Healthcare IT seen growing at 24pc CAGR
Dubai, March 25, 2012
The health IT market is expected to experience a compound annual growth rate of 24 percent through 2014, according to a report.
This overdue investment in IT is aimed squarely at the construction of a long-anticipated information backbone that will support improved care quality and cost reduction through enhanced connectivity and data analysis, said the report from RNCOS, a market research company.
The developing health IT infrastructure, with its host of new applications, is ushering in the most intensely competitive era in the healthcare industry’s history, by sharply accelerating the industry’s clockspeed.
Charles H Fine of MIT’s Sloan School of Management used the term to describe the pace of business evolution within industries. He found that industries with faster clockspeeds, such as computers and entertainment, had higher levels of market experimentation, more competition, and increasingly frequent waves of innovation.
“This will be challenging for the healthcare industry, and for insurers in particular, who are used to a much slower pace of change,” said Dr Walid Tohme, principal with Booz & Company, a leading global management consulting firm.
“To succeed, they’ll need to look outside their sector for effective business models, and build new capabilities that support rapid product development, a consumer product mind-set, and expansion into adjacent markets.”
The leading healthcare insurers will find that IT modernization will either expand their role as information aggregators — making them the primary engine for higher-quality, more cost-effective care — or enable new competitors to supplant them. Historically, insurers have not needed a strategy for responding in a fast-paced environment.
Repeated waves of consolidation (which oriented insurers toward scale rather than innovation), complex regulatory requirements that varied by market, the competing incentives and targets of multiple stakeholders, and the slow adoption of information standards have created speed bumps that impeded innovation.
The ambiguity in healthcare reform’s implementation may seem yet another reason for insurers to assume that the historical pace of the industry will continue. However, as health IT becomes more connected, precise, and prevalent, many companies will have to race to realize its potential. Insurers’ products have already begun to be smartphones will enable faster, more comprehensive data collection and more effective interventions.
Existing competitors and new entrants will create real-time decision support tools to help providers and patients better manage care. Microsoft, for example, is exploring virtual care delivery, and medical device manufacturer Medtronic has developed Wi-Fi-enabled cardiac devices that allow doctors to remotely monitor and assist patients.
Insurers, who currently control claims data and the valuable insights contained therein, will face a crucial point of reinvention as these advances and the companies that field them engage consumers, influence medical utilization, and seek a proportional share of the healthcare dollar.
The Amazon Way
Health insurers looking for guidance on how to compete in a fast paced environment won’t find many examples within their own industry, but they can look to industries where the clockspeed has long been fast and furious, such as online retailing.
One excellent model for them to study is Amazon.com. Amazon has built a full-service, seamless vertical approach — including order fulfillment, recommendations, and customer service — around its core retail business over the past decade.
Simultaneously, it has staked out beachheads in key horizontal platforms, becoming a partner to other vendors through Amazon Marketplace, e-commerce hosting, and Web services (home of its much-ballyhooed cloud computing business). These businesses generate additional revenues that are funneled back into R&D for Amazon’s core business.
“This kind of approach could translate very well for healthcare insurers today, but to make it work, they will have to establish the proper balance between vertical and horizontal integration, and between control and speed. They will need a vertically integrated approach that keeps critical components under proprietary control to create differentiation,” said Jan Schmitz-Huebsch, a senior associate with Booz & Company.
“At the same time, they will need strong horizontal capabilities that can be deployed in fast and flexible ways to help master accelerating product cycles. For example, insurers that decide to help physicians use HER data will need swift application development capabilities.”
“That robust expertise could be deployed in multiple vehicles, such as cloud based computing to the physician’s desktop or to handheld devices, and for multiple purposes, for example, health analysis or prevention campaigns,” he added. – TradeArabia News Service