Healthcare Information Technology

• Publication date: March 2011

REPORT HIGHLIGHTS * BCC estimates the total market for the clinical healthcare IT technologies covered in this report at more than $6.3 billion in 2010. The market is projected to grow to approximately $7.4 billion in 2011 and nearly $17.5 billion in 2016, a compound annual growth rate (CAGR) of 18.7% over the next 5 years. * Software applications accounted for 71% of the market in 2010, although their share is projected...

REPORT HIGHLIGHTS

* BCC estimates the total market for the clinical healthcare IT technologies covered in this report at more than $6.3 billion in 2010. The market is projected to grow to approximately $7.4 billion in 2011 and nearly $17.5 billion in 2016, a compound annual growth rate (CAGR) of 18.7% over the next 5 years.
* Software applications accounted for 71% of the market in 2010, although their share is projected to shrink to 66% by 2016. This sector was worth $4.5 billion in 2010 and is expected to increase at a 17$ compound annual growth rate (CAGR) to reach more than $11 billion in 2016.
* The share of dedicated hardware, chiefly equipment used in telemedicine, is projected to rise from 29% to 34% over forecast period. This market was valued at $1.8 billion in 2010 and is expected to reach just under $6 billion by 2016, a 22.4% compound annual growth rate (CAGR).

STUDY BACKGROUND

The market environment for healthcare information systems has shifted dramatically in recent years. After years of incremental steps toward a national healthcare information technology (IT) infrastructure, the American Recovery and Reinvestment Act (ARRA), the economic stimulus bill approved by Congress and signed into law in February 2009, provides more than $19 billion for healthcare IT spending, including more than $17 billion to promote the wider adoption of electronic health records (EHR). The Obama administration has made it clear that this $17 billion is only a down payment on the total cost of a national EHR system, which is generally estimated at $100 billion or more.

Modernization of the nation’s healthcare IT infrastructure is a cornerstone of the Patient Protection and Affordable Care Act (PPACA), the national healthcare system that was enacted into law in 2010. The PPACA does not include any specific measures to encourage the adoption of EHR beyond those already contained in the ARRA, but EHR is one of several clinical healthcare IT technologies that have the potential to increase the availability and quality of healthcare while contributing to lower costs.

In addition to the potential benefits in terms of the quality and cost of U.S. healthcare, this is obviously a significant opportunity for suppliers of healthcare IT and related technologies. U.S. healthcare providers presently spend approximately $40 billion per year on all types of IT technologies.

GOALS AND OBJECTIVES

This report is an update of an earlier report published by BCC in 2009 whose goal is to provide an understanding of the U.S. market for selected clinical healthcare IT technologies in the context of the ongoing dramatic changes in the structure of the U.S. healthcare sector. Specific objectives include:

* Identifying the segments of the clinical healthcare IT with the greatest growth potential
* Analyzing key market drivers and constraints
* Estimating the size of each market segment through 2016
* Providing other information on relevant laws and regulations, standards, potential funding sources, and other information that will be useful to healthcare IT suppliers seeking a share of this market.

INTENDED AUDIENCE

The report is intended especially for healthcare IT suppliers, as well as government agencies, healthcare policy analysts, and others seeking to understand the cost and preconditions for the success of healthcare IT modernization initiatives. Although the report is structured around specific technologies, it is largely non-technical in nature. It is therefore less concerned with theory and jargon than with effectiveness, the market is likely to purchase, and the going price.

As such, the report’s main audience is executive management and marketing and financial analysts. It is not written specifically for scientists and technologists, although its findings concern the market for their work, including the availability of government and corporate research funding for different technologies and applications.

SCOPE OF REPORT

This report is an analytical business tool whose primary purpose is to describe and analyze the dynamics of the U.S. market for healthcare technology. It is particularly focused on clinical IT systems that facilitate or provide input into the care process, as opposed to administrative and financial systems. It covers only software applications, as well as dedicated hardware and online services used to run them.

The study format includes these major elements:

* Executive summary
* Definitions
* Clinical healthcare IT applications
* Benefits and barriers to implementation
* Market environment (e.g., legal and regulatory standards, economic conditions, consumer attitudes)
* Current (i.e., 2010) and projected markets for healthcare IT technologies and products through 2016
* Industry structure

METHODOLOGY

Both primary and secondary research methodologies were used in preparing this study. The findings and conclusions of this report are based on information gathered from developers, providers, integrators, and users of healthcare IT technologies in the public and private sectors. Interview data were combined with information gathered through an extensive review of secondary sources (e.g., trade publications, trade associations, company literature, online databases) to produce the baseline market estimates contained in this report.

