Startups that had planned to exhibit at the HIMSS20 trade show are grappling with the conference's cancellation, after learning the Healthcare Information and Management Systems Society won't refund exhibitors.
The annual health information and technology conference—canceled earlier this month in response to the COVID-19 outbreak—typically brings together more than 40,000 attendees from the healthcare and technology industries, and provides a popular space for companies to launch new products and try to network in the event's exhibition hall.
But despite the conference's cancellation, HIMSS this week said it won't issue refunds to businesses that had signed on as exhibitors or sponsors of the event, in accordance with terms included in the trade group's contracts. In an email to exhibitors this week, HIMSS referred to the cancellation as "heartbreaking," but "unavoidable" due to the COVID-19 outbreak.
"As a not-for-profit, HIMSS must enforce the terms of exhibitor and sponsorship contracts, which include a force majeure clause, and will not issue refunds," the email reads. A force majeure clause typically excuses an entity—in this case, HIMSS—from its contractual obligations when circumstances arise beyond their control.
Exhibitors pay HIMSS for space for a booth in the conference's exhibition hall, but there's other costs associated with participating in the conference, such as building the booth, shipping it to the convention center in Orlando, Fla., and contracting vendors for setting it up. Then there's costs aside from the conference itself, like airline tickets and hotel reservations.
All of that can add up for companies, and particularly for startups.
Some companies had been hoping to see HIMSS apply payments for booth space to next year's conference, which would have helped to offset some of that financial burden. HIMSS has said exhibitors will be able to carry over their staff badges to the conference next year, which is slated for March 2021 in Las Vegas, but not booth payments.
"It's hard when you're a small startup, and you do rely on HIMSS," said Heather Holland, co-founder of Edgility, a startup that builds command center and healthcare management tools. She said Edgility has attended the event each year since 2017—the startup launched in late 2016—and sees it as a way to connect with possible customers and showcase the company's products.
"I wish they would reevaluate the refund policy," Holland said. All told, she estimates Edgility spent about $10,000 on activities associated with attending the conference.
HIMSS did not respond to a request for comment at deadline.
The annual event is a major source of revenue for HIMSS. In their fiscal year ended June 2018, HIMSS reported $43 million in revenue from conferences and meetings, according to an Internal Revenue Service Form 990. It's total revenue was $94 million.
"The cancellation of HIMSS came as a big blow to us," said Dr. David Nace, chief medical officer at Innovaccer, a developer of data tools for population health management. "This is the major event that drives our business, in terms of contacts and relationships."
But "we can't ignore why it was canceled," Nace added. "From a public health and safety perspective, it was absolutely the right decision."
HIMSS has planned a virtual edition in lieu of this year's conference, which will include a scaled down selection of educational sessions. Exhibitors who participate in the virtual conference, called HIMSS20 Digital, will have opportunities to share announcements, presentations and white papers with attendees, the trade group said.
However, for companies, that likely that won't be able to replace the benefit of meeting attendees one-on-one and conducting demonstrations of their products, nor does it provide an alternative for the more than 1,300 companies that were slated to exhibit at the event.
Hospital leaders—the folks companies would likely target as potential customers—are also focused on COVID-19 response, noted Jeff Fallon, CEO of eVideon, a startup that develops patient and visitor engagement software. He said eVideon hasn't decided whether it will participate in the virtual event.
"I'm a little skeptical about what attendance might even look like," he said. "The decision-makers of these hospitals are fully invested in addressing this pandemic."
Fallon estimates HIMSS20's cancellation resulted in about $100,000 in "sunk costs" for eVideon.
HIMSS20 isn't the only conference to cancel in the wake of COVID-19.
In fact, it's one of a growing number of healthcare associations that have canceled upcoming conferences in response to the pandemic, including the American College of Healthcare Executives and America's Health Insurance Plans. Modern Healthcare also canceled its Health Care Hall of Fame and postponed its Leadership Symposium.
Some trade groups, like the Professional Convention Management Association and the Software & Information Industry Association, have begun calling on the government to step in and provide financial assistance to companies that produce business-to-business events in future stimulus packages.
"The entire industry has been forced to sharply curtail, even eliminate entirely, their activities, thus jeopardizing their ability to stay in business," the groups wrote in a joint letter to congressional leaders last week, arguing these companies should be eligible for tax credits, loan guarantees or other relief that Congress is considering extending to the hospitality industry.
There's also downstream effects on local economies. Orlando, Fla., city officials have said they estimate HIMSS20's cancellation to result in a $113 million economic loss for the county.
"That's just a massive impact for that region," Fallon said. "While this is a massive impact for us, it trickles down."