Health IT investments on rise in Europe, says Frost & Sullivan

Hospitals turning to professional services for help

The market for health IT professional services is on the rise in Europe, according to a new report from Frost & Sullivan, driven by providers trying to improve care delivery and lower costs. Still, adoption levels aren't what they could be, thanks to tight budgets.

Exploring changes across the pond such as consolidation and the adoption of inorganic growth models, Frost & Sullivan's "Analysis of the European Healthcare IT Professional Services Market" finds that the European market saw revenues of $1.58 billion in 2011 and should reach $1.93 billion by 2017.

"Hospitals are now increasingly dependent on IT solutions to support them day-to-day, reduce human errors, limit operational costs and stay ahead in terms of technology," said Frost & Sullivan Research Analyst Somsainathan C.K. "As the penetration of healthcare IT rises, hospitals are investing in professional services to optimize the use of these solutions."

The study finds that as European hospitals increasingly see the importance of using the right communication and technology solutions, they are turning to healthcare IT professionals to select the models best suited to their needs.

The need to update existing technology to boost efficiency and lower costs is also driving the growth of IT professional services on the continent, officials say. Frost & Sullivan finds that this will have a beneficial impact on the training segment, in particular, since when a new technology is acquired, hospital staff needs to be trained to use the upgraded version.

Still, a major and continuing challenge for the Europeans remains shrinking healthcare budgets, according to the report. These have adversely affected the revenues and the margins earned by industry participants.

"Lower cash inflows have motivated hospital CIOs to revisit investments into IT solutions and services," said Somsainathan. "Simultaneously, the market is being negatively affected by certain pre-conceived end user notions. For instance, some IT services, especially training and consulting, are perceived as adding very limited value to existing IT infrastructure and solutions."

This points to a need for cost effective solutions that promote clinical and cost efficiencies, the study finds. Service providers, on their part, will have to place cost optimization atop of their agendas.

"Newer architecture and delivery models, such as cloud services, will revive the market for healthcare IT professional services in the near future, as more and more hospitals are looking to improve their technology set up," said Somsainathan. "Ultimately, the need to reduce costs through the effective use of technology and the optimum utilisation of financial resources will help in improving the penetration rate of IT professional services in Europe."

[See also: European CIOs focus on project management in large-scale HIT roll-out]