Growth seen for non-clinical IT in 'post-EHR' world
The mature U.S. hospital information systems market – made up of the clinical and non-clinical segments – is expected to see higher growth opportunities in the non-clinical segment over the next seven years, according to market research firm Frost & Sullivan.
Despite high penetration rates – about 95 percent for non-clinical and 90 percent for clinical information systems – a new post-EHR era is taking shape in hospitals, driving the adoption of non-clinical systems, according to its new analysis, "U.S. Hospital Information Systems Overview and Outlook, 2013 2020: Managing Information in an Era of Reform."
These changes will be needed to meet a multitude of challenges associated with healthcare reform, including changing reimbursement models, competitive threats from non-traditional providers, and the rise of health insurance marketplaces, the report shows.
Glenn Tobin, of The Advisory Board Company, agrees.
"I believe we are in a post-EHR world right now," he told Healthcare IT News earlier this week in an interview about interoperability. "That doesn't mean EHRs are not important. But that does mean that the original promise for which EHRs were rightly pushed out - we're beyond that. Now we're trying to find the next layer of information systems that's going to tie it all together."
"What we're really talking about, " he added, "is the amount of electronically available information is just skyrocketing on an exponential, very steep part of the exponential curve, but insight that can actually drive behaviors and actions in a population health world, are really, really nascent still – in fact, primitive."
Frost & Sullivan forecasts the market for information systems in U.S. hospitals will grow at a compound annual growth rate of 5.7 percent between 2014 and 2020. It also notes that the U.S. HIS market was valued at $11.1 billion in 2013. Total market revenue is expected to increase steadily, reaching $17.6 billion by 2020, representing a 58.9 percent rise from 2013.
Administrative information systems will be the fastest growing market segment with a CAGR of 10.4 percent over the forecast period. Financial information systems will follow, registering a CAGR of 9.7 percent over the same period. Clinical information systems will grow more slowly than the other segments with a CAGR of 0.6 percent.
[See also: Patient portals business means big money.]
"Hospitals understand they must establish new business models in order to survive under a dramatically transformed provider landscape" said Frost & Sullivan Connected Health Principal Analyst Nancy Fabozzi.
"Most impactful will be cuts in Medicare reimbursement required by the Affordable Care Act as well as the shift to value-based reimbursement by commercial payers," she added. "Additional concerns are the growing competitive pressures from retail pharmacy clinics and third-party telehealth providers as well as the rise of the health insurance marketplace that requires individuals to select their own health plans and provider networks."
IDC Research Director Judy Hanover came to similar conclusions earlier this year, when she forecast a "reshaped role for EHRs."
"What I've seen in hospitals is since 2009, and starting in earnest since 2010, is they've been laser focused on getting to Stage 1 meaningful use, and then expanding use of the EHR and related functionality to get to Stage 2," she told Healthcare IT News Editor Mike Miliard. "For the larger organizations that have been successful with EHRs, that started to pull away in 2013 – and what I'm seeing for 2014 is that they're really maturing and moving on to the next step."
[See also: New to-do lists loom for 'post-EHR era'.]
The urgent requirement for hospitals to improve the quality of care, attract and engage new patients, and ensure financial viability will accelerate the demand for "next-generation" financial and administrative information systems, Fabozzi wrote in her analysis.
"Administrative information systems, in particular, offer robust opportunities for IT vendors as this area has been somewhat ignored in recent years due to the scramble to implement EHRs," according to Fabozzi. "The need to better manage labor costs, drive productivity with new workflow tools, engage consumers, and maximize operational efficiencies will see this segment grow."