Healthcare ICT Sector Drives a Wealth of New Opportunities
With political pressures and increased funding shortfalls by governments worldwide, budgets are being dramatically stretched to cover the rapidly increasing costs of healthcare. This is driving a renewed focus and new opportunities within the Healthcare sector as governments realise that technology will both drive down costs and provide enhanced healthcare.
Smart ECM/IM vendors have to take seriously the opportunity for their products and services within the healthcare sector, in-line with the fast emergence and growth of the healthcare consumer. The previous attitude of reluctance to enter this sector has changed quite dramatically over the past few years, with M&A activity in the healthcare sector for high technology vendors and service providers at its highest ever level; last year witnessed a record high, particularly among the final quarter acquisitions - and this trend has continued in 2015.
With this scenario as a backdrop, John Symon reviews some of the market dynamics and drivers which are fuelling significant new opportunities for suppliers of ECM/IM solutions for the Healthcare sector.
Key Factors Driving New Opportunities
The technology area that can drive the greatest efficiencies and improved customer service levels is the ECM Information Management sector, which is creating significant opportunities for software, hardware & service providers across the Healthcare sector. In the current climate, any solution that can demonstrate a tangible ROI in approximately 12 months will very likely get the attention of any FD or CFO.
Recent studies in the UK show that one in four pensioners will need long-term care for an average of two years. In the US, the story is very similar. ECM/IM solutions in particular, are able to achieve efficiencies that can ease the burden of front line clinicians, carers and national Governments.
The global Healthcare IT market is significant in size and growing quickly. IDC Health Insights estimates total global healthcare IT spending will top $97 billion in 2015, up 27% from 2011.
Included among the primary reasons for accelerated growth in this sector, are such drivers as:
- Ageing Population: An ever increasing, ageing population with the baby boomers reaching retirement. In most countries, median life expectancy is now well into the mid-eighties. By 2022 there will be one billion people aged 60 or above worldwide. The “Silver Tsunami” is about to hit all shores!
- Digitization: Government directives & incentives, especially in the US & UK, to move to electronic records. This is driving an increasing need for digitization and automation in the healthcare sector
- Clinician Demands: Pressures to improve the quality of healthcare, increase clinical efficiencies & processes and curtail healthcare delivery costs. Solutions need to be clinician driven with improved information access for multiple clinicians at the point of care
- Integration: Increased demand to integrate healthcare ICT systems incorporating patient data from Primary & Secondary healthcare services as well as Social Care (e.g. Mental Health, Disability etc.)
- Regulatory Compliance: There are increasing pressures to ensure regulatory compliance, transparency and greater accountability of how public healthcare funding is spent. Further, data protection & security issues need to be upheld to safeguard the interests of patients in the access and sharing of patient information.
- Acute Diseases: An increasing requirement to manage the diagnostics, treatment and research that addresses the worldwide growth of acute, medical diseases
- Mobile Devices: Increased demand for Mobile Health & Tele-Healthcare systems for both point of care & remote patient diagnostics & treatment
- Austerity Cuts: In the current economic climate, governments are under pressure to make austerity cuts in public expenditure, which further drive the need for greater efficiencies in all areas of the healthcare sector.
The bottom line is that both public & private healthcare organisations need to modernise their medical record keeping, reduce administration costs while being able to provide enhanced healthcare for their patients. This is driving government healthcare bodies worldwide to both fund and focus on the deployment of Healthcare IT, particularly Electronic Health Records (EHR), within the next 2-3 years.
Government Mandated EHR Initiatives & Funding
The primary factor fuelling the growth in the EHR market is the mandatory implementation of electronic health records (also often referred to as electronic medical records). The Health Information Technology for Economic and Clinical Health (HITECH) Act, enacted as part of the American Recovery and Reinvestment Act of 2009, mandated the use of EHR in the USA by 2015 to reduce this cost. As a result, healthcare professionals and hospitals are scurrying to meet government deadlines to avoid penalties and take advantage of government funded reimbursement initiatives to do so.
