Professional Documents
Culture Documents
Agenda
3. Economic Crises Impact on Healthcare Information Technology Industry 4. Healthcare Information Technology Trends 5. APAC Healthcare Information Technology Outlook 6. CIO & CFO Healthcare Information Technology Survey
Introduction
The adoption of Information and Communication Technologies (ICT) is essential for modern healthcare delivery systems if they are to gain greater efficiency, reduce overall healthcare costs and improve patient safety. In recent years, the acquisition of computer technologies by healthcare organizations has increased substantially with the spending showing upward tendency placing the industry as one of the major consumer of ICT products and services.
In 2007, spending on Healthcare information system in Asia Pacific was valued at $15.50 billion. This accounted for 1.5 to 2.3 percent of total healthcare expenditure. By 2012, it is estimated that healthcare spending will almost double.
The HIT adoption trend by healthcare organisations is unstoppable, however there is expected to be a backlash in view of the current financial crisis. We are already seeing negative impact on the growth of the HIT industry as hospitals and health systems are taking measured but deliberate action by delaying capital projects, cutting capital and operating budgets, and laying off workers.
Agenda
The NBER (US) has declared December 2007 as the beginning of recession in US. Soon the rest of the world followed. Unlike the 1997 1998 recession, which was mostly confined to Asia, the current slowdown has global implications. The global pull stems from the failing of the worlds largest economy engine the US with weakening USD and decreased demand for imports being the main factors. Although the signs of recession are not so pronounced in APAC region, the early hints are already visible as the regions is predominantly dependant on exports to US. This has been cushioned, to a certain degree, by redirection of trade to China. The effect, however is temporary as Chinas economy is likewise an export oriented and the local demand is already stagnating. Considerable uncertainty about likely duration & depth of current economic crises makes any predictions difficult as most economies/corporations correct their forecasts on a monthly basis
December 2007 - ????; External to APAC Credit crunch - shortage of finance High Interest Rates resulting from underestimation of property sector Initially, overvalued property sector followed by sharp drop in house prices - related to shortage of mortgages and credit crunch Cost push inflation squeezing incomes and reducing disposable income Secondary fall in demand and industrial output, deflation, and unemployment.
July 1997 March 1999; Internal to APAC Excessive Growth with Asset's price inflation and imbalanced BOP. Vulnerable Banking System due to rapid credit growth, large capital inflows and over-valued exchange rate.
March 2001 November 2001; External to APAC Dot.Com bubble burst overvaluation of technology companies. High interest rates. 9/11 terrorist attack High fuel prices
The effects of the downturn has disproportionately affected different segments of the economy The healthcare sector has outperformed the broader market This implies that investors expect that, while the healthcare sector will be affected by the downturn, it will still out-perform the general economy
US Market Indices
16,000 14,000
Feb-08
NasDaq Financials
Mar-08
May-08
Jul-08
Aug-08
NasDaq Biotech
Oct-08
Nov-08
China: Interest rate cuts; $586 billion stimulus (infrastructure, rural) India: Interest rate cuts; $4 billion stimulus package (infrastructure, exports, textiles)
Taiwan: $31 billion stimulus package (subsidies, tax cuts) Malaysia: $2 billion stimulus package
Global Response Governments infusing capital into financial institutions Globally coordinated interest rate cuts IMF offers bridge loan to meet foreign exchange requirements Discussions, coordinated efforts (G20 summit)
Agenda
Impact on Healthcare Companies in 2009 Development Stage Pharma/Biotech Companies Pharmaceutical and Biotechnology Companies Medical Technology Companies Healthcare Services Providers
The economic downturn will impact the various segments of the healthcare sector differently in 2009
D e m a n d
HIT vendors corrective actions: Lay-offs Virtualisation of activities Outsourcing Price Reduction (probably deflation)
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Agenda
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Agenda
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Pharmaceuticals 66.2%
Competitive
Singapore , Malaysia, India
Non-applicable to all 8 Countries Traditional Healthcare management lacks patient care effectiveness, operational efficiency and market attractiveness
PHI TPA
Challenging
Taiwan, Thailan d
PHI
High Priority
PHI
HCIT
Indonesia
Taiwan, Thailan d
HCIT
Australia, China
Low Low
TPA
The paradigm shift of healthcare from provider to patient centric, centralized to decentralized, have pushed the standards of healthcare in terms of quality and efficiency to a higher level. Hence, value added components, such Health Information Technology, Health BPO and private health insurance are likely to play significant roles in the transition process.
