A strong pulse

Change is in the air for federal health information technology. With a new presidential administration around the corner, a sense of possibility and a renewed focus are energizing the major contractors in the field.

"I am excited about it. This is an area of large expansion," said Dr. Robert Wah, chief medical officer and vice president of Computer Sciences Corp.'s North American Public Sector unit. "We have designated government health IT as a high-growth sector."

CSC is not alone. Nearly all the major federal health IT players ? including EDS Corp., IBM Corp., Northrop Grumman Corp., Perot Systems, Science Applications International Corp. and SRA International Inc. ? are extending their reach in the area. These companies were identified as the Who's Who of Federal Health IT by Suss Consulting Inc., which developed the list for Washington Technology.

Other large contractors ? such as CGI Group Inc., General Dynamics Corp. and Lockheed Martin Corp. ? are expanding their health IT involvement.

Federal health IT has been heating up in recent years with the Bush administration's drive to create electronic health records (EHRs) for all Americans by 2014. But adoption has been hampered by a lack of universal standards for data and continuing resistance from physicians and patients because of privacy and security concerns. But a stronger push to reduce costs in the next several years could spur EHR adoption.

Meanwhile, military and civilian government health agencies have been updating their IT systems and promoting the integration and sharing of data for improved logistics, disease tracking, research and identification. Those trends are seen in initiatives such as the Health and Human Services Department's Nationwide Health Information Network and the Centers for Disease Control and Prevention's BioSense.

Along with growing interest in data mining to better use health information to improve patient care, those activities point the way to more spending for health IT, industry executives say.

"We will see an increased focus on health care IT," said Timothy Atkin, SRA's senior vice president of global health business. "There are still tremendous cost pressures that will drive people to use IT to make better solutions."

TWO APPROACHES

If Sen. Barack Obama (D-Ill.) wins the November presidential election, we could see universal health insurance. If Sen. John McCain (R-Ariz.) wins, we might expect broader health care availability and portability. In either case, the presumptive nominees have said they will seek to deploy EHRs and modernize health IT infrastructures to reduce costs and improve patient care by making information more readily available.

"McCain's health care agenda relies on market forces to drive down costs and improve quality," said Don Picard, EDS' vice president of federal health care. "Obama's health care plan calls for affordable, universal coverage through a mix of private and expanded public insurance. Yet, the common theme of both plans is the appropriate use of information technology and management systems."

IT systems promise to improve care and reduce costs, he added.

Regardless of who wins the presidential election, the health IT market is expected to grow at a higher rate than the overall federal IT market in the next several years. A recent report by Input Inc., of Reston, Va., suggests a growth rate of 7.1 percent for federal health IT from 2008 to 2013, peaking with a federal IT market of $4.5 billion. There could be a temporary lull as the Bush administration wraps up projects, followed by heightened growth starting in 2009, industry observers say.

The federal health IT contracting landscape has become more competitive in recent years. Several players in commercial health care markets have been involved in military and government health IT for many years. At the same time, several major federal contractors, especially those active in defense, have entered the market through acquisitions and expansions of their health divisions. Many have hired physicians, former government health IT officials and public health specialists to augment their IT services.

For example, in May, General Dynamics bought Vips Inc., a health IT provider, and in late 2007, General Dynamics hired a former HHS chief information officer, Melissa Chapman, as vice president of health IT strategic programs. Several smaller companies are offering specialized support and expertise.

"Most of the major players in federal health IT have a core competency in one or several areas," said Bob McCord, SAIC senior vice president and business unit general manager. "To date, we have not observed any of our competitors gaining momentum across the entire spectrum but rather having an increased impact in one agency, center or operating division."

In other closely watched moves, in the past two years, software giant Microsoft Corp. has made two health IT acquisitions and created its HealthVault data-storage solution.

"We provide a platform, working with all the contractors," said Jack Hersey, general manager of U.S. public-sector health care at Microsoft.

Some industry executives say they expect such innovations to have a noticeable impact. "In thought leadership, the nontraditional companies, like Microsoft, will tend to shape the industry more so than the traditional providers," said Douglas Ash, vice president of Lockheed Martin's health care group.

PATIENT-CENTRIC APPROACH

In recent years, federal health IT has focused on transforming systems at Defense, Veterans Affairs and other departments. Major initiatives have included CDC's BioSense for tracking diseases and HHS' Nationwide Health Information Network for connecting health care systems to share data. Both projects are still in their early stages.

In a broader sense, federal health IT has followed a general trend away from transaction-centered systems toward patient-centric environments and Web-based applications.

Introducing patient-centric capabilities will be a major challenge for existing health IT systems, which are transaction-oriented rather than actor-oriented, said Scott Schumacher, senior vice president and chief scientist at Initiate Systems Inc., a health IT contractor. "I believe this will be the major growth area over the next five years."

