April 6, 2009 / 3:22 PM / 11 years ago

Health IT is set to grow - and consolidate

CHICAGO (Reuters) - As interest in the health information technology sector swells ahead of government funding to modernize the U.S. healthcare industry’s record-keeping system, consolidation cannot be far behind.

The U.S. stimulus package includes $20 billion to create computerized systems that can easily communicate with one another, replacing reams of disparate, paper records.

Both large and small companies are likely to join forces to increase the scope of their offerings, while others are looking to enter this potentially lucrative business.

Some 225 companies are exhibiting for the first time at the annual Health Information Management Systems Society meeting this week, which has drawn more than 23,000 health IT professionals.

“You can’t dangle billions of dollars in front of an industry and not expect more people to try and get involved,” HIMSS Chief Executive Stephen Lieber told Reuters.

From the Chicago meeting site, Lieber said he expected some of the bigger players, which include the healthcare arm of General Electric Corp (GE.N), Siemens (SIEGn.DE), McKesson Corp (MCK.N) and Cerner Corp (CERN.O), to acquire smaller companies to broaden their scope.

“You may see a lot of the smaller ones merging,” he added.

More partnerships are also likely.

On Monday, computer maker Dell Inc DELL.O announced an alliance with Perot Systems (PER.N) to provide desktop, storage, server and electronic medical records systems for physician’s offices, hospitals and other healthcare providers.

Dell also said its EMR and Clinical Practice Management package to help small medical practices cut paperwork would be available at Wal-Mart’s (WMT.N) Sam’s Club stores.

“If we want massive adoption, it has to be inexpensive,” said Paul Bell, President of Dell Public, which helps healthcare, government and other public organizations improve their use of information technology.

Dr. James Coffin, general manager of Dell Healthcare and Life Sciences, estimated the market for electronic medical records would reach $20 billion globally over the next few years, from a tiny fraction of that amount now. He declined to predict how much of this market Dell can capture.

THE WAL-MART EFFECT

Lieber noted that about half of U.S. physicians practice alone or in groups of three or less, which makes distribution of Dell’s EMR product through Sam’s Club’s broad retail network potentially transformational.

“Wal-Mart has the potential to do to healthcare what it did to retail,” he said.

And last week, GE and Intel Corp (INTC.O) said they would invest $250 million in the field over the next five years to develop devices to help doctors monitor patients remotely, an area they said could grow into a multibillion-dollar business.

GE is working on electronic medical records as well, and the conglomerate’s CEO, Jeff Immelt, said the stimulus program could “tangentially” benefit the project with Intel by stimulating investment in healthcare technology.

Kaiser Permanente and the U.S. Veterans Administration have the most advanced electronic medical systems.

Kaiser, the largest nonprofit U.S. healthcare organization, invested $4 billion to computerize its system and created 10 million electronic medical records in three years time. Even in the project’s early days, the company has seen cost savings and efficiencies, a reduction in medical errors and better care as a result, Chief Executive George Halvorson told Reuters.

Halvorson, a keynote speaker at the HIMSS conference, cited Kaiser’s Colorado pilot program that linked coronary artery disease patients with teams of primary care physicians, nurses and pharmacists, and created an electronic care registry. By providing more information to caregivers, the program cut cardiac deaths by almost two-thirds, he said.

For its part, HIMSS, whose 20,000 members include doctors, nurses, IT professionals, financial specialists, insurance representatives and corporations, is embarking on a public awareness campaign to explain how electronic medical records improve health outcomes.

“Automating documentation and electronic records takes some of the art out of medicine and puts more science in medicine,” Lieber said. “That shouldn’t be a problem. I want more science in medicine.”

Editing by Lisa Von Ahn

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