Health IT opportunity might change competitive landscape

The federal government’s emphatic push into health-related information technologies is likely to generate a wave of new work for IT contractors.

The deployment of health IT systems — most notably electronic medical records that can be exchanged among patients, doctors, specialists and other health care providers — is high on President Barack Obama’s priority list. He has contended that digitizing all health care records within five years will help the effort to revive the economy.

Indeed, the American Recovery and Reinvestment Act of 2009 allotted $19 billion in health IT investments. And any major health reform legislation that Congress passes this year is expected to add more funding for electronic medical records exchange, sources say.

“There is going to be an abundance of opportunities,” said Amy King, director of health care systems management at Northrop Grumman Corp., a major player in the federal health IT marketplace. “You’re seeing some of it now with the stimulus, and once health reform legislation gets passed, there will be even more opportunities.” Northrop Grumman has contracts to support the Health and Human Services Department’s Office of the National Coordinator for Health IT in the development of the Nationwide Health Information Network, or NHIN, and AHLTA, the Defense Department’s electronic health records system.

The stimulus package contains funding for regional health IT extension centers, which assist health providers across the country to adopt or enhance EHRs, King said.

King and other market observers said EHR development will create significant demand for expertise in areas such as security and system access technologies.

“Certainly, security is going to be a huge issue because people are very sensitive about their data and want to make sure that the wrong people don’t have access to their" health records, she said. In addition, “there is going to have to be access to different systems so that [patients] can see all of that information regardless of what system it’s in. So we’re really looking at portal technologies, sharing data across multiple databases and even things like natural-language processing technologies.”

Warren Suss, president of Suss Consulting Inc., of Jenkintown, Pa., agreed. “We’re looking at establishing interfaces between a lot of different sources of information and that could begin to unlock opportunities for many different players in the marketplace,” Suss said. “Whatever companies are able to unlock the door to this and do it in a secure, interoperable way are going to have the keys to a $25 billion kingdom.”

The exchange of health records also will involve more collaboration among federal, state and local health organizations, opening other opportunities for vendors that work across levels of government to tap into new markets, King added.

The effort to create a national system of interoperable medical records began during the last administration. In 2004, President George W. Bush issued an executive order mandating that HHS establish ONCHIT, an office dedicated to promoting a nationwide health IT infrastructure that would permit the secure exchange of patient information. In partnership with DOD and the Veterans Affairs Department, ONCHIT officials issued contracts to develop the NHIN and Connect, gateway software designed to let federal agencies and other health IT stakeholders adapt their systems to the NHIN.

But more recent government health IT programs might foreshadow burgeoning opportunities for contractors, sources say. For example, the Military Health System’s MiCare project, a pilot program launched last year and intended to let service personnel access and manage their personal health records, enlisted industry giants Google and Microsoft Corp. Both companies have developed health records databases, Google Health and Microsoft HealthVault.

The MiCare program had a successful test period at the Madigan Army Medical Center in Tacoma, Wash., and has received the green light for expansion, DOD officials said recently at the Open Government Innovations conference in Washington.

Some observers said they believe that MiCare might be a signal that the government is moving toward the use of more commercial vendors in the health IT space.

“Health IT has been an insider game,” Suss said. “It’s been a game dominated by…large, well-established, deep-pocketed federal integrators. They play the game and know how to play it well. But [MiCare] seems to be facing more toward the commercial side of companies like Microsoft and Google.”

Suss suggested that if the commercial approach to MiCare is more widely adopted, the door to the federal health IT market could swing open to “players who are not the traditional leaders within the federal [health] IT space and may change the competitive mix.”

King said it is too soon to assess the impact of MiCare, though he said he does think "that the government wants to move more in a [commercial software] direction.”

Col. Claude Hines, program manager for the Defense Health Information Management System, said MiCare was a prototype and not necessarily an indicator of a change in direction.

“We were just trying to prove the concept through some type of portal,” he said. “It was never the intention that [MiCare was] a Microsoft PHR and a Google PHR. We chose Microsoft and Google because they are the big leaders in IT, and they’re trying to kick off their own systems as well.”

However, Hines agreed that the government’s momentum on the EHRs front gives contractors more opportunities.

“The emphasis on making sure that all U.S. citizens have an electronic health record has opened up this space for contractors who may not have had an interest at one time or may have felt it would be hard for them to bring [their products] to the market,” he said. “But now we’re talking about as a nation, everybody needs an electronic health record. That’s a lot of work when you really think about it, and so I think [many contractors] are thinking, ‘I might want to get involved in that space.’ ”