Telstra Health was once described as an experiment gone wrong, but its vision of connected companies and services seems more in reach now.
Elizabeth Koff comes across nothing like the managing director of a large, fast growing and increasingly successful Australian health tech company.
Telstra Health has probably now reached unicorn status – a valuation of over $1 billion – and that operates under the umbrella of one of our largest publicly listed corporates, Telstra.
Ms Koff doesn’t speak in corporatese. There is no calculated banter on how good things are with the company, what a great strategy and culture they have, how good the team is – there is a little bit of that – and how well they are executing everything.
In fact, halfway through the time allocated for our chat she stops herself for a second, looks guiltily to the head of corporate affairs sitting next to her, and declares: “I really should say something about Telstra Health at some point here, shouldn’t I?.
What she talks a lot about is our healthcare system and ways it can, and ways it won’t, be improved.
Ms Koff was NSW Secretary of Health for six years before her appointment as Telstra Health’s managing director. That heritage of running the largest, most complex and potentially most politically difficult health precinct in the southern hemisphere might explain why she is like she is – politely obsessed with breaking down silos in healthcare and realising some sort of future which is integrated enough and connected enough for the system to significantly improve a patient’s experience while not sending everyone broke in the process.
It’s almost certainly not a coincidence that this obsession with system improvement mirrors the internal strategic problem that Telstra Health has had since its inception: how do you integrate your various component part companies – the Telstra Health portfolio mirrors the healthcare system by having companies serving hospitals, aged care, community care, primary care and more, all of which remain reasonably disconnected – and realise the potentially huge latent synergies that seem to exist between these component parts?
There was a point not that long ago when industry analysts were describing Telstra Health as an experiment gone wrong, which newly minted Telstra CEO of the time, Andy Penn, was looking at breaking up and selling off as quickly as he could.
The story goes that Penn ran into Mary Foley (another past NSW Health Secretary and board member of Telstra Health at the time) at a company cocktail do one night and after a long chat realised that the parent company had been looking at the sector the wrong way.
Health, he recognised, was nothing like his other transforming digital markets (banking, retail, energy et al.). It needed a very different approach to management and development. It needed someone with deep and longitudinal expertise in the sector to help sort out what is an inordinately complex, highly risk averse and regulated, and politically very difficult market.
Mary Foley was an accomplished academic in the area of health policy and funding but as another past secretary of Health NSW she’d gotten her hands dirty at the coalface, including managing the politicians.
Mr Penn took the then unusual step of appointing her as CEO to try to stabilise and reboot the company.
Ms Foley, like Ms Koff, understood the system as a whole and with that knowledge went about positioning the various pieces of the portfolio into something more cohesive that fitted Shane Solomon’s original vision of a connected health portfolio serving all the disparate parts of the system with contributing synergies.
Ms Foley also made some decisions on a couple of new acquisitions that had the potential to start gluing the pieces together better.
The iconic primary care patient management platform, Medical Director, was the biggest and possibly most important of those acquisition decisions. It cost $340 million for which Telstra copped a fair bit of criticism for overpaying at the time, but talking to Ms Koff about strategy as it unfolds today in the group, it becomes clear that Ms Foley and her management team were always playing a long game.
Ms Koff hints at a part of that game by suggesting that “platforms” are a cornerstone of the group’s strategy thinking.
“We’re at that strategic integration point where you can get clarity on how you connect systems from pharmacy to GP, to the hospital and to the aged care facility,” she says.
Ms Koff thinks about 20% of growth in the company will come from expanding its platform plays like Medical Director and Fred IT, and sees particular upside in a play like Medical Director connecting to the relatively green field of the aged care digital sector in the coming years. She has combined products and services under aged care, community care and primary care into one division with one leader.
She also puts to bed the often floated question of whether Telstra has just been stabilising and setting up Telstra Health to sell it one day.