Although EHRs hold much promise, the move away from paperwork has been sporadic, and the outlook is uncertain.

"Many health care processes still need to be automated or modernized over the next few years in order to realize cost savings and, more importantly, to create comprehensive patient electronic health care records that can be used to improve the quality of health care," wrote John Slye, a principal analyst at Input, in a recent report.

Nonetheless, federal health IT contractors are optimistic about overcoming resistance from doctors and patients to a standardized electronic record system for health care.

"People used to be uncomfortable using an [automated teller machine] or buying online," said Cheryl Campbell, vice president of public-sector health care at CGI Group, which is a $70 million division. "Now it is second nature. We will see a similar progression in electronic health care records."

CSC, which has been involved in standardizing records for regional health care systems, uses an approach that capitalizes on expertise to share information across increasingly diverse groups, Wah said. "Our approach is on connecting data islands."

Even so, Wah, a retired Navy physician, said he recognizes federal limitations. At DOD, he managed a $900 million medical portfolio, and at HHS, he was in charge of meeting President Bush's goal for electronic health records by 2014 ? with a budget of about $60 million.

"My federal role was as a catalyst, and I had to rely on others to implement," Wah said. "The next administration may lead to a reexamination of that role. There may be more government involvement."

KNOW THY CLIENT

Another growth area in health IT is the mining of health care data, also known as informatics. A researcher can use software to sort through large amounts of data in a short time to discover patterns and potentially improve treatment.

In the research area, the availability of health IT for data mining has greatly increased the capacity and efficiency of health care systems, Atkin said. For example, when investigating a rare condition, a researcher can search multiple electronic databases by keyword in a short period of time rather than searching by hand through countless paper documents.

"What used to take a researcher three to four weeks can now be done in less than 10 minutes," Atkin said.

Information sharing among health care agencies also continues to be fruitful and is likely to increase in the coming years, said Dr. George Peach Taylor Jr., vice president of health and human services at Northrop Grumman IT.

"More and more health care agencies are realizing that the data collected by one can be repurposed and useful for another," Taylor said. "For example, the Centers for Medicare and Medicaid Services pays out millions of dollars in benefits, but they have little way of knowing what the return-on-investment results are from those benefits. If they were able to mesh health care data with benefits data, they would gain more visibility as to what is working and what is not."

As federal health IT gains visibility as a large and lucrative market, contractors foresee more competitors entering the field, possibly with mixed results. Despite the market's promise, there are pitfalls.

"The secret of success is to have medical advisers and be familiar with the culture of our providers," Campbell said. "We try to model the behavior of clients and understand their missions. That understanding comes with time. Some firms are trying to do it by acquisition."

"It is a very competitive marketplace, and there will be more entrants coming," said Lee Carrick, president of Perot Systems Government Services. "From a business perspective, we need to be agile and adapt to changes."

Alice Lipowicz (alipowicz@1105govinfo.com) is a staff writer at Washington Technology.
Federal health information technology is a volatile market that could undergo major expansion and change in the next several years, said Warren Suss, president of Suss Consulting Inc.

"We are dealing with a dynamic, turbulent and, to a large degree, immature market segment," said Suss, whose consulting firm, based in Jenkintown, Pa., specializes in advising large clients on federal defense and civilian IT.

Large contractors have been developing custom health IT solutions for the Defense, Veterans Affairs, Health and Human Services, and other departments for decades, but now there is a drive for greater interoperability and the use of commercial technology, Suss said.

In addition to maintaining and updating existing IT systems, the federal government also is likely to play a larger role in solving major problems in health care, such as increasing costs and lack of availability of health insurance, he said. That federal role includes setting standards and fostering information sharing across systems.

As a result, interest in federal health IT is growing. Federal systems integrators have made it a strong focus, commercial health care providers are more likely to enter the federal market, and IT giants, such as Google Inc. and Microsoft Corp., also are getting involved in public-sector health care, Suss said.

"Companies that don't play in the federal health care space may find themselves left out in terms of being able to shape the market," he added. "There is a convergence happening of federal and commercial health IT."

But despite all the changes occurring, the federal health IT market has not yet matured, Suss said.

"Demand has not quite jelled. Market leadership has not yet been established," Suss said.

"With all the changes and the push to develop [commercial] solutions, there could be a threat to existing players and opportunities for new players."
The 2008 Federal Health IT Who's Who was developed for Washington Technology by Suss Consulting Inc., of Jenkintown, Pa.

The companies listed have made deliberate corporate commitments to focus on building their already significant federal health information technology services business.

All the companies have designated health IT practices that are actively promoted as part of their overall federal IT business strategies.

Other large federal contractors perform substantial amounts of health IT work but have not yet developed significant health IT practices as part of their IT strategies or created separate practice areas around that specialty.

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