Maintaining a tradition among IT analyst firms, following is Chilmark Research’s forecast of Top Trends for 2009. While there is a significant amount of “crystal ball gazing” in any forecast, 2009 is particularly challenging due to an economy that has yet to stabilize and a new administration and re-invigorated Congress that seeks to “reform healthcare.” Against this backdrop, our predictions reflect and extend what we have seen in 2008, our continuing research, and conversations with numerous stakeholders in the healthcare sector. As always, we welcome your feedback, via comments on what you foresee in 2009 as well.
Without further adieu our Top Ten are:
Healthcare Not Immune to Economic Woes: Declines in investment returns and philanthropic giving coupled rising bad debt, fewer consumer/patient visits (delay care) and increase in charity care will wreck havoc on an industry sector that is accustomed to being immune to economic downturns. As it pertains to healthcare IT (HIT) spending in 2009 will be way down as healthcare providers look to control costs. Providers will go into maintenance mode simply maintaining the systems they now have in place. IT projects at least 50% of the way towards completion will see continued funding, if they can see light at the end of the tunnel and ROI will be quickly realized. All other projects will be curtailed, delayed or killed. Some bright spots in all this doom and gloom; apps that focus on eligibility checking, revenue cycle management and more progressive cloud-based offerings (e.g., HIE with hosted EMR) will see reasonable growth in the 8-12% range.
Health 2.0 Companies Shrivel on the Vine: As consumers take on more responsibility for healthcare costs and seek low cost alternatives, use of the Internet as a virtual doctor/adviser will increase. Despite this increase, most Health 2.0 companies fortunes will evaporate for three simple reasons:
- Not enough competitive differentiation. There are far too many “me too” apps in market today.
- Access to additional funding and exit strategies have evaporated. Reliance on advertising revenue will only sustain “Big” Brands as Internet advertising contracts.
- Poor go-to-market strategies including; lack of partners, ill-defined value proposition and poor positioning.
Those Health 2.0 companies that address all three concurrently and successfully are the ones to watch – ignore the rest.
Retail Health Clinics Gain Traction, Corporate Clinics Stall: Budget-constrained consumers seeking lower cost alternatives, and payers encouraging such practices, will increasingly turn to retail clinics for much of their healthcare needs in 2009. This will lead to continued growth in use and build-out of retail clinics across the country. Despite their potential savings, corporate clinics are a long-term investment. Corporate clinic providers such as the two Walgreens acquired in 2008, (i-Trax and Whole Health) will see growth stall as employers layoff employees and pursue shorter-term cost cutting strategies.
Virtual Visits – A Mixed Bag: Related to Health 2.0 is the proliferation of Internet-based third party healthcare service offerings, (e.g. American Well) which bring together technology, streaming video and an ability to access a doctor over the Web 24/7. Problem is, healthcare is based on trust and as inherently social creatures, humans base trust on direct, in-person interactions. Thus, third party virtual visits will struggle. This will not be the case for eVisits with a consumer’s existing physician/care team where a relationship already exists. eVisit reimbursements are now becoming commonplace and consumers will increasingly use such services due to convenience and lower costs.
Dossia Ramps-up: Over two years in the making and a couple of stumbles along the way, Dossia was finally launched in late 2008 with roll-out to consortium member Wal-Mart employees (actually, WebMD roll-out with WebMD sitting on top of Dossia stack). Earlier this month Dossia announced its second PHR partner, Medikeeper. While Dossia’s ecosystem of partner apps is dwarfed by Google Health (GHealth) and Microsoft’s HealthVault, Dossia brings something to the table that the other two platform providers do not, some 8M+ potential users (employees). Expect at least three more of the consortium’s eight members to begin rolling out the solution, via PHR vendor, to their employees. We are placing our bets on Pitney-Bowes, AT&T and Intel to go live in 2009.
Chicken & Egg Scenario Plays-out for GHealth and HealthVault: As Google Health and Microsoft look to add more partners, in particular data providers such as pharmacies (GHealth) or payers (HealthVault) the big question remains: Will consumers begin actively storing their health data on these sites and subsequently engage any of the numerous apps that sit on top of these repositories? Right now it is a very mixed message. Today, traffic and subsequently use of either platform remains lackluster. Early reports are that GHealth is generating some decent consumer traffic (click-thrus) for partners. HealthVault, however, is generating very little traffic for its partners, but has created better visibility for these partners among larger corporate entities (e.g., payers, employers, providers, etc.).
Over the course of 2009 expect Google to become slightly more aggressive, first with biometrics, second with support for other standards and third attracting new partners, especially data owners. This last point is contingent on additional standards support. HealthVault will couple its aggressive actions to bring more data providers (payers & providers) and software partners into the ecosystem with direct to consumer marketing. HealthVault’s biggest challenge will remain – creating an engaging and easy to use interface for the consumer.
New HIE Models Leveraging Cloud Computing and SaaS Gain Traction: Chilmark Research recently completed a project for a client that gave us an opportunity to gain an in-depth understanding of the HIE/RHIO market. What is clear is that the vast majority of quasi-public RHIOs still have not figured out a funding model that is sustainable (e.g., CalRHIO is one hairy initiative that will be declared DOA in 2009). Health Information Exchanges (HIEs), that are increasingly receiving funding from payers or are set-up within a given IDN will continue to see reasonable, low-double digit growth. Those HIEs that prosper will be based on a cloud computing model and offer small physician practices, at little or no cost (sponsored by payer), via SaaS, such services as lightweight EMRs and eRx capabilities. We learned of several such projects, yet to be announced, that will roll-out in 2009.
Continua Compliant Devices Hit Market with Little Impact to Anemic Telehealth Growth: The industry consortium, Continua, recently announced that Continua compliant biometric devices will enter the market in 2009. Problem though is that Continua compliant devices only alleviate vendor lock-in for one can now mix and match Continua compliant devices from various vendors. Continua does not address the much broader and seemingly intractable problem of how to incorporate telehealth into the existing workflow of care providers and even more importantly, reimbursement models for telehealth remains immature. Until these issues are addressed, 2009 will not see a major boost in the sales of biometric devices.
Dreams of Big Fed Spending on HIT Do Not Materialize: Despite campaign promises and HIMSS Blueprints, healthcare reform and funding for HIT will not materialize in any meaningful amount in 2009. Half of the problem will come from continued economic woes in other sectors seeking rescue from federal coffers that will start drying up. The other half of the problem will result from healthcare reform, in all its many guises, that languishes as Congress over-reaches with its multitudinous approaches and little reconciliation in ’09. We expect 2010 to hold more promise.
mHealth Continues Expansion, Most Apps Lame: We see tremendous promise for mHealth and honestly believe it will be here that consumers truly engage in health and wellness at a very personal level. Despite the enormous potential, and a growing number of mHealth apps available for the consumer, we find that the vast majority of these apps are incredibly simplistic and do not fully leverage new smartphone capabilities. Over the course of 2009 we will see far more apps, particularly those originally developed for the iPhone, being re-purposed for Google’s Android OS, the BlackBerry OS and in Europe, for Nokia’s Symbian OS. Some truly novel, excellent apps are expected, but these will by far be in the minority.
That’s “IT” everyone and to a certain extent this list defines our research agenda for 2009. Stay tuned, it promises to be an extremely interesting year ahead.