March 30, 2011

The HIE Market...Is It Time for Market Consolidation Already by Jim Bloedau of Information Advantage Group

It seems like we just started the HIE market and here we are at the consolidation phase already, according to John Moors's concise overview of the HIE market during eHealth Initiative's Covisint sponsored webinar today.  

After a review of the leading contenders out of 189 vendors claiming HIE utility at the HIMSS conference last month, he broke out the market into three competitive segments and the amount of traction they were gaining.  John concluded:
  •  EHR Vendors: These vendors are targeting their installed base and include Allscripts, Cerner, eCW, Epic, GE, McKesson.  Because of the closed and proprietary nature of these systems, traction is expected to be limited and will not penetrate far outside their installed base.
  •  A Varied Group of Service Firms: ACS, AT&T, CSC, Dell, IBM/PWC, Verizon are targeting the larger public and enterprise markets.  Their greatest traction is expected in large complex environments.
  • Core HIE Vendors:  These are mostly smaller software companies and consolidation is rapidly occurring in this sector due to entrance by the larger vendors wanting into the market and them not having enough competitive girth.

Within the last three years there have been nine significant acquisitions out of a total of over 21 in the HIE market.  This first round of consolidation is characterized by HCSC and Aetna [both large insurance carriers], IBM, Harris Corporation, Covisint, and Lawson buying market niche leaders.  This is leaving a host of smaller companies that are ripe for acquisitions with the top nine including CareEvolution, dbMotion, ICA, Intersystems, Kryptig, Missys, MobileMD, Orion Helath and PatientKeeper - all of these are privately held.

Because of entry by the large, deep-pocketed enterprise players and publicly held vendors who can quickly fill the need for deeper analytic capabilities and due to the smaller companies being stretched and inevitably not being able to keep up, consolidation is expected to continue for at least the next eighteen months.  A key trend to watch is how analytic software companies will enter this market.

Roll-ups and consolidation runs across the board for all of healthcare.  From home health to hospitals and physicians, non-licensed caregivers to ACOs – it is the name of the game in a continuing financially restrained environment...such is high tech and now healthcare.

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