The market for clinical information technology should stay hot for a long time as healthcare organizations employ IT in the "reinvention" of care delivery, a leading technology executive says.
Addressing a healthcare investors' conference in Las Vegas on Tuesday, McKesson Corp. Chairman, President and CEO John Hammergren said the company's revenues from information technology should grow by at least 10% this year and could possibly accelerate in the future.
"We see a consistent growth in IT spend for at least the next 10 years," Hammergren says.
Much of that will be fueled by software sales, he predicts. Says Hammergren: "We think clinical software spend (growth) is somewhere in the range of 20%," for fiscal year 2003, which ends next Monday.
For the third fiscal quarter, which ended Dec. 31, the San Francisco-based company reported a 63% growth in software revenues vs. the same period a year earlier. Total IT revenues increased by 19% year-on-year, to $295.3 million.
The steep growth curve may flatten out a bit in the future, according to Hammergren, because he sees more healthcare organizations spreading out their IT investments over a period of several years rather than making one large purchase.
The most recent quarterly result does not account for Horizon Expert Orders, a computerized physician order entry system that McKesson brought to market in December. Hammergren says he is counting on CPOE to help "drive (profit) margin expansion."
Hammergren says the firm does not record revenue from its healthcare software until it actually completes installation of the product. Most of the software revenue booked in the third quarter was based on sales made in fiscal year 2002, he says.
The company chief says that CPOE, along with electronic medical records, digital imaging and comprehensive hospital and pharmacy information systems, is pushing "the reinvention of healthcare through information technology."
Though McKesson generates more than $1 billion annually from its information technology division, the company still draws the vast majority of its business from pharmaceutical distribution and services.