From The Editor | November 12, 2010

Health IT Consolidation Imminent

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By Ken Congdon, editor in chief, Health IT Outcomes

Back in June, I wrote an article titled "A Trend Toward EMR Consolidation?" that hinted at the possibility of a string of mergers and acquisitions in the EMR space over the coming years. According to a recent market commentary issued by Marlin & Associates, this consolidation trend will likely not be limited to EMR companies, but extend to encompass the entire healthcare IT market. The report, titled "Back To The Future: Healthcare Rebooted," suggests that the U.S. Healthcare Information Technology market is in the early phases of a massive consolidation that will ultimately devolve into a handful of mega firms that form Healthcare IT superstores — or "Healthcare Information Networks."

Marlin predicts that a few companies will successfully integrate the key components of a healthcare information network and be in a position to set industry standards. From this position, these vendors will be poised to provide comprehensive integrated information, analytics, communication, administrative, clinical, and revenue cycle management tasks — all via a seamless network accessed through web or dedicated terminals. Marlin envisions a future in which providers, payers, and patients will be able to conduct the majority of their healthcare business through these integrated, real-time information networks.

The commentary notes several companies that may be looking to build these next-generation Healthcare Information networks including incumbents in the healthcare IT industry such as Ingenix (who recently acquired Picis, Axolotl, and A-Life Medical), to telecommunication companies like Verizon (NYSE:VZ) to AT&T (NYSE: ATT), to large technology companies like Microsoft (NASDAQ: MSFT) and IBM (NYSE: IBM).

"These companies all have pieces of the puzzle," says Afsaneh Naimollah, co-author of the report and partner at Marlin & Associates. "The question is: Which firm will be first to assemble a truly comprehensive information and transactional healthcare platform? You need vision, money, and the right leadership to get there. Not a small task if you are creating a comprehensive healthcare platform."

Other predictions made in the report include:

  • Accelerated merger and acquisition activity between administrative (payer and provider sides), revenue cycle management, and analytics businesses.
  • An increasing trend towards outsourcing, which will lead to the creation of a new breed of BPO (business process outsourcing) companies that will focus on managing the information flow in many of the HIEs (health information exchanges).

It will be interesting to see if Martin & Associates' vision for the industry becomes reality, or how quickly and accurately these predictions begin to take shape. While Martin & Associates' predictions make sense on paper, the healthcare IT market is a complex system that will require a great deal of commitment, leadership, and foresight for even the most resourceful of companies to corner.

Ken Congdon is Editor In Chief of Health IT Outcomes. He can be reached at ken.congdon@jamesonpublishing.com.