digital

healthcare—Amazon has yet to respond to an interview request from
Internet Health Management. But Amazon is already in healthcare in a big
way, and analysts that watch Amazon predict the company’s next move into
healthcare will involve its Amazon Web Services cloud computing unit and
its Amazon Business business-to-business marketplace.
“From an e-commerce perspective, I think it’s more likely that Amazon

would partner with another merchant to offer prescription services because
it’s a highly regulated industry with a lot of specialization required,” says
analyst Colin Sebastian of investment firm Robert W. Baird & Co. “I think
the company is more focused on product categories such as grocery, home
and apparel, but I suspect as they do more B2B commerce, you will also see
Amazon offer increasing selection in healthcare products for businesses.”
Amazon’s biggest move into healthcare thus far has been through Amazon
Web Services, its highly successful business unit that offers other companies
and government agencies data storage and computing capacity. Since 2014
Amazon Web Services has provided cloud computing and network support
services to Healthcare.gov, the health insurance e-commerce network
operated by the Centers for Medicare and Medicaid Services, a division of the
U.S. Department of Health and Human Services. Under a multiyear contract
Amazon Web Services has with the Centers for Medicare and Medicaid
Services, Amazon has built several e-commerce programs that have enabled
millions of consumers to comparison shop and purchase health insurance on
Healthcare.gov. Those tools include building an identity management system,
28
MANAGEMENT
Portion of Amazon’s total revenue that

comes from Amazon Web Services.
9% AWS provides services for healthcare sites such as:
Healthcare.gov Intermountain Healthcare
Cleveland Clinic Oscar Healthcare
a feature for comparing insurance plans, and a tool to determine eligibility for
specific plans based on a consumer’s income and other variables.
Amazon Web Services, which generated revenue of $12.21 billion in 2016,

or 9% of Amazon’s total revenue of $135.98 billion, has nearly three dozen
publicly named big healthcare clients. They include big health systems such
as Cleveland Clinic and Intermountain Healthcare, and health insurers
such as Oscar Healthcare. For the Cleveland Clinic, Amazon Web Services
helped to develop the Healthy Brains Initiative, which gives patients and
neurologists a way to enter and analyze information about conditions and
activities that affect brain health. For Intermountain, Amazon Web Services
worked with oncologists across the U.S. to deliver precision medicine
to cancer patients, while Oscar uses AWS to run its insurance platform,
customer databases, and analytics program.
Amazon Web Services is teaching the parent company how to sell to

healthcare institutions, says Dan Housman, a director with Deloitte in
Boston and chief technology officer at ConvergeHEALTH by Deloitte, which
applies new technologies such as mobile, geospatial, wearable/sensors,
cognitive computing and predictive modeling applications to healthcare.
“Historically the enterprise or back-end side of the business has not

been Amazon’s thing, since they historically come at a market from the
consumer side,” Housman says. “What Amazon Web Services is helping
Amazon to develop is selling to healthcare from the ‘inside out,’ or learning
how to sell to a big healthcare organization with a big infrastructure
for information technology.”
Amazon doesn’t break out any public healthcare metrics. But analysts
that cover Amazon say there are multiple signs that Amazon has a bigger
29
MANAGEMENT
appetite for more healthcare business. One indicator is the “help wanted”
sign: Amazon is looking to hire a wide array of employees with healthcare
expertise—or skills that can be leveraged for the healthcare market.
Amazon.com currently has 259 available openings for various healthcare jobs.
Those jobs include positions for engineers and programmers with skills in
healthcare cloud computing, network systems, network security and artificial
intelligence, among others. There also are job openings for marketing and
sales specialists that can sell marketplace services to business-to-business
healthcare supply chain and procurement executives.
Amazon also is a factor in healthcare by virtue of the many health-related

products it sells on Amazon.com. A search on the term “healthcare”
returns about 326,000 results across about 30 product categories. Amazon
also has the ability to introduce customers, including such healthcare
providers as doctors, to its new communication tools, such as Alexa and
Amazon Echo. Alexa, Amazon’s virtual personal assistant technology that
responds to voice commands, has been around for about two years and is
getting smarter and more sophisticated in responding to health-related
requests, says Ashraf Shehata, a partner in the Global Healthcare Center of
Excellence at KPMG US.
For example, hospitals including Massachusetts General Hospital and