The base year for analysis and projection is 2010, and market projections were developed for the period of 2011 to 2016. These projections are based on a consensus among the primary contacts combined with BCC’s understanding of the key market drivers and their impact from a historical and analytical perspective. The analytical methodologies used to generate the market estimates are described in detail in chapters six through twelve.

All dollar projections presented in this report are in 2010 constant dollars.

E-Healthcare Industry in the United States

CHAPTER ONE: INTRODUCTION 1
STUDY BACKGROUND 1
GOALS AND OBJECTIVES 1
INTENDED AUDIENCE 2
SCOPE OF REPORT 2
METHODOLOGY 3
AUTHOR’S CREDENTIALS 3
RELATED BCC RESEARCH 4
BCC ONLINE SERVICES 4
DISCLAIMER 4
CHAPTER TWO: EXECUTIVE SUMMARY 5
SUMMARY TABLE US MARKET FOR CLINICAL HEALTHCARE IT
TECHNOLOGIES, THROUGH 2016 ($ MILLIONS) 5
SUMMARY FIGURE CLINICAL HEALTHCARE TECHNOLOGIES
MARKET SHARES, 2010–2016 (%) 6
CHAPTER THREE: CLINICAL HEALTHCARE IT: AN OVERVIEW 7
DEFINITIONS 7
TABLE 1 MAJOR CLASSES OF HEALTHCARE IT TECHNOLOGIES 7
CLINICAL SOFTWARE 7
HARDWARE DEDICATED TO CLINICAL IT APPLICATIONS 8
HISTORY 8
HISTORY (CONTINUED) 9
CHAPTER FOUR: TYPES OF CLINICAL IT TECHNOLOGIES 10
TABLE 2 MAJOR TYPES OF CLINICAL HEALTHCARE IT
TECHNOLOGIES 10
ELECTRONIC HEALTH RECORDS 11
PROVIDER ORDER ENTRY SYSTEMS FOR DRUGS, LAB TESTS,
AND PROCEDURES 12
ELECTRONIC PRESCRIBING SYSTEM 12
PICTURE ARCHIVING AND COMMUNICATION SYSTEMS FOR
FILMLESS IMAGING 13
LABORATORY INFORMATION SYSTEMS 13
CLINICAL DECISION SUPPORT SYSTEMS 13
TELEMEDICINE 14
OTHER RELATED AND SUPPORTING TECHNOLOGIES 14
PERSONAL HEALTH RECORDS 14
RADIO FREQUENCY IDENTIFICATION 15
VeriChip 16
BAR CODING 16
SPEECH RECOGNITION 16
MEDICAL EQUIPMENT INTERFACES 17
BENEFITS OF CLINICAL HEALTHCARE IT TECHNOLOGIES 17
BENEFITS TO PATIENTS 17
Improved Quality of Care 18
Lower Costs 19
Lower Costs (Continued) 20
Wider Availability of Health Insurance 21
BENEFITS TO HOSPITALS, PHYSICIANS, AND OTHER
CAREGIVERS 21
Clinical Efficiencies and Improved Quality 21
Verification of Insurance Eligibility and Benefits 22
Patient Satisfaction 22
Image and Public Relations 22
Reduced Malpractice Risk 23
Employee Morale 23
BENEFITS TO THE PHARMACEUTICAL INDUSTRY 24
Pharmaceutical Manufacturers 24
Improved Drug Safety Surveillance 24
Clinical Trial Recruitment 24
Support of Regulatory Approval 25
Retail Pharmacies 26
Opportunities to Increase Revenues 26
BENEFITS TO HEALTH INSURANCE PROVIDERS 26
BARRIERS TO DEPLOYMENT 27
COST 28
LACK OF METRICS 29
Lack of Metrics (Continued) 30
LACK OF STANDARDS 31
Clinical Vocabularies 32
Clinical Ontologies 32
COMPATIBILITY 33
Backwards Compatibility 33
Sideways Compatibility 34
Forwards Compatibility 34
WIDE RANGE OF SOFTWARE CHOICES 34
LACK OF PERSONNEL WITH APPROPRIATE SKILLS 35
LIMITED FINANCIAL RETURNS ON HEALTH IT
INVESTMENTS 36
