Many markets outside U.S. posting strong growth
The healthcare information technology market in the U.S. is booming, but it's much the same story elsewhere.
According to a December report from IDC Health Insights, Framingham, Mass., total global healthcare IT spending is projected to top $97 billion in 2015, up 27% from 2011. The estimates include spending on hardware, software and services for providers and payers. In comparison, U.S. purchases will surpass $54 billion in 2015, up 29%.
The health IT buying binge in the U.S. should come as no surprise. In 2009, Congress passed the American Recovery and Reinvestment Act with about $29 billion for health IT incentive programs. According to the CMS, total federal incentive payments jumped 48% between October and November last year to $1.8 billion.
“Healthcare is going through this global investment cycle,” says Scott Lundstrom, IDC Health Insights group vice president. In the U.S., the stimulus law is having an impact, but he says hospitals are making upfront IT investments to meet meaningful-use targets, with the cost being only partially offset by federal incentive payments and the rest made up through gains in operational efficiencies.
Overseas, upward health IT spending trends are tracking those in the U.S., but for varied reasons. In Europe, with a plethora of public payment systems, “they're really focused around population management,” including tools to improve evidence-based medicine, Lundstrom says. In the Middle East, there is “very strong investment” that is “maybe a little bit more understandable and self-serving by the monarchies to mitigate some of the Arab-spring effect.”
The Asia Pacific market is a mix of “five or six really vibrant economies” and “a lot of other places” that are trying to reach a base level of services. China, for example, is both, with technologically advanced urban centers and rural areas where the basics of building clinics and getting medicine to the people are the top priorities.
Another expert on the global health IT landscape is Jeremy Bonfini, executive vice president of global services at the Healthcare Information and Management Systems Society, a Chicago-based health IT trade group. This year, HIMSS plans to host conferences in Abu Dhabi, Copenhagen and Singapore.
In the global marketplace, U.S. vendors of IT infrastructure products such as Oracle and Cisco are “already there,” Bonfini says. Also, “a lot of the back-end revenue-cycle management companies—Siemens, 3M—are common vendors across the world,” he says. “The EHR vendors are a little bit more challenged. I think one of the hottest markets to watch is the Middle East. Saudi Arabia wants to build 300 new hospitals in the next five years.”
For U.S. vendors looking abroad, Bonfini says a big challenge will be finding qualified staff. The U.S. market is so busy, while “the international markets are clamoring for attention as well. They are very hot markets. They're small compared to the U.S., but they have relatively high growth because their populations are growing.”
KLAS Enterprises, based in Orem, Utah, produces customer-satisfaction surveys and rankings based on interviews with health IT system customers. Previously, KLAS confined efforts to the U.S. and Canada, where U.S. products sell well. That parochialism is about to change.
About three or four years ago, information requests from overseas began picking up, says Jared Peterson, executive vice president of research operations at KLAS, “because they were using vendors from the United States.” Meanwhile, “a couple of the vendors that started dipping their toes into Europe found there wasn't a KLAS-type organization over there” and encouraged KLAS to look into that market.
In September, the British government pulled the plug on the National Health Service's national IT program after nine years and spending nearly $10 billion. The Brits' decision threw their hospital health IT market up for grabs.
Peterson says he flew to Birmingham, England, for a trade show in November, and “man, the energy was there,” he says. This month, KLAS plans to publish its first report on the international EHR market, covering about 14 multinational vendors. It will include Australia, Canada and West Europe and will “lightly touch” on Central and South America, the Far East and the Middle East, focusing on market share. KLAS also plans to release in April a U.K. customer-satisfaction report on EHRs and financial systems.
Still, KLAS won't try to tap the entire global health IT research market.
“The Chinese market, that's a big mystery,” he says. “The India market, we're just scratching the surface and wondering what's going on.”
In the U.S., Epic Systems Corp., an EHR vendor from Verona, Wis., is doing well in the large-hospital niche. Still, Epic also has looked abroad. It has offices and customers in Dubai and the Netherlands.
In 2010, Epic won a $14 million, five-year contract to provide the U.S. Coast Guard with an EHR system for its 40-plus ambulatory clinics as well as its shipboard sick bays. Last month, the State Department announced it had entered into an agreement with the Coast Guard to share health IT costs and software, including use of the Epic EHR around the globe.
“They're going to put us in 170 countries,” says Epic founder and CEO Judith Faulkner. It's an achievement she proudly describes as “cool.”
In Faulkner's view, U.S. companies have benefitted from growing up in a tough neighborhood—the largest health IT market in the world. “I think the U.S., being as big as it is, has been very demanding and has created very strong systems.” In many smaller countries, “there hasn't been the build-up of systems that are competitive,” she says.
Faulkner says Epic approached the barriers of programming in multiple languages by first “internationalizing” the code base of its system “so our software doesn't recognize any single language; it's language independent.”
Next came the process of “nationalizing” the EHR to a specific country and customer by cross-mapping the internationalized code back to a human language.