PHI = Private Health Insurance, TPA = Third Party Administration, HCIT = Healthcare Information Technology
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Malaysian HIT Background Malaysia implemented its national plan for the development of ICT in health in 1995. In 2000, the country has embarked on Telehealth implementation that aimed at providing uniform HIT infrastructure across the entire nation for creating single EMR and providing Subsequently in 2007, the government increased its emphasis on E-Health with its strategy and vision to 2020 of the Multi-Media Super Corridor initiative and the Telemedicine Act 1997. The Multi-Media Super Corridor initiative was aimed to establish a health-care system which could leverage advanced information and multimedia technologies to significantly enhance its healthcare standards with telemedicine and medical informatics as the crucial components. Government funds were also allocated to expand Tele-Health and Tele-consultation services, to share health records and plans, to set up the National Health Informatics Centers and to implement hospital information systems in selected hospitals and clinics, which provides a positive outlook for the E-Health industry. Malaysia is planning to introduce National Health Insurance Scheme, which will include developing Casemix System to facilitate reimbursements.
2.2% 2.6%
US$ 171m
Source : The Association of Computer & Multimedia Industry of Malaysia (PIKOM), National Information Technology Council Malaysia, Frost & Sullivan estimates
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Hospitals in Singapore are taking full advantage of technological advances in Healthcare IT to improve efficiency and speed up patient care Some examples of information technology playing a major role in revolutionizing healthcare delivery in Singapore include: Hospital Information Systems (HIS), Picture Archiving and Communications Systems (PACS), Electronic Medical Records (EMR), E-Health, wireless technology, radio frequency identification (RFID) Healthcare service providers in Singapore can boast of being the leaders in technology adoption in the Asia Pacific healthcare space Healthcare delivery in Singapore is made up of both public and private systems. In 1999, there was a reorganization of the public healthcare delivery system into two vertically integrated networks, the NHG and SingHealth - to enable a greater degree of integration, cooperation, and collaboration among the public sector healthcare providers Major private healthcare providers in Singapore are: The Parkway Group and Raffles Medical Group
20 15
10 5 0
2003
2004
2005
2006
2007
2008
2009
Healthcare IT Systems Market: Market Life Cycle for Selected APAC Countries (2004)
Source : Frost & Sullivan; E-Health in Asia and the Pacific, United Nations ESCAP
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Manufacturing Other Land Transport etc Business Trade Services Construction Hospital
Modernization of Thailand through ICT Globalization effect has triggered Thailands emphasis on E-Health, and subsequently, the Modernization of Thailand project further reinforce the governments aim in utilizing technology for its key sectors, including healthcare and medical insurance. In a recent survey conducted by the National Statistical Office, Thailand, the hospital segment accounted for about 0.2% ICT coverage in terms of the number of establishments, out of the total 820,137 establishments in 2007 (a majority 82.67% of the total hospital population. Furthermore, in contrast with the other industries, the hospital segment creates more ICT job opportunities, whereby 55.2% of the establishments employ 51 to 200 persons for their ICT activities, and is highly active in terms of internet usage (95%).
Source : National Health Statistical Office, Thailand: Information and Communication Technology Survey 2007, United Nations: E-Health in Asia and the Pacific
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It is estimated that the healthcare IT market in Australia is worth US$2.89 billion in 2007-08, growing by CAGR of 16.6% since 2001. In an effort to resolve the implications caused by the Privacy Act on the development of Healthcare information, the Australia government amended the legislation in 2004 to allow for legitimate operations of health IT. The nationwide implementation of HealthConnect National Information Network was also announced by the Australian government in the same year, demonstrating Australias commitment to expanding the health IT industry. The Health IT industry gained further momentum with the creation of the National E-Health Transition Authority (NEHTA) in 2005, in which the government committed US$85 million funding in 2006. The extent of health operating budget invested in IT varies greatly amongst different health organizations, ranging from 1% to over 10% - with public hospitals spending an average of 1.5% of their total budget on IT. In 2008, approximately 90% of the General Practitioners in the country are computerized.
