Digital and artificial intelligence (AI) technologies are becoming a critical focus in healthcare spending, according to Damo Consulting’s third annual survey. However, healthcare executives this year have also indicated that they are taking a realistic approach to balancing their technology needs and their need to improve care delivery, with many saying they will spend a significant amount of their IT budgets maintaining and optimizing EHR systems with improved functionalities. But there is one caveat: The digital health solutions currently available are not as mature as they would like. Nonetheless, healthcare executives are more upbeat about overall IT spend growth than are most technology vendors.
Technology providers continue to struggle this year with long digital and AI sales cycles, despite aggressive marketing efforts. For the second year in a row, the rise of non-traditional players, such as Amazon and Google, continue to have a strong impact on the competitive environment while EHR vendors will increasingly dominate.
Key findings from the survey include:
- IT budgets will grow by 20 percent or more. The need to reduce cost, meet higher demands, and respond to increasing change and disruption from new payment models, M&A, and new entrants will challenge healthcare providers in 2019, spurring demand for sophisticated IT solutions with most respondents (71 percent) saying their IT budget will increase this year.
- Digital, advanced analytics, and AI are the top spending priorities for both healthcare and technology service providers. A majority have stated that “accelerating digital health initiatives” is the number one spending priority for healthcare enterprises, followed by “modernizing IT infrastructure” and “optimizing EHR systems.” Also, this year, we noticed a significant increase (38%) in respondents pointing to EHR enhancements as a spending priority.
- Healthcare executives questions the buzz surrounding AI and digital technology. Many have expressed some confusion about the seemingly blurring lines of capability and competition, as well as who the strongest players are, and what their roles will be going forward. The emergence of non-traditional players (e.g., Apple, Amazon, Google, etc.) moving into the healthcare technology space, and the obscuring distinctions between platform providers and applications providers, are the likely cause.
- Cybersecurity and data privacy are not the biggest concerns. This suggests that over the past couple of years healthcare leaders might have made the investments required to get in front of the problem.
- Data management and interoperability take center stage. In their digital transformation initiatives, these are two of the biggest challenges facing healthcare providers this year. Interoperability has been a challenge since day 1 because the ACA and HITech Act failed to ensure data interoperability when they set up the meaningful use program. For digital transformation programs to succeed, an underlying requirement is the ability to aggregate and analyze data from multiple sources. Proprietary EMR systems have made that difficult and have also imposed “tolls” on access to data. There is also the issue of reluctance on the part of healthcare providers to share their data. Emerging data sources have made the task of data integration more complex.
- The technology provider market is getting a lot more competitive. Emerging players – global giants Amazon, Google and Apple – are now considered the greatest competitive threat by existing healthcare IT providers. In 2019, technology and service providers said they plan to spend more on new offerings and capabilities, branding, and thought leadership and less on hiring sales people, business development, and M&A activities.
- The CIO remains the most important buyer for technology vendors. However, IT budgets are now sitting with multiple stakeholders, including the CFO, CTO, CMIO and CDO.
This year’s survey reveals that technology providers are keen on tagging their products as best in the digital, AI and analytics space. Yet, healthcare providers will remain cautious about where they plan to spend, indicating that it’s not just about investing in technology but also serving the end-user – the patient – with affordable, better care and an improved patient experience.
To download the full report, please visit https://www.damoconsulting.net/2019-healthcare-it-demand-survey/.
