Health information technology might be a booming business, but industry players agree: Its one tough market.
Faced with reluctant physicians who dont see the bottom-line value of costly electronic systems in their practices, vendors have embarked on plans to better align their products with providers needs while trying to educate their customers about IT services. Many of those plans include mergers and acquisitionsa sign the market is maturing, insiders say.
In the first half of 2007, the health IT industry saw several large-scale mergers between vendors, especially in the electronic health-records segment. Most recently, SureScripts and RxHub last week announced they had merged to become the largest electronic drug prescribing network in the country. Another proposed deal involving Raleigh, N.C.-based Misys Healthcare Systems purchasing a controlling interest in Allscripts Healthcare Solutions, Chicago, passed the waiting period for Justice Department antitrust review, Allscripts announced in early June.
Driving the consolidation are high barriers to entry and the larger, more-established competitors who continue to eat market share, said Mike Davis, executive vice president of the analytics division of the Healthcare Information and Management Systems Society. The market is crowded, and only a few players have stayed on top over the past decade, he said. Weve got some dominant vendors, pointing out companies such as Cerner Corp., Epic Systems Corp. and McKesson Corp.
C. Peter Waegemann, chief executive officer of the Medical Records Institute, which hosts the annual Towards the Electronic Patient Record conference, states it more bluntly: There are too many companies. In addition, vendors continue to create systems in the face of doctor reluctance to buy them, which doesnt come as a surprise to Waegemannelectronic systems can cost anywhere from $1,000 to $80,000.
Hospitals are looking for systems that provide functionality, interoperability, flexibility and service elements, said John Glaser, vice president and chief information officer of Partners HealthCare System, Boston.
The market needs a better middle ground, according to Bob Sarnecki, chief information officer at 294-bed Phoenix Childrens Hospital. Many of the vendors products have the same features, he said. It now takes a hospital about three years and $50 million to implement an electronic system, a cycle that facilities cannot sustain financially, Sarnecki said. Hospitals need to rethink how and why theyre purchasing IT systems, he said.
With the industrys eye on data exchange, physicians want systems that can move information easily, said William Bria, chief medical information officer of the Shriners Hospitals for Children system, in Tampa, Fla. Google and Microsoft Corp., the two application giants that recently joined the health IT field, are providing a bridge in data exchange without developing costly electronic systems, Bria said. Web-based applications and patient-driven healthcare represent a game changer for the industry, he said.
Government mandates play a role in IT demand, too. As Medicare pursues greater use of pay-for-performance, and insurers catch on to tying payments to standardized medical practice, physicians are turning to IT systems to help them with reporting methods, Davis, of HIMSS Analytics, said. I wouldnt want to try to go through those charts by hand.