Boston Children’s Hospital are experimenting with ways to use Alexa to help
surgeons in the operating room with complying with safety checklist before
a procedure, or for developing Alexa apps that will provide instructions
patients can use at home.
In March healthcare content provider WebMD and Amazon announced a

technology and marketing program that enables users of Amazon Echo, Echo
Dot and Amazon Fire TV to gain access to WebMD’s library of healthcare
Healthcare jobs available

at Amazon.com. Positions
include engineers and
programmers with
skills in healthcare
cloud computing,
network systems,
network security and
artificial intelligence
30
MANAGEMENT
‘Google tried to enter this area and

Verizon tried to enter this area,
and it is not as easy as it looks.’
—JASON GOREVIC, CEO TELADOC INC.
content, ask questions about conditions , treatments, drugs and other topics
such as symptoms and get answers. Those answers also can be sent to a user
via an Alexa app.
Because Amazon already has such diversity and depth in healthcare, the
company could potentially play a much broader role in healthcare delivery,
Shehata says. “Amazon has a long history of disrupting consumer industries
and healthcare is becoming much more consumer-driven,” Shehata says.
But to move further into healthcare, Amazon will need to learn the ins and
out of a highly fragmented and heavily regulated industry where technology
adoption tends to be relatively slow, says Jason Gorevic, CEO Teladoc Inc.,
a large publicly trader provider of telehealth and other virtual medicine
delivery services.
“They (Amazon) are not the first large technology-oriented company to

potentially be interested or express interest in this space,” Gorevic, told
analysts on the company’s recent second quarter earnings call. “As you know,
Google tried to enter this area and Verizon tried to enter this area, and it is,
as I think we’ve demonstrated, not as easy as it looks.”
Amazon will go deeper into healthcare but it will take the online retailer
time and substantial resources to build a big base, he told analysts.
“I would expect them to get into areas where they have clear capabilities
to leverage their logistics and distribution capabilities, for example, with a
pharmaceutical distribution and/or medical supply distribution,” Gorevic
told analysts based on a transcript from SeekingAlpha.com. “The remote
delivery of care, building doctor networks, dealing with the 50-state
regulatory environment is pretty far afield from what they do, and even
if they do decide to get into this space, it’s going to be many years before
they have any real footprint.” 
31
PROTECT MEDICAL DATA, STAY
COMPLIANT, AND BUILD TRUST.
AKAMAI MAKES IT ALL EASIER.
Securing patient data and meeting regulatory compliance is a

complex job. You need to secure a hybrid network of applications and
protect infrastructure against DDoS attacks, while trying to maintain
high performance.
As the world’s largest and most trusted cloud delivery platform, Akamai
help you manage and secure sensitive data so you can maintain ISO and
SOC certifications, stay HIPAA compliant — and build trust with patients.
To learn more visit Akamai.com/healthcare

VENDORS
A larger dose
of e-commerce
Despite complex challenges, more e-commerce
and web services vendors want in on healthcare.
BY MARK BROHAN
For many e-commerce service companies, healthcare might well be

described as the holy grail of industry markets. After all, by sheer size and
diversity, the market for digital healthcare, which includes e-commerce, mobile,
database and customer service and customer relationship management among
others, is estimated to be about five times bigger than the market for business-
to-consumer e-commerce services.
Forrester Research Inc. estimates that retailers of all sizes spend about
$6.1 billion annually on e-commerce products and services. In comparison,
healthcare organizations—including hospitals, health insurance companies,
doctors, laboratories, pharmacies and drug makers—are expected to spend
$32 billion annually on digital healthcare technology and related services
by 2021, according to investment banker Goldman Sachs. They are spending
about $10 billion now, or about 10% of the estimated $100 billion healthcare
spends annually on information technology, says Goldman Sachs.
34
VENDORS | HEALTHCARE E-COMMERCE OPPORTUNITIES INTERNET HEALTH
MANAGEMENT
Spending
money
to make
money
Digital healthcare
investments $1.7 billion $2.7 billion
Source: Mercom Capital Q2 2016 Q2 2017
The digital healthcare market is certainly drawing interest and cash from
investors. Investors pumped $2.7 billion into digital healthcare in the second
quarter, up by nearly 60% from $1.7 billion in the second quarter of 2016, says
Mercom Capital, a healthcare technology research firm.
But it takes careful planning, plenty of resources, and patience to deal with
entrenched ways of doing business and lots of red tape to make a successful
run at the digital and healthcare e-commerce market, note e-commerce
analysts. And not every startup or established company gets everything right
the first time out.
“Getting into healthcare is not for the faint hearted,” says Gene Alvarez,
managing vice president and analyst at Gartner Inc. “It’s a big, fragmented
and heavily regulated industry that takes time, money and a really well
thought out strategy to pull off a new technology product or service.”
Many vendors that established a successful customer base in online retailing

