Health-Care Industry Will Play Catch-Up By Spending On CRM, ERP, Report PredictsHealth-Care Industry Will Play Catch-Up By Spending On CRM, ERP, Report Predicts

The health-care industry has long lagged behind other industries in deploying business technologies until well after they've gone mainstream in many other industries. Now, enterprise-resource-planning and customer-relationship-management software are expected to be among those better-late-than-never health-care IT trends, a report predicts.

The report by research firm Datamonitor predicts investments by U.S. and Western European health-care companies in CRM will grow at a compound annual rate of 9% from 2004 until 2010, compared with only 3% in all other industries. This CRM spending by the health-care industry will reach about $481 million in 2004 to about $803 million in 2010, says James Adams, a Datamonitor analyst and author of the report.

During the same period, spending on ERP applications by the health-care industry grow at a 7% compounded annual rate, compared with only 2% in the overall ERP market, Adams says. Health-care industry spending on ERP will climb from about $1 billion in 2004 to around $1.5 billion by 2010, Adams says.

Factors driving growth include the fact that the health-care industry is playing catch-up to most other industries when it comes to automating many manual, paper-based processes. "Traditionally, whenever health-care providers have had small amounts of capital money, it's gone to clinical technology, not IT," Adams says.

Much of the growth in CRM will come from health-care payers, including private insurance companies, as well as government-related programs, especially in Europe, where countries such as the United Kingdom and France provide or pay for much of their nations' health-care services. Payers there, as well as in the U.S., are adding customer "visibility" into processes, such as allowing via the Web the ability to check the status of payment for services or claims. Also, in the U.K., an ongoing, multibillion-dollar, multiyear national program to revamp that country's delivery of health care through IT--such as allowing patients to schedule appointments online--will account for a large portion of the software market growth, too, Adams says.

Much of the CRM investment by U.S. health-care insurers will focus around automation of sales processes, he says.

Meanwhile, the growth in ERP will come from health-care providers in Europe and the U.S. that are making smaller investments in software that can help them manage their complex, yet squeezed, revenue streams and resources, Adams says. "One of the biggest changes is that vendors are adapting their products to address those specific needs, like grant management for health-care providers," he says.

With success in other vertical industries, CRM and ERP vendors over the years have begun focusing more attention to developing specialized packages to better address the specific needs of health-care payers and providers, which helps "stabilize" those products and bring down the costs to implement them, Adams says.