HIPAA may Contribute To Market Surge

Solution providers and developers say they anticipate that a confluence of government actions could prompt a surge in spending on document and records management technologies in the health-care, financial and government markets.

Health-care providers face an October 2003 deadline to comply with aspects of the 1996 Health Insurance Portability and Accountability Act (HIPAA). While the deadline relates to exchanging and securing certain patient information electronically, it could also provide an impetus for health-care providers to upgrade systems for managing voluminous paper records.

So far, however, solution providers say HIPAA is prompting more talk than deals. "The discussions are fast and furious," said Lance Johnson, president of Encore Imaging Systems, a Portland, Ore.-based solution provider. "It's just that the medical industry is economically challenged these days."

Johnson said Encore began focusing on the health-care market two years ago because of HIPAA. While medical-records systems are making doctors' offices more efficient, the real efficiencies will come from linking those systems to the documents needed to support insurance claims, he said, adding that the average doctor generates 30 to 50 paper documents each day.

While many doctors will be slow to comply with the new guidelines, hospitals and larger integrated health-care organizations will move more quickly toward automating patient records, Johnson said. Because of the way healthcare companies interact and share information, the technology should spread from there, he said.

Others, however, don't think HIPAA will boost the document management space as much as anticipated. Kenneth Chin, an analyst at Gartner Dataquest, said HIPAA compliance will have less impact on document management than on security technologies such as digital signatures and certificates. "You're talking about an industry [health care that has a very poor record in managing paper-based documents," he said.

Still, HIPAA is only one factor that could pump up the market for electronic information management. The financial services sector, too, is showing more interest in getting paper-based records into electronic form. The events of Sept. 11 underscored the vulnerability of paper-based record-keeping, and the Enron debacle demonstrated a need for better records management. More important, the Securities and Exchange Commission and other government agencies have adopted guidelines for maintaining legally valid e-documents.

"The government's saying it can get rid of paper if it stores information electronically in the right way and has audit trails," said Bruce Williams, CEO of Blue Lake Software, a Redondo Beach, Calif.-based partner of document management software vendor LaserFiche. "In banking, there's a mandate. In terms of the SEC, there are clear guidelines now."

As a result, Williams said Blue Lake has never had so many potential clients.

Meanwhile, content management vendors FileNet, Stellent, IBM and Documentum report that e-government initiatives are driving sales. "This is the biggest opportunity we have right now," said Dean Berg, director of product management at Stellent, Eden Prairie, Minn.

Solution providers say many government agencies are eager to move documents to the Web and forge links between agencies, and they're under pressure to enable online transactions.

The next wave of initiatives will focus on developing an infrastructure for handling document management transactions on the back end. "That's where I see tremendous growth for us," said Monte Wilson, vice president of government operations at Documentum, Pleasanton, Calif.

Still, with 36 states slated to hold gubernatorial elections in November, government spending on big IT projects is on hold, Wilson said. But come November, that's expected to change.

"Next spring is going to be a very important time," he said. "That's why we're looking very closely at how HIPAA and e-government are evolving and at how a lot of that money is going to be [spent after November."