PRIVACY CONCERNS 37
SAFETY ISSUES 38
LEGAL LIABILITY 38
Privacy 38
Safety 39
PREVIOUS IMPLEMENTATIONS OF HEALTHCARE IT 40
USA 40
Department of Defense 40
Department of Veterans Affairs 41
Department of Veterans … (Continued) 42
Cedars-Sinai Medical Center Physician Order Entry
System 43
Santa Barbara County Care Data Exchange 43
OTHER COUNTRIES 44
UK National Health Service National Programme for IT 44
Alberta (Canada) Netcare 45
Alberta (Canada) Netcare (Continued) 46
MARKET SUMMARY 47
TABLE 3 US MARKET FOR CLINICAL HEALTHCARE IT
TECHNOLOGIES BY APPLICATION TYPE, THROUGH 2016 ($
MILLIONS) 47
FIGURE 1 US MARKET FOR CLINICAL HEALTHCARE IT
TECHNOLOGIES PRODUCT MARKET SHARES, 2010–2016 (%) 48
CHAPTER FIVE: MARKET ENVIRONMENT FOR CLINICAL
HEALTHCARE IT TECHNOLOGIES 49
LEGAL AND REGULATORY ENVIRONMENT 49
LEGISLATION 49
Federal Legislation 49
Better Healthcare through Information Technology
Act of 2005 49
Medicare Value Purchasing Act 50
Health Information Technology Promotion Act 50
Wired for Healthcare Quality Act 50
American Recovery and Reinvestment Act of 2009 51
American Recovery …(Continued) 52
Patient Protection and Affordable Care Act of 2010 53
State Legislation 54
Maryland 54
Massachusetts 54
Minnesota 55
New Mexico 55
Rhode Island 56
Vermont 56
EXECUTIVE ORDERS 56
Federal Level 56
Executive Order 13335 56
Executive Order 13410 57
State and Local Levels 57
TABLE 4 STATE EXECUTIVE ORDERS RELATING TO HEALTH IT 57
TABLE 4 (CONTINUED) 58
REGULATIONS 58
Federal Regulations 58
Potential FDA Regulation of EHR 58
EHR and HIPAA 59
HHS Regulations to Facilitate Adoption of Health
Information Technology 60
State and Local Regulations 61
CERTIFICATION BODIES 62
Certification Commission for Healthcare Information
Technology 62
ECONOMIC ENVIRONMENT 62
Government Funding 63
Federal Government 63
FIGURE 2 TRENDS IN PROJECTED FEDERAL HEALTH IT
SPENDING, 2010–2016 ($ BILLIONS) 64
Other Government Entities 64
Massachusetts 65
Minnesota 65
New York State 65
New York City 65
North Carolina 65
Vermont 66
Nonprofit Funding 66
California Healthcare Foundation 66
Colorado Health Foundation 67
Regenstrief Institute 67
Markle Foundation 67
Robert Wood Johnson Foundation 68
Private Funding 68
Care Providers 68
Investment and Financing Trends in the
Hospital Industry 68
FIGURE 3 TRENDS IN US HOSPITALS’ IT SPENDING, 2010–2016 ($
BILLIONS) 69
Physician Practice Financial Trends 69
Implications for ARRA Incentive Program 69
Insurance Companies 70
Mixed Public-Private Funding 70
Washington Health Information Collaborative 70
Washington …(Continued) 71
CHAPTER SIX: ELECTRONIC HEALTHCARE RECORDS:
TECHNOLOGIES AND MARKETS 72
SUMMARY 72
FIGURE 4 US MARKET FOR ELECTRONIC HEALTH RECORDS
TECHNOLOGIES, 2010–2016 ($ MILLIONS) 72
FIGURE 4 (CONTINUED) 73
TECHNOLOGIES 73
EHR VERSUS EMR 73
EHR FUNCTIONALITIES 74
TABLE 5 TYPICAL EHR FUNCTIONALITIES 74
TABLE 5 (CONTINUED) 75