19.58
5.46 1.19
Source : Fujitsu Australia: Achieving Benefits from Investments in Health IT, Frost & Sullivan analysis & estimates
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2006
98.7%
Key Drivers The government is the key driver of an integrated island-wide health information system in Taiwan, and is responsible for the creation (and funding) of Taiwans successful health smart card Hospitals, too, have played an important role in integrating IT into the health sector and generally cover the costs of their individual HCIT systems
1989
1991-1993
Challenges Interoperability Some hospitals treat health and medical data as their exclusive property and are unwilling to share patient data with other hospitals Privacy Medical data is sensitive and proprietary. Many are concerned that de-identification is not sufficient to protect privacy as practice patterns, medication use, and outcome variations are all sensitive information
1994-1996
HIN plan extended to other regions in Taiwan Phase II of HIN begun with: bandwidth and VPN upgrades, local resources analysis, web-based application and standards development
1999
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Implication on India HCIT market by US Service Providing Penetration (2003-2010) Revenue (US$ Mil)
Revenue 4000 3000 2000 1000 0 2003 2004 2005 2006 2007 2008
Key Contributors of Telemedicine
Company/ Institution ISRO Sector Public Public Key Involvements GRAMSAT project Develop telemedicine application through aerospace technologies Facilitator for development of technology, pilot scheme initialization, and co-ordination Pioneer in-house developer from the hospital segment with more than 45 telemedicine centers set up in the country Co-development, whereby SGPGIMS is responsible for R&D and educational initiatives; Lucknow provides the platform for trial implementation. CAGR % (20032008) Revenue : 82.10% Workforce: 70.00%
Workforce
The Ministry of Health, of Family Welfare, of Communication and Information Technology, state government, and the Indian Space Research Organization (ISRO) are those who have played significant roles in the development e-Health in India The major fields of e-Health more rapidly developing in India involves 2 main aspects: (1) Total Hospital Information System and (2) Telemedicine To date, majority of e-Health development in India are outsourced from US service providers.
The hospital segment is undergoing an evolution since the early 1990s, with the rising requirement for automation. Although a large number of HIS services providers are available in the market, the major players in the field include CDAC, Wipro, TCS, and Siemens Information System Ltd. The government-led CDAC, in particular, was the pioneer for the development of the first HIS solution in collaboration with SGPGIMS and Lucknow in 1997.
Private
Public Private
ISRO = Indian Space Research Organization, DIT = Department of Information Technology, SHPGIMS = Sanjay Ghandi Postgraduate Institute of Medical Science Source : WHO: Mode 1 GATS Report India Cross Border Trade in Health Services (E-Health), United Nations: e-HEALTH in Asia and the Pacific, SGPGIMS
The rapid increasing and aging of population, gradual increase in disease burden, rural-urban healthcare coverage disparity, and manpower constraints in the healthcare sector, have magnified the importance of e-Health intervention on healthcare in both the public and private sectors.
5000
800
700
600 500 400 300 200 100 0 2001 2002 2003 2004 2005 2006
Hospital Management Information SystemHospital Clilnic Information System (HCIS Implementation Level (2006) (HMIS) Implementation Level (2006)
Partial 41% None 32%
None 99%
2000
2002
Source : CCID Consulting; China Ministry of Health; US Commercial Service
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Drivers
NHIS Policy and Strategies and a decree on Hospital Information System (Oct, 2003) have been developed and adequate health centers has been set up by the government Cooperation and assistance from both public and private sectors as well as from international bodies like the World Bank, UNDP and JICA to support NHIS initiatives Rapid development of IT in the region
Restraints
Financial support for HIS maintenance is considered the least priority in the national budgetary Lack of Health Information Technology personnel in Indonesia to manage the HIS network. Currently almost all HIS centers are staffed with medical personnel with limited IT/IS background HIS spending in Indonesia is primarily done by the private sector, most of the times focusing on private healthcare centers in cities like Jakarta, Bandung and Denpasar, Bali. Fragmented health IT and IS infrastructures
Not utilizing HIS Utilizing HIS to some extent Fully utilizing HIS
No comprehensive data exist that covers the entire nation, except for certain diseases like Tuberculosis and AIDS/HIV
Challenges
The geographical outlook of Indonesia and its population distribution The current state of decentralized health services and administration makes HIS implementation much more complex. The decentralization and lack of central authority help to further breaking down of the routine HIS
92%
Source : WHO Indonesia Country Health Profile (2008), Biskom Indonesia (2008)
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College of Healthcare Information Management Executives (CHIME), The National Alliance for Health Information Technology (NAHIT) AHA Solutions, Inc.
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Key Findings
Over half of the CFOs/VPs Finance (55%) report experiencing slight or significant delays in accessing
capital and expect the financial crisis to last another 12 to 24 months.
For now, CFOs/VPs Finance are dealing with budgetary pressures by delaying or lengthening
timeframes for completing new facilities or facility upgrades, (74%), deferring IT equipment purchases (57%) and delaying or lengthening timeframes for implementing health IT initiatives (52%).
CIOs are responding by implementing longer timeframes for application projects (63%) and reducing
spending on outsourced IT services (34%).
One-third (33%) of CFOs/VPs Finance plan to or have cut budgets while one in four (26%) plan or
have laid off staff or instituted a hiring freeze.
