What are the Trends in Australian Hospital Information System Market?

The international research firm has recently released a report entitled Australian Hospital Information Systems Markets (Frost & Sullivan, March 2006).

The summary of the report makes some interesting points.

The first is that they see the key driver of increasing investments in Health IT as being driven by a growing demand for safer and improved healthcare noting there are ambitious plans underway in a number of states and at the Commonwealth level.

The second point they make is that there is a strategic shift in healthcare IT requirement that is expected to boost market growth. They go on to say:

“Hospitals in Australia are replacing legacy systems with sophisticated and integrated ones. Similarly, there is a strategic shift from the adoption of administrative systems to clinical systems and healthcare providers of various states and territories are looking at integrating their IT systems under programs such as the nation-wide electronic health records. Australia is slowly moving toward an integrated healthcare delivery structure, where healthcare agencies will be linked with each other, notes the analyst of this research service. Information systems are expected to play a vital role in this structure and there is likely to be an increased uptake of hospital information systems to allow seamless integration between the legacy and contemporary healthcare information systems.”

I must say that while the shift to more clinically based computing is certainly evident in most States I am less sure there could really be said to be a move towards “an integrated healthcare delivery structure” really underway as yet. As of 2006 the State / Commonwealth divides are as real and as damaging as ever in my view.

Integration between the legacy and contemporary healthcare information systems is also very much a work in progress I would suggest and is certainly not seamless.
The following would seem to be an important paragraph and I would read this as suggesting care is needed before making major investments by vendors of hospital systems in Australia.

“Nevertheless, despite these positive developments, participants must remember that there has been chronic under-investment in healthcare IT in Australia, leading to the adoption of fragmented and inefficient information systems by the healthcare providers. Further, there is also a huge level of penetration of legacy systems in Australian hospitals and migration to packaged software could pose considerable challenges.”

In the last section they say the market for clinical systems holds high growth potential. To quote:

“With hospitals replacing low-quality patient administration and financial systems with standardized and integrated solutions, the administrative HIS segment currently accounts for a majority of the market revenues. However, public and private hospitals are now showing considerable interest in clinical solutions and health departments are expected to allocate more funds for the adoption of clinical systems.

Consequently, there is growing interest in clinical systems such as radiology information systems (RIS), picture archiving and communications systems (PACS) and electronic medical records (EMR), which is expected to accelerate the growth of the overall Australian HIS markets.”

This is all true, however the next paragraph is more problematic.

“Considering the shift toward integrating the IT systems, huge contracts are expected to be awarded in the Australian HIS markets in the coming years. With the health departments of various states and territories planning numerous IT initiatives during the next few years, vendors need to enhance client relationships through better customer service and scheduled project completion, says the analyst. Also, with the increasing demand for clinical solutions, developing solutions tailored to local needs is likely to evolve as a market necessity.”

In recent times we have seen major decisions taken for clinical hospital software in the public sector in NSW, Victoria, Tasmania and South Australia. This really leaves only Qld and Western Australia to declare their hands. Qld is likely to be very conservative after the problems of the recent past (i.e. will probably follow NSW / Victorian approach if they are seen to be successful) and WA has developed its Health IT Strategy (HealthTec founded in January 2006) ) but as far as I know is probably a good way off making procurement decisions. WA does, however, need a refresh of all hospital systems sooner rather than later according to my WA correspondents.

Overall I see this report as being rather too optimistic as far as new prospects are concerned while having correctly identified the general trend to raised investments in the clinical sector. The major spending over the next few years I envisage as being focussed on implementation and integration services rather than software purchases.

Work on implementation will run for the next five to ten years so – other than Qld and WA - I suspect a quiet time will be had in the public sector for the next decade.

The private hospital sector, on the other hand, will gradually come under more pressure to provide clinical hospital systems, and I would expect this is where the major hospital market will be over the next five years in terms of new system sales.

David.