CLIENT/SERVER ARCHITECTURE VERSUS APPLICATION
SERVICE PROVIDER 75
SUPPLIERS 76
TABLE 6 EHR TECHNOLOGY PROVIDERS 76
TABLE 6 (CONTINUED) 77
MARKET FOR ELECTRONIC HEALTH RECORDS
TECHNOLOGIES, 2010–2016 78
TABLE 7 ARRA INCENTIVES AND THE MARKET FOR EHR 79
TABLE 8 POTENTIAL (UNCONSTRAINED) US MARKET FOR EHR
SYSTEMS, THROUGH 2015 ($ BILLIONS) 79
TABLE 9 REALISTIC US MARKET FOR ELECTRONIC HEALTH
RECORDS TECHNOLOGIES, THROUGH 2016 ($ MILLIONS) 80
CHAPTER SEVEN: PROVIDER ORDER ENTRY TECHNOLOGIES AND
MARKETS 81
SUMMARY 81
FIGURE 5 US CPOE TECHNOLOGY MARKET, 2010–2016 ($
MILLIONS) 81
TECHNOLOGIES 82
SUPPLIERS 83
TABLE 10 CPOE TECHNOLOGY SUPPLIERS 83
MARKET FOR PROVIDER ORDER ENTRY TECHNOLOGIES, 2010–
2016 83
TABLE 11 INSTALLED BASED OF CPOE SYSTEMS IN US
HOSPITALS, THROUGH 2009 84
TABLE 12 US MARKET FOR CPOE SYSTEMS, THROUGH 2016 ($
MILLIONS) 84
CHAPTER EIGHT: ELECTRONIC PRESCRIBING TECHNOLOGIES AND
MARKETS, 85
SUMMARY 85
FIGURE 6 US ELECTRONIC PRESCRIPTION TECHNOLOGY
MARKET, 2010–2016 ($ MILLIONS) 85
TECHNOLOGIES 86
CURRENT PRACTICES 86
ELECTRONIC PRESCRIBING 87
E-Prescribing Software 87
E-Prescribing Software (Continued) 88
E-Prescribing Software (Continued) 89
E-Prescribing Software (Continued) 89
Installed Applications 90
Web-Based Applications 90
Mobile Interface Devices 90
PDAs 90
Smart Phones 91
Electronic Data Interchange 92
SUPPLIERS 92
TABLE 13 E-PRESCRIPTION SOFTWARE SUPPLIERS 93
MARKET FOR E-PRESCRIBING SOFTWARE, 2010–2016 93
TABLE 14 US MARKET FOR ELECTRONIC PRESCRIPTION
TECHNOLOGIES, THROUGH 2016 ($ MILLIONS) 94
FIGURE 7 US ELECTRONIC PRESCRIPTION MARKET SEGMENTS,
2010 (%) 95
CHAPTER NINE: PICTURE ARCHIVING AND COMMUNICATIONS
TECHNOLOGIES AND MARKETS 96
SUMMARY 96
FIGURE 8 US PACS TECHNOLOGY MARKET, 2010–2016 ($
MILLIONS) 97
TECHNOLOGIES 97
ARCHITECTURES 98
In-house PACS 98
Web-Based PACS 98
DICOM and Web-Based PACS 99
INTEGRATED PACS/RICS 100
ENTERPRISE PACS 100
PACS STORAGE AND ARCHIVING 101
Advanced Storage Technologies 101
Holographic Storage 102
Digital Image Compression 102
SUPPLIERS 102
TABLE 15 PACS TECHNOLOGY SUPPLIERS 103
MARKET FOR PICTURE ARCHIVING AND COMMUNICATION
TECHNOLOGIES, 2010–2016 103
TABLE 16 US MARKET FOR PACS, THROUGH 2016 ($ MILLIONS) 104
CHAPTER TEN: LABORATORY INFORMATION SYSTEMS
TECHNOLOGIES AND MARKETS 105
SUMMARY 105
FIGURE 9 US LABORATORY INFORMATION SYSTEM MARKET,
2010–2016 ($ MILLIONS) 105
TECHNOLOGIES 106
INTEROPERABIILTY ISSUES 106
LIS-CPOE Interoperability 107
LIS-CDSS Interoperability 107
LIS-EHR Interoperability 107
DATA STANDARDS 108
SUPPLIERS 109
TABLE 17 LABORATORY INFORMATION SYSTEM SUPPLIERS 109
MARKET FOR LABORATORY INFORMATION SYSTEMS
TECHNOLOGIES, 2010–2016 110
TABLE 18 US MARKET FOR LIS, 2010 THROUGH 2016 ($
MILLIONS) 110
CHAPTER ELEVEN: CLINICAL DECISION SUPPPORT TECHNOLOGIES
AND MARKETS 111
SUMMARY 111
FIGURE 10 US CLINICAL DECISION SUPPORT SYSTEM MARKET,