So far, she says, “We've only done it once, for Dutch. It's a lot of mapping. It's a task, but it hasn't been that bad of task.” Building on the foundational work of internationalizing the code first was “a huge leg up,” she says.
That said, the global health IT horizon, for now, has its limits, in Faulkner's eyes.
“Some countries are really not ready for healthcare IT,” she says. “First they have to get better water, they have to bring in enough doctors and have to get better sanitation and public health.” There are also issues of costs, intellectual property rights, culture and employee safety.
“I've been told the U.S. is responsible for about 60% of healthcare IT purchases,” she says. “When you rule out those countries that I've just mentioned, what's left, it's not gigantic.”
While many of the U.S.-based companies and associations are looking abroad to expand their operations, a few foreign eyes also have been fixed on North America. In 2000, a unit of German industrial conglomerate Siemens bought U.S.-based health IT outsourcer Shared Medical Systems for $2.1 billion.
But the recent, incentive-fueled IT boom has not produced a gold rush of foreign-based firms heading here, says C. Sue Reber, communications director for the not-for-profit Certification Commission for Health Information Technology. CCHIT has tested and certified nearly half of the 1,556 EHR systems or component parts of systems from 705 developers on a vendor list kept by the ONC.
“I can tell you, an awful lot of them are off-shore development, but the distribution and marketing and headquarters are here,” Reber says. The number of foreign-based firms seeking product certification has been “minuscule.”
One of those foreign companies on the ONC list is Orion Health. Software from the New Zealand-based firm powers health information exchanges in Louisiana, Maine and Alberta, Canada.
The U.S. offers a level playing field to outsiders, but that doesn't make cracking the health IT market here easy, says Paul Viskovich, a native New Zealander, now a U.S. citizen, and president of Orion's North American division. Ten years ago, Viskovich launched his comp-any's U.S. campaign from his apartment in Santa Monica, Calif., and focused, out of necessity, he says, on rural providers, the only ones who would listen to their sales pitches.
The company's first U.S. sale, of a browser-based clinician portal, came in 2001 at 159-bed Central Washington Hospital in Wenatchee.
Dr. Brandon Winchester and his webcasting/video-lecturing equipment.
“I think, generally, the U.S. market is open,” Viskovich says. “The issue for someone coming in is its size. It's the world's biggest market, so it is an attractive one.” Today, Viskovich says, Orion's annual revenue is more than $100 million and two-thirds comes from North America, “so we've been well received.”
The global IT realm isn't always about competition, however. Collaboration and communication occurs there too.
Wes Rishel is a vice president and healthcare analyst for Gartner, a technology market-research firm, and a frequent blogger on health IT uses. Rishel recently praised the efforts of an international group of health informatics experts working on an interoperability project called the Clinical Information Modeling Initiative led by fellow HIT Standards Committee member Dr. Stanley Huff, chief medical informatics officer at Intermountain Healthcare in Salt Lake City. The group also includes representatives from the U.K., Korea and Canada. “It's just natural” they work across borders, Rishel says. “The academic community that does the theory of informatics is very international.”
These days, with high-powered Web technology, U.S. entrepreneurs don't have to leave home to launch an IT business with customers overseas.
Dr. Brandon Winchester, an anesthesiologist, entrepreneur and a video-tech maven, remembers July 3, 2009, for the heat and the theater of the absurd.
Winchester had set up a video camera and green screen in the garage of his Durham, N.C., home and he was about to shoot his first live webcast, a training program on ultrasound-guided, catheter-placed, anesthetic nerve-blocking, a procedure “still very much in the early adopter phase of general anesthesia.” His audience was a peer group in Beijing. The heat in Durham that day was intense. The 500-watt lights in the garage made it broiling.
Winchester stripped off his pants, set the camera to capture him only from the waist up and soldiered on, completing the lecture.
“I was in a suit, tie and boxer shots and I was still sweating bullets,” Winchester recalls. A breadbox-sized portable video editor called a NewTek TriCaster handled the slides, sound and background images while Winchester's video visage streamed to the Web. After nearly falling victim to the China syndrome in that first sweltering shoot, Winchester added air conditioning to his garage.
Since the Beijing webcast, Winchester has moved to Gulf Breeze, Fla. There he's the regional anesthesia fellowship director at the Andrews Research & Education Institute. He's also upped his game to producing live, high-definition videos of himself—with the help of an assistant on the portable video equipment—performing the blocking procedures on actual patients. To shoot video in the confines of a pre-op room, Winchester fitted an endoscopy cart with a video broadcasting box, editing tools, monitor and multiple cameras, including one on a swing arm. The cart enables Winchester to capture multiple clinical procedures as he wheels it from room to room.
Winchester webcasts training videos now “about once every four to six weeks” and receives $500 a lecture from a corporate sponsor that offers the sessions without charge to invited physicians. Payments for live procedures run to $5,000, Winchester says. He plans to develop a 12-hour training series next, he says.
“I think this is truly the beginning for an enormous opportunity to significantly improve medical communication worldwide via the Internet, not to mention an enormous business opportunity for companies that specialize in the capture, live streaming and on-demand content delivery,” he says.