The following carefully researched and desperately sad article (for Australian E-Health) appeared today.
Poor prognosis for medical software sector
- Karen Dearne
- From: The Australian
- January 18, 2011
THE medical software sector hit the wall last year, with large and small players that had geared for expansion hit by a triple whammy.
Long-anticipated e-health projects did not materialise, the global financial crisis had people scrimping every last penny, and currency exchange losses added insult to injury (see table).
Medical Software Industry Association president Geoffrey Sayer said it had been a tough period for the sector.
"The outlook for e-health in 2011 is challenging for everyone, to say the least," he said. If we are to be successful, we will need to establish a transparent leadership partnership between all stakeholders that delivers tangible and measurable benefits."
Australia's largest health IT company, iSoft, crashed hard, but it was by no means the only local firm to bleed red ink in a year that also brought a retreat from the sector.
ICSGlobal exited in April, selling its core Thelma medical billing and claiming transaction hub to CargoWise subsidiary eHealthWise for a total consideration of up to $1.45 million.
The e-commerce pioneer, which listed on the Australian Stock Exchange in 1999, was still licking its wounds from a lengthy anti-competitive action against Medicare.
It alleged the government agency had misused taxpayer funds to replicate its computer program, and offer it free to the private health sector.
Medicare settled the claim for $460,000 in October 2009, a month before the matter was due back in the Federal Court.
ICSGlobal also sold its US business, Medical Recovery Services, in April after a disastrous bid to take the clearinghouse model into the large private market there.
After management redundancies, including former chief executive Tim Murray, and closure of local offices, ICSGlobal now operates only in Britain, where its Medical Billing & Collection unit is a $200,000-a-year business.
Most of the local medical software companies are too small to report their annual results to the Australian Securities & Investment Commission or are exempt foreign-owned companies, but a flood of special-purpose financial reports over the past few years reveal a sector under stress.
Lots more sad stories and a must see table here:
Really I believe it is really simple to understand what has caused all these issues for e-Health providers.
The key issue is a lack of regulatory, political and commercial certainty that would allow for proper business planning and for taking on reasonable risks to grow and provide quality solutions for those that need them.
Rather than a supportive, innovation friendly environment we have seen Government agencies make sudden unexpected policy decisions (e.g. the effective cancellation of HealthConnect in 2006/7), announcement of strategies that are then not actually funded (e.g. the Deloittes 2008 National E-Health Strategy) and Government deciding to compete with established businesses on a very unfair playing field (e.g. Medicare and Thelma).
We have also seen chopping and changing in incentive rules and requirements and the list goes on.
Until there is consistent leadership, policy and clarity of direction to provide business certainty our providers are going to continue to struggle.
Yesterday’s blog actually explores some of these issues in a little more detail.
What is needed is for Government to set the rules of the game and the objectives it wants to meet. Once it has done that all that is needed is a steady strategic hand on the tiller, appropriate leadership and relevant funding where the is market failure. The private providers can then be left to do what they do best - develop and innovate for their clients!
Sadly for Government to properly undertake its role it requires a level of understanding and skill in the e-Health domain I am not sure is there. One can only hope!