Business Modelling in Healthcare: Benefits, Challenges and Application

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Business models (BMs) enable organisations to create, deliver, and capture value (Limburg et al. 2011, p.2). They are used mainly as narratives to explain new ideas. Through the simulations, health facilities can debate, plan and execute the implementation of different programs, services and systems. Changing healthcare needs, such as aging populations and higher health care costs have necessitated a search for financially viable solutions (Kimble 2015, p.18). Business modelling provides the answer since it allows firms in the healthcare industry to apply techniques and technologies to meet the requirements of customers. The following report examines the role of business modelling in healthcare reviewing its benefits, challenges and application in healthcare.

Benefits of Business Modelling in Healthcare

The incorporation of the simulations in healthcare will help to formulate the critical success factors that influence the sustainability and effectiveness of health technologies. The Internet has undergone significant evolution from the time it was viewed as an ‘Internet of Computers' to an ‘Internet of Things' where decision making through data analysis has become easier. Billions of devices that connect to the Internet have allowed healthcare organisations to gather and analyse data to make informed choices (Gomes and Moqaddemerad 2016, p61). Despite the enormous belief that the ‘Internet of Things’ will have a key influence on innovation in healthcare, little is known about the business feasibility and economic gains of the tools. Business modelling provides a way to comprehend such insights. It permits the application of analytical concepts to gain a longer view of organisational performance. As a result, business models allow firms in the industry to determine the outcomes of certain decisions to choose the most appropriate strategy.

Business modelling also allows companies to introduce research activities before the actual technical designs that focus on the environment of eHealth technologies and gives value drives that will support the ground choices of what to create. The CEOs of health facilities are concerned about the use of finances, and the healthcare sector provides significant competition for health facilities (Agwunobi and Osborne 2016, p.141). Based on the need to ensure proper utilisation of economic resources, hospitals are giving more attention to tools that can better decision making. Models enable hospitals to undertake research of the proposed designs of technologies and other health services to determine the effect on finances and competitive ability. They offer a way for CEOs to understand the implications of specific actions providing a basis for taking certain actions. As a result, health facilities can avoid wastage and continue building their competitiveness ensuring the sustainability of their businesses.

Models are also crucial for the success of eHealth technologies. Through business modelling, hospitals are able to make the development of such tools to become stakeholder focused and value-driven. A business model has a vital part in the implementation of eHealth technologies. It serves as a basis for discussing value drivers with stakeholders and acts as a basis for further operationalisation to give a more concrete case for a chosen method (Brady and Saranga 2013, p.342). Therefore, the simulations permit hospitals to involve stakeholders and identify the gains they will get from particular technologies and tools to enhance their outcomes. They give hospitals a way to check the socio-technical factors that people consider necessary to ensure the maximization of the possibility that stakeholders will adopt eHealth technologies.

Challenges of Business Modelling in Healthcare

Despite the enormous benefits that arise from the adoption of business modelling in healthcare, it faces several problems that affect adoption. One of the issues facing the use of business modelling is the high level of concentration given to patient-doctor relationships rather than patient empowerment that would facilitate their greater involvement in treatment. Among the components of business models is the need to develop ways for stakeholders to work together to address the recurring tasks in a consistent manner (Hwang and Christensen 2007, p.1331). However, the existing simulations focus on building relationships between patients and physicians rather than giving patients the tools to enable them to participate in their care. As a result, the issue provides a problem for business modelling in healthcare.

Another challenge facing the use of models in healthcare is a lack of competitiveness. Simulations do not consider the competition structures that face an organisation (Ching and Fauvel 2013, p.21). The outcome is that the models developed by health facilities fail to recognise the possible synergy effects that may arise from adopting technologies. For instance, health facilities may determine that they will achieve certain results from adopting eHealth technologies. However, the models exclude the effect on competition since access to such information is limited. The outcome is that the synergies that hospitals may gain from employing IT tools are lost through improper consideration of the results of adoption. Therefore, the ability of models to establish a network of entities that drive value generation and appropriation is lost.

Increased spending on research and development has led to the need to establish intricate infrastructure relationships among different kinds of interested parties (Mrak, Vukobrat and Sokolic 2017, p.50). The variations in technological development, payback periods, and changes in the financial burdens among stakeholders have led to a demand for a deeper understanding of the factors that drive the creation of various business models. The outcome has been a predominantly commercial view that has affected the adoption of business modelling, particularly in the public sector. Business modelling requires financial resources that the public sector is reluctant to invest due to restrictive measures on the use of finances. Consequently, the simulations have suffered from low funding in the public sector.

Using Business Modelling in Healthcare

BMs have an essential role in the healthcare industry. In the aged care sector, regulations have led to limited innovation to meet the needs of customers (Nusem, Wrigley and Matthews 2017, p.387). BMs provide a means to rejuvenate the creativity required to meet the requirements of users. They allow organisations to examine the outcomes of various actions without heavy investment in the tools to understand the implications for business. The reduced cost is particularly important for the public sector. In the United Kingdom, the provision of electronic assisted living goods and services happens through the National Health Service (NHS) and the social services of local authorities (Ward et al. 2017, p.1051). However, the UK is experiencing reduced public funding in such areas. BMs offer an inexpensive way to simulate different programs and outcomes to determine their effect on health services. They reduce the use of resources before understanding the effect of various products and services enabling the optimisation of the available funding.


BMs are gaining increasing relevance in the healthcare industry. They help the creation of critical success factors that make products and services more effective, and they promote a stakeholder focused approach to conducting business in the industry. However, BMs face several challenges, such as the concentration on relationships instead of patient empowerment. They also suffer from a need for spending that limits application in the public sector. Nevertheless, business modelling provides a way to inspire innovation in areas that face creativity problems, such as the aged care industry where spending has decreased. As a result, business modelling has an essential role in the healthcare industry that should motivate increased usage.


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Ward, G. Fielden, S., Muir, H., Holliday, N. and Urwins, G. (2017). Developing the assistive technology consumer market for people aged 50-70. Ageing & Society, 37: 1050-1067.

January 19, 2024

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