Almost all respondents (94%) have cut IT budgets by extending implementation time of existing
projects and delaying or reducing the slate of new projects.
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More than half (52%) report slight or significant delays in accessing capital and expect the financial crisis to last another one to two years. 74% CFOs/VPs Finance are dealing with budgetary pressures by delaying or lengthening development of new facilities, facility renovations and health IT initiatives. 33% reported cutting budgets, 26% are planning or implementing staff layoffs or have instituted hiring freezes. Those who reported an increase in their IT capital budgets (11%) are finding ways to reduce costs by more aggressively negotiating with payers or providing increased oversight on charity/uncompensated care. 52% of CFOs/VPs Finance reported delaying or cutting EMR rollouts and 43% pushing back or reducing CPOE implementations. However, an equal or larger number plan to move fullspeed ahead with these strategic clinical IT application projects.
More oversight on charity/uncompensated care More aggressive negotiations with payers Increases in charges Selective layoffs due to utilization reductions Delaying health IT initiatives or lengthening timeframes for completion Delaying equipment purchases Delaying facility/facility upgrade investments or lengthening timeframes for completion Reductions in specific departments budgets Across the board cuts
0%
Tapping into foundation, endowment and other funds to meet capital expenses 8% Making other budget adjustments to keep capital projects on track 4%
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Decrease 36%
Decrease 49%
More than half (52%) of CIOs reported that their organizations capital budget will remain the same in 2009 while 36% said it would decrease. Just 2% expected their organizations capital budgets to rise. Nearly half (49%) of CIOs and 44% of CFOs/VPs Finance report that their organizations IT capital budgets will be lower in 2009. 36% of CIOs and 33% of CFOs/VPs Finance said they expect IT capital spending will remain the same. Both CFOs/VPs Finance and CIOs expecting capital IT budget cuts said reductions will impact applications, software and outsourced IT services such as consultants. Some also pointed to cuts in spending on servers, networking and storage.
Decrease 44%
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Across the board cuts Networking IT services (Outsourced e.g. consultants) Applications/Software Storage Servers
Across the board Applications/software Networking Hardware IT services (Outsourced e.g. consultants) IT staff 0%
67% of CFOs/VPs Finance say their organizations operating budgets will increase or stay the same vs. 26% of CFOs/VPs Finance reporting a decrease. 54% of CIOs report that their organizations operating budgets will increase or stay the same vs. 39% of CIOs reporting a decrease. 49% of CIOs and 44% of CFOs/VPs Finance report that their organizations IT capital budgets will be lower in 2009. 65% say the annual budgets for running their departments will increase or stay the same in 2009 . 31% say their budgets will decrease. Of the CIOs who are cutting their 2009 operating budgets, 59% plan to reduce IT services, 30% will cut staff, and 27% will decrease new applications and other software. Applications, software and outsourced IT services to see the biggest cuts, followed by staff layoffs. 64% are delaying or reducing new projects. Outsourced IT services are the most common area targeted for cuts, and many also are looking at staffing reductions and decreased training and professional development to manage the operating budget constraints.
26% 4% 13%
30%
Delay or reduce slate of new projects Reduce staff/implement hiring freeze Across the board
26%
64%
Re-negotiate service contracts
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Health IT Initiatives Are Strategic Imperatives But Delays In Funding Support Is Anticipated
CFOs/VPs Finance: Clinical Initiatives with Planned Reduction or Delay in Funding Support
21%
EHR/EMR CPOE Medication Management Other
14%
50%
43%
36%
Major clinical IT initiatives show the biggest dichotomy among respondents. Half (50%) of CFOs/VPs Finance and 52% of CIOs report reductions or delays in funding for EMRs. Slightly fewer - 43% of CIOs and 36% of CFOs/VPs Finance - expect cuts or delays in funding for CPOE systems. Many of their counterparts, however, are moving head with these types of efforts.
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Conclusion
Going into 2009 and possibly some or all of 2010 will be challenging years for hospitals. Before economic turmoil hit, hospitals had shown important progress in health IT adoption, and for now, many of these initiatives are funded and moving forward. But a prolonged or deeper economic slowdown will inevitably be met by further reductions in IT capital and operating budgets, so even those health IT initiatives that have a demonstrated return on investment could become difficult to fund. Health IT is no longer a nice to have.. It is a strategic priority for hospitals to deliver safer, higher quality and more cost-effective care, thus enabling hospitals to stay competitive. Some hospitals executives surveyed see this as the time to invest in IT initiatives that will deliver direct and quantifiable savings to their organizations. ...hard times are time to invest in the future
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