2010–2016 ($ MILLIONS) 111
FIGURE 10 (CONTINUED) 112
TECHNOLOGIES 112
KNOWLEDGE-BASED SYSTEMS 112
Expert Systems 112
Expert Systems (Continued) 113
Probabilistic Systems 114
Bayesian Networks 114
Heuristic Systems 115
NON-KNOWLEDGE-BASED SYSTEMS 115
Artificial Neural Networks 115
Artificial Neural … (Continued) 116
Genetic Algorithms 117
WORKFLOW INTEGRATION 117
SUPPLIERS 118
TABLE 19 CLINICAL DECISION SUPPORT TECHNOLOGY
SUPPLIERS 118
MARKET FOR CLINICAL DECISION SUPPORT TECHNOLOGIES,
2010–2016 118
TABLE 20 US MARKET FOR CLINICAL DECISION SUPPORT
SYSTEMS, THROUGH 2016 ($ MILLIONS) 119
CHAPTER TWELVE: TELEMEDICINE TECHNOLOGIES AND MARKETS 120
SUMMARY 120
FIGURE 11 US MARKET FOR TELEMEDICINE TECHNOLOGIES,
2010–2016 ($ MILLIONS) 120
TECHNOLOGIES 120
VIDEOCONFERENCING TECHNOLOGIES 121
Real-Time, Store-and-Forward, and Hybrid
Teleconferencing 122
IP-Based Videoconferencing 122
Peripheral Devices 122
HOME TELEMETRY TECHNOLOGIES 123
Telehomecare 123
Mobile Phone-Based Technologies 124
Bluetooth 124
Signal Transmission via Human Skin 125
ZigBee 125
SUPPLIERS 126
TABLE 21 TELEMEDICINE EQUIPMENT AND TECHNOLOGY
SUPPLIERS 126
MARKETS 127
TABLE 22 US MARKET FOR TELEMEDICINE TECHNOLOGIES,
THROUGH 2016 ($ MILLIONS) 127
FIGURE 12 TELEMEDICINE TECHNOLOGY MARKET SEGMENTS,
2010–2016 (%) 128
CHAPTER THIRTEEN: INDUSTRY STRUCTURE 129
NUMBER AND SIZE OF FIRMS 129
FIGURE 13 CLINICAL HEALTHCARE IT FIRMS SEGMENTED BY
ANNUAL SALES REVENUES, 2010 (%) 129
PRODUCT SPECIALIZATION 130
FIGURE 14 CLINICAL HEALTHCARE IT FIRMS SEGMENTED BY
TYPE OF APPLICATION, 2010 (%) 130
MERGER AND ACQUISITION TRENDS 131
MERGER AND ACQUISITION TRENDS (CONTINUED) 132
APPENDIX A: COMPANY PROFILES 133
AGFA HEALTHCARE 133
ALLSCRIPTS, INC 133
AMAZING CHARTSCOM, INC 133
AMD TELEMEDICINE 134
AMICAS, INC 134
CARD GUARD AG 134
CARESTREAM HEALTH, INC 135
CARETRENDS 135
CERNER CORP 136
CYBERNET SYSTEMS CORP 136
DATALOGIC SPA 136
DIGICHART, INC 137
DRFIRSTCOM 137
ECLIPSYS CORP 137
EMAGEON, INC 138
FUJIIFILM MEDICAL SYSTEMS USA, INC 139
GE HEALTHCARE 139
GEMMS 139
GLOBALMEDIA GROUP, LLC 140
HEALTH FRONTIER, INC 140
HEALTHLAND 140
HIGHFLEET, INC 141
ISABEL HEALTHCARE, INC 141
LANGUAGE AND COMPUTING, INC 141
LIFECOM, INCREMOVAL REQUESTED (RESTORE REQUESTED 142
LOGICAL IMAGES, INC 142
MASSACHUSETTS GENERAL HOSPITAL 143
MCKESSON CORP 143
MEDRX 144
MEDVITAL 144
MERGE HEALTHCARE, INC 144
M*MODAL 145
MICROSOFT CORP 146
NCD MEDICAL CORP 146
NUANCE COMMUNICATIONS, INC 146
OBS MEDICAL 147
PHILIPS HEALTHCARE 147
POLYCOM, INC 147
PROBLEM-KNOWLEDGE COUPLERS 148
SCOTTCARE CORP 148
SIEMENS HEALTHCARE 148
SURESCRIPTS, LLC 148
TELEVITAL 149
THERADOC INC 149
UNITED THERAPEUTICS CORP 150
POSITIVEID CORP 150
ZYNX HEALTH, INC 151
APPENDIX B: PATENT ANALYSIS 152
FIGURE 15 US CLINICAL HEALTHCARE IT PATENTS ISSUED
SINCE 1975 (%) 153
FIGURE 16 US CLINICAL HEALTHCARE IT PATENT
APPLICATOINS PENDILNG AS OF FEBRUARY 15, 2011 (%) 154