Small hospitals are the customers of the future for the global healthcare IT market, while low-end users will drive down profit margins of PACS and RIS companies. These are among the findings of the latest investigation into the global healthcare IT market by GBI Research.
The global healthcare IT market is forecast to grow at a compound annual growth rate (CAGR) of 9.3% to $20.5 billion in 2017. The ongoing implementation of hospital information systems (HIS) will continue to drive the market in the future. Emerging economies and Asia-Pacific countries such as the Republic of Korea and Taiwan will be the main drivers for the market. Healthcare providers can now benefit from funding of up to $27 billion if they demonstrate ‘meaningful use’ of IT healthcare, although fears of a ‘funding cliff’ this year may result in companies investing less, or looking towards countries such as India and China for growth.
Healthcare information systems and medical imaging information systems (MIIS) are used to store and share patient information between the various healthcare delivery organisations and departments in an organisation, thereby improving workflow, decreasing the possibility of errors and improving the quality of patient care. Market estimates are based on the revenue generated from software sales for first-time installations (licence cost included), hardware sales for first-time installations and one-year service contracts. It excludes revenue generated from software updates, new partial installations, security updates, system integration (excluding during new installations), regular hardware maintenance, off-site services, solution-as-a-service, consulting and training services.
Medical imaging information systems
MIIS are used in large hospitals and diagnostic imaging centres to store, retrieve, modify and forward images and information to various hospital departments or imaging centres in the network. They include picture archiving and communications systems (PACS), cardiology information systems (CIS) and radiology information systems (RIS):
- Picture archiving and communications systems: PACS are used in large hospitals and diagnostic imaging clinics to store, retrieve, modify and transmit patient digital images over the network to various departments in a hospital or to a different healthcare delivery organisation within the network. A PACS comprises computers and servers used for the storage and retrieval of patient images.
- Radiology information systems: RIS are used in hospitals and diagnostic imaging clinics for patient registration and tracking, scheduling, result reporting and image tracking. RIS are integrated with HIS and PACS in large hospitals to expedite and improve patient care. This segment includes stand-alone RIS solutions.
The global MIIS market grew at a CAGR of 10% from 2003 to $3.7 billion in 2010. PACS continues to be the biggest market in MIIS with a market value of $2.7 billion in 2010.
Outsourcing radiology information to low-cost destinations such as India and China has led to the installation of RIS and PACS in hospitals in the US. To combat the need for repeated radiology procedures, which expose patients to high costs and high doses of radiation, governments in Europe and the US have funded the installation of PACS in public hospitals.
Market drivers
The one-desktop solution is being projected as the future of imaging and diagnostic solutions for hospital departments by PACS vendors. Its new features comprise advanced applications such as orthopaedic templating, mammography, vessel and cardiac analysis, virtual colonoscopy and 3D visualisation. PACS will offer cross-linking data across various hospital departments to provide an integrated diagnostic application, and enable radiology to have a single workstation for all users across departments. This will allow technologists, radiologists and referring physicians to share data without the need for separate workstations.
In the European Congress of Radiology 2009, GE unveiled its lesion management system, a computer-aided diagnosis application that allows the interpretation of 3D images of the liver, lungs and colon. It can be integrated with RIS and PACS to improve clinical workflow.
Small hospitals are focusing their purchases on specialised PACS tools because of the more common use of 16-slice CT and the prospect of 64-slice scanners. New products are now specifically designed to keep in mind the evolving needs of small hospitals. Features such as 3D visualisations are now considered critical in decision making. For example, GE Healthcare’s PACS-IW is designed to meet the demands of physicians working in small to medium-sized hospitals for advanced post-processing. It is user-friendly and easy to install yet offers modern clinical tools such as maximum-intensity projection/multiplanar reformat (MIP/MPR) and advanced 3D technology.
Specially designed products for small healthcare providers have become the focus of companies such as Merge Healthcare/Amicas and NovaRad, which offer products designed for small healthcare providers and are priced lower than those offered by large vendors.
Market restraints
PACS adoption in the European market varies from 40% in Italy and Spain to 90% in England and Scotland. PACS penetration in the US is only 47%.
As most high-end users (large and very large network hospitals) have already installed PACS, it is only low-cost providers that currently remain under-penetrated.
Typical low-end hospitals have fewer than 300 beds and use small private healthcare providers to generate contract volumes. Owing to small financial resources, these hospitals tend to pay per procedure to recover the costs of installing new PACS. The upfront installation costs for a small hospital range from $200,000 to $400,000 (£126,566-£253,132) and, because of low procedure volumes, they tend to be charged slightly more for each procedure than larger, high-volume hospitals.
This means that revenue earned from small hospitals is much lower than that from high-volume hospitals, forcing vendors to account for the low average price with a higher volume of contracts.
This market, however, is rapidly becoming saturated. The small hospitals market is expected to peak in two years’ time, after which the only PACS customers will be rural hospitals and physicians’ offices with an average of fewer than 10,000 annual procedures.