have already expanded into the healthcare market and are looking to grow.
That includes such vendors as Akamai Technologies Inc., a developer of
content delivery networks, cloud computing and web security products
and services; website design and development firm Americaneagle.com;
e-commerce platform provider Magento; Salesforce.com Inc., a developer of
customer relationship management and related products and services , retail
management consulting firm BRP and e-mail services vendor MoreVisibility.
A recent survey of e-commerce vendors by Internet Retailer found 68% of

vendor respondents considered getting into the healthcare market a “very
important” or “important” priority. The survey, which garnered a detailed
response from 29 e-commerce technology product and services companies,
also found that 54% of e-commerce vendors have plans to begin selling their
products and services to healthcare organizations such as hospitals, doctor
groups and insurers within the next six months.
35
MANAGEMENT
‘Getting into healthcare is not for the faint hearted.

It’s a big, fragmented and heavily regulated industry that
takes time, money and a really well thought out strategy
to pull off a new technology product or service.’
—Gene Alvarez, managing vice president and analyst at Gartner Inc.
72% of e-commerce vendors also said the primary reason for getting into
healthcare is to develop a new revenue stream. Some of the biggest names
in consumer brand manufacturing, internet services and online retailing
are ramping up their healthcare businesses. For example Apple Inc. has
three software services, including CareKit, ResearchKit and HealthKit, for
the healthcare market aimed at making it quicker and easier for mobile
technology developers and consumers to collect and share healthcare
data such as steps and heart rate. HealthKit is designed to make it easy for
consumers to collect and then share health information with academic
hospitals. Meanwhile, Mount Sinai in New York uses ResearchKit to gather
and share medical research for clinical trials and CareKit builds mobile apps
that enable patients to manage their health and medical conditions and
share the data with physicians.
Amazon, Apple and Google like healthcare

Google and Amazon.com Inc., the largest online retailer, also are developing
more products and strategies aimed at healthcare. In August Google
acquired Senosis Health, a Seattle startup that develops apps for monitoring
a newborn for jaundice, lung function and blood hemoglobin by using
the smartphone’s camera and microphone. Amazon’s biggest move into
healthcare thus far has been through Amazon Web Services, its highly
successful business unit that offers other companies and government
agencies data storage and computing capacity. Since 2014 Amazon Web
Services has provided cloud computing and network support services to
Healthcare.gov, the health insurance e-commerce network operated by
the Centers for Medicare and Medicaid Services, a division of the U.S.
Department of Health and Human Services.
Amazon may also be planning a bigger move into healthcare. In a series of

stories, the latest of which ran in late July, CNBC reported that Amazon.com
has quietly assembled a research and development staff named 1492 and is
working on developing a slew of digital healthcare applications that may
include electronic health records designed for easy sharing and telemedicine
applications that digitally connect patients and doctors. In May, CNBC
36
MANAGEMENT
reported that Amazon also was developing possible plans to get into the
online pharmacy business, which would put the leading online retailer in
direct competition with the likes of Walgreen Co. and CVS Health Corp. or
startups such as Pillpack.com.
Amazon hasn’t publicly stated what it may do in digital healthcare. But

even a big company like Amazon must evaluate the risks and rewards of
potentially significant new revenue from healthcare e-commerce, says
Dan Housman, a director with Deloitte in Boston and chief technology
officer at ConvergeHEALTH by Deloitte, which applies new technologies such
as mobile, geospatial, wearable/sensors, cognitive computing and predictive
modeling applications to healthcare.
“There are very significant barriers to entry and they range from learning
to operate in a highly regulated industry, having to comply with patient
privacy laws and knowing which healthcare segment to sell to,” Housman
says. “It’s a very complex process to introduce a new technology or service
into healthcare.”
Putting skin in the game