She says Telstra sees healthcare as a core vertical that it needs to build and understand and remain deeply engaged with over time to help realise a greater company strategy of evolving into something much more enduring than a telco.
So, she suggests, Telstra Health is going to stay with Telstra – at least for the foreseeable future.
One reason that decision might be easier to make for current CEO Vicki Brady, is that Telstra Health has probably just passed unicorn status, with revenues exceeding $300 million per annum and a valuation over $1 billion, and is, according to Ms Koff, growing fast still.
There was a day when, in annual analyst briefings, Telstra Health was at best an afterthought. Now it is the subject of its own series of analysts’ questions. Analysts don’t ask unless they see value for money, so in a manner Telstra Health is now on that map as far as its parent is concerned.
Ms Koff describes the evolution of Telstra Health as ideation and compilation under Mr Solomon, consolidation under Ms Foley, and now, under her, integration of the component parts moving forward to realise the synergies that have long underpinned the idea of the company.
Ms Koff’s timing might be spot on.
Our relatively new federal Labor government has hit the ground running with a determination to sort out a digital health infrastructure which has clearly become mired over the years in some misdirected and poorly executed ideas.
“Sharing by default”, the mantra of the digital health team within DoHAC led by Daniel McCabe, is an approach that has achieved spectacular results in the messy US healthcare system.
Fast healthcare interoperability resources (FHIR) and web sharing is underpinning a lot of how Telstra Health and DoHAC are connecting their siloed components and Telstra Health is committed to the government’s recent FHIR Accelerator initiative. Why wouldn’t they be?
Ms Koff points to services like eRx, which is underpinning a nationwide e-prescription platform, as where things are heading.
She is especially enthused by the potential of web data-sharing technology to enable the connection of platforms between key silos.
Probably the most important she points to is connecting hospitals to primary care (not just GPs but all points of care in the community) and primary care to aged care.
Medical Director and and its competitor Best Practice are likely to play a big role in that, she suggests.
But she concedes that there are still a lot of obstacles and complexity to overcome.
While technology stands as a key lever to bring productivity to a system that is still highly siloed and can’t hope to solve its workforce problems with simply more workforce, it has to be aligned with appropriate and considered reform in policy which, she points out, must include funding reform no matter how iterative.
One area where Ms Koff thinks government is still missing the point is organisation and connection of care in the community sector: care outside hospitals is still fragmented and in need of a lot better framing and funding by government.
In particular, she says, general practice is significantly underfunded to realise the potential of modern connected technologies.
“We need a supportive layer to integrate and provide a higher level of data management in for general practice,” she says.
“GPs haven’t even got time to put their head above the parapet.”
She has, of course, a commercial interest in pushing this point, as Telstra owns one of the two big GP patient management platforms in Medical Director, so a lot more money for GPs to upgrade their tech will flow to Telstra Health nicely.
But she is also making a perfectly valid and evidenced-based point.
Hospitals are funded, organised and largely well run – if you put aside politician’s regular obsession with building shiny new bricks and mortar monoliths to win upcoming elections.
The community sector is all over the place and in need of much better planning by government and funding if any realistic vision of outcomes or value-based care is to be realised like everyone says they want, says Ms Koff.
“Care in the community would benefit from a of a rethink of how care and health care in the community works, because health care in the community is not homogeneous service delivery,” she says.
“There’s still a lot of care that that is not quantified, which I think would be useful to map because it’s not a homogeneous group of services that [deliver] care in the community.”
In the short term Ms Koff sees opportunity in connecting primary care to aged care and for that the group has some good component parts – Medical Director on the GP end and clinical and medication management solutions in aged care.
Overall, Telstra Health looks and feels like a very different company to six years ago when it was being described by analysts as a basket case that a new parent company CEO probably had to break up and dispose of as quickly as possible.
Back then the vision of connected companies and services realising synergies across a siloed system felt more like a pipe dream.
But today, maybe, that original vision of Shane Solomon is realisable in one form or another.