In the UK, (the biggest EHR market in Europe), Health Secretary, Jeremy Hunt, announced in September 2013 that the government and NHS will jointly invest £1bn in technology, with the aim for the NHS to 'go paperless' by 2018. On the way towards the 2018 goal, the Health Secretary set out the following objectives of this 5 year plan:
- By March 2015 – everyone who wishes to will be able to get online access to their own health records held by their GP.
- Adoption of paperless referrals – instead of sending a letter to the hospital when referring a patient to hospital, the GP can send an email instead.
- Clear plans in place to enable secure linking of these electronic health and care records wherever they are held, so there is as complete a record as possible of the care someone receives.
- Clear plans in place for those records to be able to follow individuals, with their consent, to any part of the NHS or social care system.
- By April 2018 - digital information to be fully available across NHS and social care services, barring any individual opt outs
While the recent UK election may result in some adjustments to such an investment in the NHS, there is a strong political and economic will to ensure considerable funding is available toward achieving these goals.
These are ambitious plans and there have already been high profile and costly failures, particularly in the UK, in reaching these targets by trying to design a “one-size fits -all” top down approach to digitising all patient records. There is an apparent growing realisation that a more pragmatic bottom up, and clinician-driven approach, is needed that provides value and enhanced care at the user level while ensuring the business also benefits and a solid ROI is achieved for the adoption of specific technology solutions.
In support of this view, Jeremy Hunt went on to say:
“Rather than imposing a clunky, one size fits all, approach from Whitehall, this fund will empower local clinicians and health services to come together and find innovative solutions for their patients. Technology is key to helping our A&E staff meet the massive demand they face as the population increases and ages."
The Electronic Health Record market reportedly reached $20 billion in 2012, and is expected to rise to $35.2 billion by 2019, according to Kalorama Information. The trend of adoption will continue to move forward, although slowing; hospital EMR adoption will supersede doctors EMR adoption. It is anticipated that current EMR owners will upgrade and train on systems, and that the threat of penalties will force doctors and hospitals to make upgrade decisions. In the USA, the EHR market is growing rapidly. According to reportlinker.com, the market is expected to grow at a CAGR of nearly 15% during 2013-2017.
Addressing the Reality of Paper Records
According to techUK, “In order to succeed, there will need to be a step change in the way users, buyers and suppliers of health and care solutions think and act. The paperless agenda cannot be regarded as an end in itself, but a way to add tangible value to the delivery of health and social care services. There also needs to be a clear understanding of what ‘paperless’ means and therefore, agreement of what success looks like. Finally, there needs to be an acceptance that, regardless of the pace of digitisation in the NHS, there may never be universality of data, systems and processes that meet the diverse needs and complexities of health and social care patients, clients and staff”.
As stated by Saffron Cordery, Director of Policy and Strategy, NHS Providers, “There is a general acceptance that there are benefits to be reaped from going paperless - but these benefits partly came from the opportunities to change the way things were done when moving to a paperless system as opposed to simply replicating the paper system on a computer. To get buy-in we need to make the clinical case and that is where the challenge will come.”
"This is not just about removing hundreds of filing cabinets but about transforming the way we deliver care"
What does this all mean for suppliers in the ECM/Information Management Sector?
- Faster Sales Cycles: The Healthcare IT market is very complex and fragmented and has typically, experienced slow sales cycles due to lengthy procurement processes and lack of available funding. This is now changing significantly with many of the new procurement frameworks allowing for direct contract awards.
- Building the Business case: Technology is now coming together to provide real ROI benefits and enhanced healthcare service levels, meeting the new demands & drivers as listed above. Trusts are better understanding where their ROI really lies and that scanning all the paper is not necessarily the right solution.
- Clinician Driven Solutions: Too often, software solutions are designed with scant regard for the real life requirement of the users. Clinicians need to be able to see a holistic view of patient information, incorporating both documents & data, which meets the increasing need to dynamically access such information at the point of care. Automating the capture of patient data, increasingly via mobile devices, combined with the ability to analyse such data for further research, enables clinicians to focus on providing enhanced levels of healthcare.