54% of e-commerce vendors target hospitals and health systems as their
primary new business prospect in healthcare, followed by insurance
companies and physician groups at 21%, respectively, the Internet Retailer
survey found.
54% of respondents also said that learning the complicated and segmented
healthcare market was their top challenge. That outpaces the 38% who cited
the difficulty in dealing with red tape and government regulations. 38%
also named adapting their company’s e-commerce product or service for
healthcare as a challenge.
Difficult prognosis
Top challenges for healthcare e-commerce vendors
Complicated Red tape and Adapting

and segmented government company’s
healthcare market regulations product or service
54% 38% 38%

Source: Internet Retailer Survey 37
MANAGEMENT
‘The market was different but the

need was the same because
these healthcare companies
wanted and needed more than
just basic connectivity.’
—Ari Weil, strategic product and
marketing leader, Akamai
Akamai, a provider of content delivery network services to 338 Top 1000

retailers crossed into healthcare by signing its first customers about five
years ago among pharmaceutical and life sciences companies. “The market
was different but the need was the same because these healthcare companies
wanted and needed more than just basic connectivity,” says Ari Weil, Akamai
strategic product and marketing leader.
While Akamai, which generated total revenue of $2.34 billion in 2016, doesn’t
breakout healthcare revenue, Weil says healthcare is one of the company’s
largest emerging vertical markets. Akamai is developing a steady stream of
healthcare customers that include nine global pharmaceutical companies,
more than 20 medical device manufacturers and large hospitals such as
St. Jude Children’s Research Hospital. St. Jude’s uses Akamai to maintain its
domain name servers, for network storage space to store files and documents,
and for firewall protection services for its website that attracts 12.1 million
visitors per year including 7.6 million mobile visitors.
Five years of business development in healthcare has taught Akamai how to

build market share by identifying and helping healthcare companies solve
specific problems, Weil says. For example, it helped Practice Fusion, a cloud-
based electronic health records vendor based in San Francisco, improve its
network traffic management for an electronic records network used by more
than 30,000 medical practices and 5 million patients per month.
Physicians and medical professionals use the electronic health records

system for patient charting, writing electronic prescriptions, ordering
laboratory tests, appointment management and making referrals. The
system’s lab, imaging and billing modules integrate with a network of
third-party pharmacies, laboratories, medical imaging centers and medical
billing services. Patients also access their personal health records, including
prescriptions, diagnoses and test results, and can search for a physician
by location and specialty as well as request an appointment online via the
Practice Fusion system.
38
MANAGEMENT
$639 million
Source: Accenture
Spending on scheduling and conducting digital
doctor visits by U.S. consumers in 2015
But Practice Fusion needed to better handle traffic surges, particularly in

the early to late morning when doctors and nurses did the bulk of their
electronic records work. Practice Fusion hired Akamai because the company
had a good reputation in other industries and helped to install software and
services that expedited network performance and better supported traffic
from mobile devices, says John Hluboky, Practice Fusion senior vice president
of technical operations. “Akamai had an industry reputation and previous
experience,” he says.
The consumer is king

More consumers are looking to take more control of their healthcare
decisions, which is opening up an opportunity for mobile health companies
to provide quick and easy access to healthcare services, according to a new
report by consulting and research firm Accenture.
Accenture calls such services on-demand health. These services provide

consumers with mobile health platforms and apps that allow them to use
their web-enabled smartphone or tablet to schedule and conduct doctor
visits or manage their health and wellness outside of a hospital or provider
office. In 2015, U.S. consumers spent $12.5 billion on all types of on-demand
services. Most of that spending, $7.8 billion, went to transportation services
like Uber that let consumers request rides through mobile apps and bill the
cost of the ride to a credit card.
But healthcare is among the fastest-growing types of on-demand services,

