Healthy Choice

From the frenetic clatter of a code-blue response to the reassuring thrum of an infant cardiac monitor, technology has become the heartbeat and the lifeblood of modern health care. And the growing vertical opportunities in public hospitals and public-service agencies are helping to breathe new life into flat-lined sales of VARs that sell to the public sector, according to a GovernmentVAR survey.

In GovernmentVAR's first State of the Government Market (SOGM) survey, solution providers indicated growing optimism toward the opportunities available in health care. The survey polled 260 VARs on buying trends in government and education, and how those trends affect selling strategies. On the whole, respondents concluded that today's government arena has fewer windfalls but more long-term opportunities to offer those capable of being primary influencers and trusted advisers. And nowhere are those roles more vital than in the health-care sector (read "Advocates For Efficiency).

According to industry experts, VARs' optimistic take on public health is well-founded. Health care makes up nearly one-seventh of the U.S. economy, and much of it is funded, in whole or in part, by government agencies and programs. Phoenix Health Systems' Healthcare Information and Management Systems Society (HIMSS) survey, published in February, revealed that 22 percent of health-care providers are implementing return-on-investment initiatives related to such issues as federal HIPAA privacy mandates and security standards. Nearly 90 percent of those providers expect to expand their use of standard electronic transactions, computerized practitioner order-entry and conversion to electronic medical records.

In the security realm alone, 55 percent of the HIMSS survey's 324 respondents said they are now compliant with HIPAA security requirements. The majority of those who have yet to comply said they anticipate full implementation of the security standards within six months. Much of the compliance work requires technology investments.

And if HIPAA compliance issues aren't motivation enough, the Bush Administration in 2004 set a goal of having all patient medical records handled electronically within 10 years.

At GeminiTech LLC, a Waipahu, Hawaii-based VAR that focuses on technology solutions for education, and state and local government, public health-care customers are appearing on the radar.

"We'll definitely be expanding the work we do to provide [such things as] tablet-PC mobility solutions within the health-care industry," says GeminiTech CEO Karen James. "We see this as an attractive business strategy because it focuses a significant portion of the revenue on value-added services such as software customization, business-process-re-engineering consulting and training."

Like GeminiTech, some four in 10 VARs that sell to the public sector say they are already selling into the health-care market, according to the SOGM survey. Those that are said they get slightly more than 12 percent of their total revenue from the health industry. And like James, 42 percent of VAR respondents currently involved with health care said they plan to increase their focus on that sector. About half said they will maintain their current efforts in that vertical, while only 8 percent said they expect less health-care business in the future.

"The health-care industry is coming off of what was a long period of reactive decision-making because of HIPAA and all of the IT complexities that it generated," James says. "We are seeing more health-care providers, both large and small, be proactive, especially in the use of mobility solutions now that the infrastructure has stabilized."

James' observations match those of other VARs.

"HIPAA has opened up opportunities in the health-care segment in the areas of security, identity management, storage and communications, all of which play to our strengths," says Art Sands, COO of AC Technology in Dulles, Va. "Many organizations will be upgrading their current infrastructure to comply with HIPAA, and that is what makes it a very attractive market."

Robert Deitz, president of Government Technology Solutions (GTS) in Shingle Springs, Calif., says he's "increasing efforts in state and local government, as budgets are now on an upswing after being down the last three-plus years."

While GTS won't be focusing on health-care sales, Deitz says he thinks technologies that improve security and privacy will generate the most interest in the health-care vertical. "Identity management is a big area," he adds.

NEXT: Health-care customers with the most potential for growth.