By Ken Terry
Despite rising investments by venture capital firms, the health IT field as a whole is poised for no more than 5 to 10 percent growth this year, financial analysts who attended a panel discussion hosted by the Nashville Health Care Council this week predicted.
Factors conducive to continued growth include the impending conversion to ICD-10, the analysts said in remarks reported by Healthcare IT News. “I foresee a slightly better 2012, with the emphasis on slightly,” said Darren Lehrich, managing director of Deutsche Bank Securities.
John Moore, founder of Chilmark Research, made a similar prediction in a blog post last month. “There will be plenty more [electronic health record] sales in the year to come, but over 2012 we will also see EHR sales growth begin to plateau and level off by end of Q4 ’12,” he wrote.
The main reason for these forecasts is that EHR sales have been driven by the government’s financial incentives. To get that money, physicians and hospitals have to show Meaningful Use; and if they have not already implemented clinical systems, they’re unlikely to meet the criteria in time to get the full amount of federal largesse.
However, there are other issues that could affect sales growth of individual companies in the next year or two. One is how much effect the Stage 2 Meaningful Use criteria will have on EHR vendors. If it is difficult to meet the certification requirements in Stage 2, some firms undoubtedly will drop out. That leads to the other question: Will the disappearance many of the current vendors boost sales of the surviving companies?
Even Stage 1 Meaningful Use undoubtedly has increased the big vendors’ sales as physicians with minimal EHRs converted to more capable systems. But the market has already consolidated to some extent. Five vendors accounted for more than half of the Meaningful Use attestations last year, and some observers think that fewer than 10 companies own most of the market. If that’s the case, the disappearance of many smaller firms won’t have much impact on the survivors.
Nevertheless, venture capital firms see gold in health IT. They poured $633 million into the field last year, InformationWeek Healthcare reported. That was the highest amount since 2001, when they invested $759 million.
To learn more:
– read the Healthcare IT News story
– watch this video recap of the event
– see the Chilmark Research blog post
– check out an InformationWeek article on venture capital investment
– see an article on Meaningful Use attestation