Five Trends Reshaping The Health Care Channel Right Now4:32 PM EST Wed. Mar. 10, 2010
The state of the health-care IT channel as it relates to VARs is best expressed as a balance: on the one side, a dramatic increase in overall opportunities thanks to outside factors like the federal stimulus, and on the other, a need for solution providers to re-evaluate the role they can play in those opportunities.
As many vendors, integrators and VARs told Channelweb.com at this month's Health Information and Management Systems Society (HIMSS) conference in Atlanta, health-care IT has long since graduated from a place where a mix of hardware resale, software packages and maintenance services will win lucrative deals.
HIMSS is not traditionally a channel-centric show, but this year more than others, the takeaways for health-care IT channel observers were many. Here were five that emerged after three days of sessions and interviews:
1. Physician Practice Is A Bull's Eye
For electronic medical records (EMR), the best play for regional VARs is in small-office physician practices between 2 and 20 seats. Like hospitals and large clinics, the physician practices and ambulatory care settings must demonstrate a proper, interoperable, "meaningfully useful" EMR or risk losing out on Medicare and Medicaid incentives provided by HITECH, the health-care IT portion of the American Recovery and Reinvestment Act (ARRA).
HP is among vendors that have already taken advantage of the channel possibilities, having early in January announced a new partnership with McKesson to offer packages of HP hardware and McKesson EMR and practice management systems through the channel.
Tech Data was the chosen distributor for the HP-EMR bundles, and Barb Miller, vice president, government, healthcare and technical services, said it's indicative of a greater trend to get at corners of the health-care IT market that the big integrators don't already own and that the broader VAR channel can service.
"We do see a lot of these folks becoming more channel savvy," Miller said, referring to McKesson and other software vendors. "They have their own VAR channel already, but they see an opportunity, as do we, to get engaged because they can't get to the one-, or two-, or four-office doctors' offices."
ARRA has driven much of that interest, Miller suggested. Ever since the stimulus funding was first announced in February 2009, Tech Data, along with other distributors like Ingram Micro and Synnex, have been tailoring vertical-centric VAR programs to help solution providers try to identify opportunities.
Among recent Tech Data additions are grant writing and grant tracking services to its Healthcare Specialized Business Unit (SBU), and also the debut of its TechMed Vendor Affiliate Program, in which Tech Data partners with select health-care specialists to design VAR programs around medical software needs. Sage is Tech Data's first announced partner in the venture.
"We're not pretending to be the health-care experts, but we are here to evangelize the channel," Miller said of Tech Data's HIMSS participation. "There are plenty of ways resellers can play here that aren't always clear."
2. EMR Vendors Are Reaching Into The Channel
Neil Simon, COO of Aprima Medical Software, said that to EMR and practice management software vendors like Aprima, the channel is precisely the quickest route to physician practice and ambulatory setting customers: the health-care SMBs, in other words.
"Aprima is a big believer in the reseller channel," he explained. "VARs can enhance what we offer for software whether it's through customer services or packaging what we have as part of overall deployments."
Aprima does about 30 percent of its business through VARs, but now that meaningful use criteria is being established and physicians are starting to make buying decisions, both Aprima and many of its competitors in the EMR space are looking to solution providers to be feet on the street.
"These are management systems," he said of Aprima's software packages. "This is not something you can just buy off the shelf."
Next: What The Health Care Solution Provider Will Soon Look Like
3. The Role Of The Health Care Solution Provider Is Changing Yearly
Dan Pelino, general manager of IBM's health-care and life sciences group, sees three types of solution providers emerging as the most important channel players for health care: specialty VARs that behave, he said, like "the easy button at Staples" in that they can not only fulfill orders but also package solutions and consult for health-care organizations; ISVs that understand the crucial importance of building software programs benefiting EMRs and health information exchanges (HIE); and clinical data management and business intelligence providers that can help organizations sort out and organize the tremendous volumes of clinical data they have to grapple with.
Each has a role in IBM's health-care channel ecosystem, Pelino explained, because "doctors don't want to play integrator."
To others, it's a matter of how platforms are changing, and whether more traditional solution providers will have a place in partnership -- not in competition -- with the expanding class of platform-as-a-service players leveraging the cloud.