Accenture says. In 2015, U.S. consumers spent an estimated $639 million
on scheduling and conducting digital doctor visits, Accenture says. This
year spending on digital provider, or telehealth sessions that take place
on a mobile device could exceed $1 billion, the report says. “Accelerating
forces will continue to transform the industry, speeding the transition from
39
MANAGEMENT
healthcare to life care,” says Kaveh Safavdi, Accenture senior managing

director for global health. “There’s an enormous opportunity for companies
to offer fast, convenient and customized user experiences that ultimately
improve the patient’s experience and outcome.”
Many e-commerce vendors have the established software and service

products healthcare organizations need to offer patients and consumers
more self-service web tools to manage their health, wellness and health
business online, says Ashraf Shehata, a partner in the Global Healthcare
Center of Excellence at KPMG US.
But selling e-commerce technology and services in healthcare is far different

than selling to retailers and financial services companies, he says. For instance,
many healthcare chief information executives are spending money and staff
time maintaining older and on or poorly integrated legacy systems. “They are
still focused on maintaining what’s inside the four walls,” Shehata says.
Many healthcare organizations also are used to information technology

project implementations and timelines based on a five- to seven-year circle
and may not be used to fast track web technology projects that often use
a two- to four-year planning and implementation cycle. “Consumers want
and expect more web access across healthcare but healthcare is way behind
compared to other industries and there is resistance to change,” Shehata says.
One way e-commerce vendors can expand their base in healthcare is

to leverage their products in integrated and flexible ways that can help
healthcare organizations and hospitals automate multiple tasks at once.
For instance, customer relationship platform provider Salesforce is betting

a bevy of new tools for its Health Cloud platform, and an expanding list
of application development partners, will equip healthcare providers
with the technology needed to put the patient relationship at the
center of care delivery.
‘Consumers want and expect more web

access across healthcare but healthcare
is way behind compared to other industries
and there is resistance to change.’
—Ashraf Shehata, partner in the Global Healthcare
Center of Excellence at KPMG US
40
MANAGEMENT
A newcomer to digital healthcare

technology—Salesforce rolled out Health
Cloud in 2016—Salesforce made the
enhancements in response to the many
challenges facing providers in the current
healthcare landscape, such as identifying their
most at-risk patients and engaging with them
in more personalized ways, the company says.
Pricing for Salesforce Health Cloud starts

at $150 per user, per month, the company
says. Among the early customers using
Health Cloud is Easter Seals Bay Area
in San Francisco.
The enhancements are intended to help

providers improve practice management
and develop better one-to-one patient
relationships that pave the way to a higher
quality of care.
“In healthcare, the potential of CRM remains

untapped,” says Joshua Newman, chief medical
officer at Salesforce. “While individuals have
always cared about patients, the organization
and its systems have neglected the patient Doctors can identify their most at-risk
experience. This has bred disconnected patients and engage with them in more
care and disjointed relationships, and made personalized ways with the Salesforce
Health Cloud: Risk Stratification app.
effective collaboration difficult.”
By adding customer relationship management

tools for Health Cloud, physicians can understand the person behind
the patient, while achieving meaningful clinical and administrative
outcomes, Newman says.
With insurance carriers moving toward outcome-based reimbursements, the

need for providers to view risk across their patient populations to proactively
deliver preventive care before a patient lands in the emergency room or
hospital is growing exponentially, Newman says.
Health Cloud’s risk stratification app uses analytics to calculate risk scores
for each patient based on the Centers for Medicare and Medicaid Services
hierarchical condition category mode, the company says. “Providers can view
41
MANAGEMENT
‘In retail if a delivery is missed it isn’t life or death.

In healthcare it is life and death. If a patient is depending on a
vendor system to deliver oxygen to a patient who needs it,
that system always has to work or someone’s in trouble.’
—Gene Alvarez, managing vice president and analyst at Gartner Inc.
risk across their patient population in customizable dashboards to provide

targeted preventative care to the patients who need it the most, while
gaining new insights into the populations they serve,” Newman says.
The ability to gauge patient risk will make it easier for providers to segment
patient populations and target them for outreach. A provider using
Health Cloud’s segmentation feature, for example, can identify patients
65 or older with diabetes, or patients who have been discharged from knee
surgery in the last 30 days, and send follow-up appointment reminders,
surveys or educational materials to those patient populations.
While improving the quality of care and patient relationships are priorities
for providers, medical practices, like any business, still need to attract
new customers in order to grow. Health Cloud’s lead-to-patient app can be
integrated with other Salesforce applications, as well as electronic health
records, data warehouse and patient registration systems, or call centers.
Once patient data is entered in Health Cloud, providers can use it to create
unique care plans and map patient relationships, Newman says.
“Hospitals are learning to treat their patients as customers and healthcare

is a referral business,” Newman says. “That’s how CRM technology can be
leveraged for additional uses.”
Despite the healthcare market’s complexities, more e-commerce technology

and services providers will look to the space as a potential big new market.
For example, 48% of respondents to the Internet Retailer survey said they
view healthcare as a market comparable to retail for their web or e-commerce
product or service.
But in making the move to healthcare, consistency is the top goal before
many others for most e-commerce vendors, Alvarez says. “In retail if a delivery
is missed it isn’t life or death,” he says. “In healthcare it is life and death. If a
patient is depending on a vendor system to deliver oxygen to a patient who
needs it, that system always has to work or someone’s in trouble.” 
42
SURVEY
SURVEY | HEALTHCARE E-COMMERCE OPPORTUNITIES INTERNET HEALTH
MANAGEMENT
Identifying opportunity in
healthcare e-commerce
Are you currently selling your e-commerce product or service
to the healthcare industry?
42.9%
es
Y
No
5 7. 1 %
How long have you been Do you plan to sell your
selling to the healthcare e-commerce product or service
industry? to the healthcare industry?
s 81.3%
Ye
1 8N o
.8 %
When do you expect to begin
selling to the healthcare market?
0% 25.0% 25.0% 50.0% 53.8% 23.1% 23.1%

Less than 2-3 3-5 More than Less than 6 months 1 to 2
2 years years years 5 years 6 months to 1 year years
44
MANAGEMENT
How important a strategic What are your primary reasons

priority is selling your for selling or planning to sell
e-commerce product or your e-commerce product or
service in healthcare? service in healthcare?
Multiple responses allowed
Somewhat Very
important important Opportunity for Healthcare is a
significant new market comparable to
revenue stream retail for our web or
32%
32%
e-commerce product
72% or service
48%
Healthcare
We have expertise organizations are
selling to the approaching us to use
healthcare market our technology product
or service
Important 36% 36% 32%
Who are you targeting as your top customers in healthcare?

54.2%
41.7%
33.3% 33.3%
25.0%
20.8% 20.8%
12.5%
4.2%
Hospitals, Medical Pharma- Medical Biotech- Insurance Physician Laboratories Employers
health device man- ceutical equip- nology and companies group
systems ufacturers companies ment and life science practices
or health and supplies companies
networks pharmacies retailers and
wholesalers

45
MANAGEMENT
What kind of executives are Will you increase your

you targeting? marketing and advertising
Multiple responses allowed budget to target more
healthcare customers?
Chief Marketing Officer/SVP/
EVP/Director of marketing 56.5%
Yes
CEO/
President 52.2% 50%
Chief Operations Officer/Chief Financial

Officer/Other operations title 43.5% No
50%
Chief Information Officer/
Information technology executive 30.4%
What are the biggest challenges you face selling to the

healthcare market?
Uncertainty
over healthcare
Red tape and reform
Learning a complicated and government regulations Industry 8.3%
segmented new market 37.5% consolidation
resulting in fewer
54.2% companies
12.5%
Dealing with
longer project
timelines and
Finding employees deadlines
with healthcare
Adopting our experience 12.5%
e-commerce product 20.8% Finding
Source: Internet Health
Management July 2017 survey.
or service for healthcare expansion
funding
Respondents included detailed
results from 29 e-commerce
37.5% 4.2%
technology product and
services companies. For certain
questions, respondents were
allowed to pick multiple answers.

46
INTERNET HEALTH
MANAGEMENT
Copyright
Copyright 2017, Vertical Web Media LLC. All rights reserved.
All Content of the Internet Health Management 2017
Healthcare E-Commerce Opportunities Report, whether in print
or digital formats, and all content of the Top500Guide.com
database version of this publication (collectively, the
“Content”), is owned by Vertical Web Media and protected by
U.S. Copyright and by applicable intellectual property laws
worldwide. The Content is intended solely for the personal use
of Purchasers or Authorized Recipients of said Content, which
use is limited to viewing, analyzing and creating reports for
internal noncommercial use only.
Purchasers and Authorized Recipients of the Content may

share such usage with others within his/ her company, but may
not copy, download, reproduce, republish, sell, make available,
distribute, display, transmit, share, or otherwise distribute any
part of the Content to any other persons or entities without
the written permission of Vertical Web Media. Purchasers and
Authorized Recipients of the Content, in any and all of its
formats, may not modify, create derivative works of, reverse
compile, disassemble or reverse engineer, republish, sell, license,
lease, sublicense, assign, incorporate into published material
or any information retrieval system, or otherwise transfer any
of the Content without written permission of Vertical Web
Media. The trademarks and service marks “Vertical Web Media”,
“Internet Retailer®”, and “Top 500 Guide®”, and any logos,
designs, slogans or other source-identifying devices, including
combinations thereof (excluding any third party owned
trademarks or service marks) (“VWM Trademarks”) displayed
on print, digital and Top500Guide.com database research
products are owned by Vertical Web Media. Internet Health
Management 2017 Healthcare E-Commerce Opportunities
Report print, digital and database research product is designed
to provide accurate and authoritative information in regard
to the subject matter covered. This research products is sold
with the understanding that the publisher is not engaged
in rendering financial, legal, accounting, tax or other
professional service. Vertical Web Media makes no warranty
as to the reliability, accuracy, timeliness, usefulness, adequacy,
completeness or suitability of the Internet Health Management
2017 Healthcare E-Commerce Opportunities Report.
47

Ihm Ecommerce

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Ihm Ecommerce

Uploaded by

Copyright:

Available Formats

HEALTHCARE E-COMMERCE

Risk and reward in

Consumers as patients also are spending more on medical supplies and

That healthcare product, services and prescription spending is opening new

To succeed a retailer or vendor needs to know Mark Brohan

Overall healthcare costs are rising, and the healthcare industry is

To hit those numbers, Orthoticshop.com is redesigning its website and

Consumers are buying more medical products.

$48.5 billion $59.0 billion $324.6 billion

Data on how much consumers are spending online specifically on medical,

In a growing market, more web merchants are targeting certain healthcare

“The healthcare industry is digitizing rapidly and the customer is getting

Orthoticshop.com will increase

‘There’s a lot more healthcare happening

Buying anything orthotic—especially shoes—is a very personalized purchase

Product king and subject matter expert

Orthoticshop in February launched a redesigned website that it worked

When Orthoticshop.com launched a dozen years ago customers with aching

FSAStore.com has achieved an

80% compound annual growth rate

Orthoticshop saw a niche for serving a certain type of consumer looking

The 7-year-old FSAStore.com has grown at a compound annual growth rate

Under the arrangements, flexible spending account managers incorporate

Creating a healthy flow

To learn more visit Akamai.com/healthcare

Big box pharmacies specialize

CVS is committed to digital and mobile healthcare, says Brian Tilzer,

‘Mobile devices have

CVS, which operates about 9,700 stores, in

In select stores CVS says its “new, health-

Broader digital healthcare business

Walgreens’ digital healthcare program already includes many of the

The next round of digital offerings will focus on more specialized

For example, Walgreens in September 2016 added a program that enables

With DermatologistOnCall, users can schedule an appointment and consult

Consumers who would be

submitting a preferred time to see a provider. Patients who create an online

The digital service can be accessed through Walgreens.com and the

In addition to DermatologistOnCall, Walgreens also features

Walgreens aims to offer patients a single source for digital healthcare

Consumers want digital health tools

important as traditional in-person services, allowing the modern patient to

In particular, more niche web merchants are launching to provide more

While there are no hard numbers on how many

PillPack manages multiple prescription medications $322.7

In addition to pre-sorting medications, PillPack coordinates refills and

PillPack is also adding more insurers to its business base. In February,

and commercial plan members, added PillPack to its national network of

In New York, another digital pharmacy startup—CapsuleCares.com—is

More than two-thirds of all shoppers at Orthonicshop.com are repeat

20% of Walgreen app

Older consumers are often viewed as less appealing

But retail pharmacy chain and healthcare delivery services company

Older Pharmacy industry

consumers, among consumers

new tricks 10%

Walgreens app users

“One of the things we repeatedly hear is that customers really value

“We created Pharmacy Chat, which enables customers to have access to

CVS Health and

CVS Health and Cleveland Clinic have expanded their

The new arrangement expands a clinical collaboration between Cleveland

Louis J. Capponi, chief medical information officer at Cleveland Clinic,