Disruptive Change Predicted for Health IT Market

While the Obama administration's drive to dramatically increase health IT spending portends a financial bonanza for vendors, the boom will not come without risks, says Input.

The U.S. health IT market is set for disruptive change, predicts a report by Input released Sept. 10. The key drivers of the change will occur "as the American Recovery and Reinvestment Act and national health care legislation increase the need for innovative health care technology that also reduces costs," according to Input's statement. Compounding the change will be the addition of the baby boomers to the swelling ranks of Medicare and Medicaid recipients.

"As the federal government begins analyzing the data collected through EHR [electronic health records] systems, a wide array of new health care IT market opportunities will emerge for vendors," Tim Dowd, Input's CEO, said in the statement. "This includes companies supplying health information systems, decision support automation, data warehousing, data mining tools and middleware to connect EHRs to regional information exchange organizations and other internal systems."

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According to Input, the federal budget combined with the deficit "will drive growth opportunities in the health care IT market as technology offers the ability to dramatically cut health care costs. Simultaneously, the stimulus package is setting the groundwork for the next stages of IT investment by making $2 billion available for the Office of the National Coordinator of Health IT (ONC). Input's research also predicts that the Obama administration's push for greater adoption of ... [EHR] systems will open up adjacent IT market opportunities."

Disruptive change, though, also brings risks, among them possible public and provider backlash over "the costs of buying and maintaining systems, and training staff to manage and oversee a new federal health care program; ... the additional work needed to ensure security and privacy of data, since it will be transferred among different providers; and ... building IT systems that track health outcomes to satisfy the federal government's desired method of compensating providers," Input said in its statement.

"The Obama administration's efforts to forge ahead with an aggressive health care IT improvement plan are not without their challenges," Dowd said. "Whatever form the country's health care reform legislation ultimately takes, it will create the need for more technology innovation, which will require planning and insight to remain ahead of the curve."

Input predicts that U.S. state and local government health organizations will increase their investments in health IT systems and services from $7.6 billion in 2009 to $9.6 billion by 2014.