One of them is Covisint, which last week introduced ExchangeLink for Healthcare, a platform for enabling medical data exchange between HIEs, hospitals and health systems and physicians and health-care associations -- on-demand, cloud-deployed services intended to help health-care providers "connect the dots," according to the company.
"These interoperability problems are going to be solved by the cloud," insisted Brett Furst, Covisint's vice president of health care. "That, in turn, is going to create the new class of solutions. It makes sense. You didn't have CNN before you had digital TV, right?"
If cloud is still in its earliest stages in health care, it'll be one area where solution providers can play a crucial role, vendors agreed.
"Meaningful use needs will translate to the most sophisticated organizations having private clouds," said Roberta Katz, director and global solutions lead for EMC's Healthcare/Life Sciences group. "There are a lot of players involved, but the important piece is guiding them toward a wiser investment. [Solution providers] can help them get better understanding of what vendors they need and how their IT needs will consolidate."
4. Niche Technologies Will Be Increasingly Important Channel Plays
Other vendors, such as Fujitsu, see emerging channel plays in niche technology markets like biometrics.
Vic Herring, vice president of sales and business development for Fujitsu's Advanced Technology Group, said that as more common hardware and software products like tablets overrun the health-care channel and price and feature wars ensue, the need for advanced biometrics tools -- such as Fujitsu's PalmSecure authentication offering -- will be the more lucrative solution provider play.
"As the price comes down, you're seeing organizations a lot more open to different types of solutions than they used to be," he suggested.
Next: How To Think Like A Physician
5. Think Like A Physician, Win The Deal
Most channel observers at HIMSS agreed that there's still a disconnect between what physicians want and what solution providers think they want.
"A physician wants to have all of these capabilities, from voice to patient data, flowing to a highly secure device," said Fraser Edward, manager of market development for health care at BlackBerry maker Research In Motion (RIM). "He doesn't want a Batman Belt of different solutions anymore. Therefore, BlackBerry is now a cool story. We have to follow the path of physician wants."
The important thing for vendors, Edward said, is to provide that vision for VARs to help them get at physicians' needs faster and more effectively. RIM was once a heavily direct-sales oriented company, he explained, but in vertical markets like health care, the "local touch" a solution provider can offer has increased the level of business opportunity for everyone involved.
That opportunity dissolves, however, when either VAR or vendor approaches the health-care customer as technologist instead of problem solver.
"This is not a crowd where you can brag about this and that technology," said Ram Appalaraju, senior vice president of marketing for Meru Networks. "They appreciate consistency and they appreciate getting what they paid for."
Solution providers that have been especially successful in health care are already following that path of "physician wants."
To Frank Kobuszewski, vice president of technology solutions with solution provider CXtec, the new health care landscape means VARs should look not just to the emerging technology needs of health-care organizations, but how their specialties -- especially in services -- can relate to those needs.
One of CXtec's major concerns, for example, is asset recovery and disposal, and more specifically, helping health-care organizations deal with "e-waste," or broken, obsolete or otherwise discarded electronics equipment. If health-care facilities, especially hospitals, are to make the transition to interoperable electronic health records and embrace their digital future, a lot of ancient systems are going to require proper disposal.
"As of right now, there's no national standard around e-waste," Kobuszewski explained, citing the e-Stewards Initiative and R2 (Responsible Recycling) among the programs and proposed standards making the rounds. "But the recycling business here is big. You probably saw the '60 Minutes' interview on people who say they do the right thing when recycling this stuff, and then their assets are tracked right to landfills in China. That's a big problem."
Even the massive systems integrators with traditionally vast health-care practices see advancing opportunity for partnerships with smaller VARs willing to adjust their roles.
"They have a play, certainly," said Amy King, vice president of health information technology programs at Northrop Grumman, of the smaller solution providers Northrop Grumman has worked with in the past. "The challenge is that it's always different based on the customer. Some have grown in terms of what they're offering, some still have to find their niche."
The basic reseller game in health care, she said, is over.
"If you're just offering commodities," King explained, "you're not going to be all that valuable."
For more on the changing health care channel, check out the following: