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New PHR Business Model from Our More Socialist Neighbors up North

by John Moore | January 21, 2008

Nova Scotia now has its own Personal Health Record platform, HealthConnex, which is looking for private investment of the tune of $1.5-3 million, Canadian. But what is unique is that they are not seeking venture or angel capital but are selling shares directly to the citizens of Nova Scotia.

Here’s the deal.

If you are a citizen of Nova Scotia and over the age of 19, you can buy a share in HealthConnex’s parent, Connecting People for Health Co-operative Inc. (CPHCi), a for profit entity, for $5,000. with a maximum investment limit of ten shares ($50,000.). Since CPHCI is using a Credit Union/Co-operative business model, investors get a RRSP (similar to our 401K) credit and residents of Nova Scotia receive a special 30% equity tax credit on top of that for their investment. Sounds like a pretty sweet deal, but there is a catch. Besides th risk pertaining long-term solvency of CPHCi, your investment will be locked-up for a minimum term of 5 years. What is also interesting about the model CPHCi is using is, as with any co-operative, all profits and dividends over that 5 year period are reinvested in the company to further develop the HealthConnex platform and expand its reach beyond Nova Scotia, first to other North Atlantic provinces and later, across Canada.  After5 years, the company will begin paying dividends passed on profitability.

In a communication exchange with CPHCi I also learned that they received initial funding from the Nova Scotia Cooperative Council (co-ops & credit unions) to the sum of 4.1m CDN,  a direct investment in return for equity in the company.  The co-ops and credit unions that are associated with this Council will also serve as a direct sales channel for CPHCi.

The HealthConnex revenue model is a standard subscription model with subscribers paying a monthly fee of $9.95/month. The platform itself will offer, initially, all the various features one would associate with a PHR such as medical history, medications tracking, allergies and a repository to store medical records from one’s physician. Using rules-based capabilities, the site will be able to provide the consumer with specific suggestions to help them better managed their health and deliver disease-specific content. These features are becoming quite common in today’s Web-based PHRs.

Where they have taken a slightly different tack is in providing online forums (very few PHRs today offer such) and discussions led by specialists. The developers of HealthConnex are also purposely not attempting to address all consumers in Nova Scotia, though the platform can certainly support such, but will focus the majority of their efforts on developing features targeted for chronic care sub-groups e.g., diabetes, asthma and hyperthyrodism. On their product road-map, HealthConnex also intends to offer users the ability to refill existing, authorized prescriptions through the website and be able to directly communicate online with their physician(s).


While I like the co-operative concept, it would see little success here in the US for our tax code does not offer a similar generous tax credit for such investments in healthcare by the consumer. That being said, the HealthConnex model, as it pertains to Credit Unions, is something that might work, especially for large organizations, such as Unions. For example, the recent agreements that the Untied Auto Workers (UAW) signed with GM, Ford and Chrysler may find this model a good fit as they look to provide their members with long-term healthcare coverage.

As for the potential success of HealthConnex in Nova Scotia and more broadly, Canada, that remains to be seen. They have just announced their formation and overall plans, now the hard work begins. Critical to their success will be adoption by physicians and secondarily, consumers. HealthConnex will need to assure those physicians that they do not wish to be the middleman between a physician and their patient(s), but a partner in delivering the best care possible.

Another area where HealthConnex appears to be falling short is in enlisting the support of employers. Granted, with a socialized healthcare system the employer push is not as significant in Canada as it is here in the States, but all employers , ncluding those in Canada, have a stake in the health of their employees and could become a strong advocate for HealthConnex. In addition, employers may see sufficient value in the HealthConnex platform to subsidize the subscription for their employees, promote it internally and drive further adoption.

One response to “New PHR Business Model from Our More Socialist Neighbors up North”

  1. Canada has a strong history of co-operative development and it is normal for credit unions, which give back millions and millions to their communities to support such projects. Did you know the most productive area in Europe with the least social problems and the lowest unemployment is Bologna Italy and strangely enough it also has the most co-operatives. Perhaps the US should be looking for a more co-operative model because right now the weakness of the model it is using is imploding.

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