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IT and Telecom Trends in U.S. Healthcare Services Vertical
Frost & Sullivan, April 2005
Rising Operating Costs Impact Healthcare Sector’s Profitability and IT Spending
Growing wages, rising medical malpractice insurance costs, and increasing regulatory compliance-related expenses are escalating operating costs for the United States healthcare services providers. An extreme shortage of qualified workers within the segment is leading to higher spending on employee hiring, training, and retention. Further, mounting health insurance costs have resulted in a decline in the number of insured Americans. This implies more self-paying patients and higher uncollectible medical bills for healthcare services providers that can amount to an average of 8.0-12.0 percent of the total revenues. These factors hamper healthcare sector’s profits and restrain purchase or upgrade of communications and information technology (IT) infrastructure.
This Frost & Sullivan research service analyzes IT and telecom trends in the U.S. healthcare services vertical, segmenting it into ambulatory care, hospitals, nursing homes/residential care, and social assistance providers. It discusses the various trends and opportunities while providing market share analysis, forecasts, drivers, restraints, and revenues. The study enables companies to align their positioning strategies to benefit from the changing market and obtain maximum return on investment.
Patient Safety and Regulatory Compliance Heighten IT and Telecom Technology Spending by Healthcare Firms
Regulatory compliance needs are currently the leading driver for technology investment by various healthcare services providers. Growing regulatory oversight in the sector is stimulating technology spending by small, medium, and large healthcare services firms. The rising cost of malpractice insurance is highlighting the need to improve patient safety and reduce medication errors using technology.
Technology providers must be aware of the relatively slow adoption of various technologies among healthcare services, notes the analyst of this research service. This can lead to longer sales cycles and require multiple contacts with potential buyers, thereby resulting in higher opportunity costs for the technology companies. Case studies and referrals can help in closing a sale. In addition, training sessions for healthcare staff - not just IT personnel but also the end users of the technology products and services - can further help technology providers overcome adoption resistance.
Rise of Per Capita Expenditure on Health Services to Boost the IT and Telecom Market
Given the steady increase in per capita healthcare expenditure, the majority of the sector's technology spending is expected to relate to patient record management, computerized physician order entry systems, transport/networking, and remote access including virtual private networks (VPNs) and high-speed access. Investment in communication technologies is also increasing to improve the flow and management of information among various members of the value chain - the physicians, nurses, administrative staff, and other hospital personnel.
The growing need of aging baby boomers for long-term care such as nursing homes and residential care is also fuelling demand for hardware, software, and consulting or professional services. The healthcare firms are implementing technology to realize cost efficiencies and improve effectiveness of operations that directly influences their revenues and profitability, observes the analyst. Medical imaging technologies as well as wireless capabilities for both healthcare professionals and patients are in huge demand.
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