- The reality of paper in a digital world: Given the considerable volume of paper records that exists within all healthcare organisations, solutions need to address the most viable way to migrate from paper to electronic health records. While EHR systems are increasingly being deployed at the Primary care level (GP’s & clinics), the massive quantities of paper-based, patient records that exist in Secondary Care facilities (hospitals) require a more practical, cost-effective and hybrid technology approach.
- New opportunities with M-Health and Tele-Healthcare products & services: M-Health-Mobile health or M-Health refers to the delivery of healthcare using portable or wireless devices. It includes tele-health, which ranges from simple monitoring of patients to telemedicine, which is the delivery of clinical services at a distance. The global M-Health application services market is set to reach $26 billion by 2017, (research2guidance).
- Tele-Health: Tele-health refers to any remote, telecommunications healthcare providers used to interact with and manage patients. It can range from tele-conferencing between patient and provider (or provider to provider) to advanced, high-quality, online voice and video interactions with a patient’s EHR, enabling healthcare providers and patients to interact with each other remotely. Mobile solutions allow an interactive dialogue between doctor & patient that enables greater education on environment & lifestyle choices, leading to greatly improved self-management of health conditions. Properly implemented, tele-health can expand access and reduce the costs of healthcare. For example, patients with wearable mobile devices can monitor and report on their own vital signs and manage treatment, eliminating the need for a trip to the doctor’s office. This process can save time and money, both for the patient and the healthcare provider. Mobile & Tele-Healthcare will open up significant B2C, self-care opportunities for healthcare related products & services with the rapid rise of IOT (The Internet of Things) and the general commercialisation of IT.
- Increased Systems Integration & Interoperability: The electronic medical record cannot sit in a document management system that remains unconnected with other hospital IT systems and processes. Information must be exchangeable and able to be shared amongst all practitioners. Further, applications increasingly need to automate other processes and workflows to achieve operational efficiencies across the entire healthcare organisation. This includes, streamlining billing processes, managing hospital assets & personnel and integration with ERP and the supply chain, etc.
- A hot sector for M&A: From an M&A perspective, we have been seeing a growing level of interest in the Healthcare ICT sector for a number of years, with a steep acceleration of interest in 2014. In the past, this sector has been hampered by the long and somewhat arduous sales cycles that have been typical of the healthcare industry. However, there are now a number of drivers making this sector far more sexy and vibrant for software & solution providers.
Delivering More for Less
Technologies that dramatically reduce healthcare delivery & administration costs are attractive. Increased pressures on available funding, combined with other drivers, as mentioned above, demand that healthcare systems do more for less. Acquirers and investors are therefore attracted to businesses that use technology that both reduces cost and enhances healthcare services. The last 12 months has seen increased M&A activity in data analytics, electronic health records and mobile healthcare technology. Technologies which focus on prevention and monitoring are also in demand. Businesses which develop products or services in the tele-health, telecare, digital technology and medical devices sectors, which help to reduce hospital admissions, are also attractive investment targets.
Document Boss Feedback
Senior executives from Document Boss have been talking to a number of healthcare technology providers over the past few months. Overwhelmingly, the feedback has been that demand for their solutions is increasing. There are also real efforts by the various healthcare institutions to reduce the time to engage and implement new solutions. Mobile devices are starting to be seen as a major step forward and even Cloud and SAAS are being seriously considered and seen as being an inevitable next step to reduce upfront costs, require fewer, specialised in-house IT skills whilst also spreading payment and risk. Solutions to ease the burden and pressure currently placed on clinicians and administrators within these organisations are eagerly being sought. The austerity measures implemented by Governments have, together with political pressures, only accelerated this process.
Correct deployment of the most appropriate technologies has the ability to ease the strain placed on governments, clinicians, patients, Healthcare administrators & management. This will enable them to be more productive and effective in providing better healthcare services and dramatically improve levels of care for all – which will, in turn, allow everyone to sleep a little more easily at night..