Will Slow-But-Steady Stay In The Race?Will Slow-But-Steady Stay In The Race?

Even though it's been pushed and cajoled for the last several years, the health care industry pretty much remains a turtle when it comes to adopting IT, right? Well, maybe not.Yes, when it comes to the provider side of health care -- namely doctors and hospitals -- progress has seemed very slow in the digitization of health records and deployment of other technologies promising to streamline processes, eliminate medical errors, and reduce wastefulness and costs. But maybe the turtle isn't as sluggish as you think.

Figures vary depending on who's doing the guesswork, but in general, it's estimated that only about 20% of U.S. hospitals have deployed "fully functional" e-medical record systems. Four years ago, when President Bush set out the goal for most Americans to have e-health records by 2014, the estimates for EMR adoption by hospitals were lower, but by most counts, not that much lower. So, on the surface, it doesn't appear there's been much improvement.

But appearances can be misleading, says Marc Holland, program director of health care provider research at Health Industry Insights, owned by IDC. That's because many hospitals (especially larger ones) are well on their way to implementing such systems, it just requires a ton of work and a lot of patience before their accomplishments are obvious.

"There's a difference between 'fully functional' and 'partially functional' EMRs," he says in an interview with information. For a hospital to have what's considered a "fully functional" patient e-medical record system, it also requires the hospital to have automated and integrated its radiology department, labs, pharmacies, and other areas of the organization that generate key patient data. That takes lots of time and money.

"If you look at the numbers of hospitals that have laid the foundation in doing that, it's much larger" than it appears in terms of progress in record system digitization, Holland says. "A lot of progress has happened in the last few years, but the visibility to the public is limited yet," he says. "The nature of these projects is that they take years to implement."

In fact, of all vertical markets, "health care will be at the top of the heap" when it comes to compounded annual growth in IT spending, he says. Spending by health care providers will grow to about $22 billion by the end of 2008, with compounded annual growth of 7%. "We've reached a point of inflection in the last 24 months, people haven't picked up on [it] yet."

When it comes to providers of health care IT and services, one company, Hewlett-Packard, recently made a pretty big growth leap of its own when it acquired EDS.

Prior to the acquisition, HP's health care and life sciences industry revenue was about $6.6 billion annually, while services provided by EDS in the health care sector were about $1.5 billion, says Harry Kim, director of HP's worldwide health and life sciences practice, citing IDC as the source for those figures. With that acquisition, HP is the largest provider of IT products and services in that sector, surpassing IBM, says Kim.

EDS doesn't have a big presence among health care providers. Rather, EDS' focus has been on providing business process outsourcing and integration services to payers. EDS provides about 22 states with claims transaction processing services for Medicaid and Medicare billing, Kim says.

Meanwhile, HP's sweet spot has been among health care providers, selling technology -- including hardware, software, infrastructure, and hand held devices -- to hospitals in the United States and globally.

Back to the bigger picture. Health care is generally considered an industry that's insulated against macro-economic turmoil. After all, people still get sick, recession or no recession. However one thing to keep an eye on is this. If credit lines get tight for hospitals, and if charitable endowments dry up, health care capital expenditures could feel the pinch, including IT investments, says Holland.

So, if the turtle is actually finally gaining some tech momentum after all, let's hope it doesn't get stuck in the economy's mud.