VARs Profit From Health Care Act

In 1996, Congress passed the Health Insurance Portability and Accountability Act (HIPAA), requiring that, by April 2003, hospitals, doctor's offices, insurance providers and other representatives of the healthcare industry protect patients' privacy and ensure the security of the electronic transmission of patient information. The value of the act has been projected as high as $4 billion by some industry estimates. [Look for VARBusiness' supplement Healthcare Integrator on March 31.]

"HIPAA is placing additional challenging requirements on the health care industry," says Craig Miller, CTO for solutions integrator/VAR Dimension Data's Tech Data Corp. U.S. headquarters in Reston, Va., which is working with companies such as Aliso Viejo, Calif.-based eEye (www.eeye.com) to provide HIPAA-related solutions. "The industry is huge, enormously complex, and burdened with IT systems that are baroque in their design and riddled with aging technology. Further, this challenge comes at a time when the industry is coming under severe pressure to contain accelerating inflation. There is temptation to address HIPAA issues in a piecemeal fashion, but there is a risk in pasting new functionality, new technology and new code on an already stressed infrastructure. A good technology in support of inefficient processes is wasted. We attack HIPAA issues by doing a technology quick fix using technologies like encryption, firewalls, and improved authentication, because there is an immediate need. We then take a more systemic approach to the look at broader data management, data structure, and information management processes as they relate to confidential and private information."

Other channel leaders are also saying that the level of activity among VARs, vendors and distributors has been non-stop:

* Clearwater, Fla.-based Tech Data Corp., the #2 global distributor of microcomputer products , is now launching a HIPAA program for VARs, still in the development mode. The program, offered through Tech Data's Government Services group, is designed to help resellers understand business opportunities within the HIPAA guidelines, profile potential customers, develop customized bids and build comprehensive solutions.Additionally, the Government Services division can help facilitate develop more complex solutions that require longer sales cycles, particularly those involving multiple technologies for a HIPAA solution.

* Somers, N.Y.-based IBM is selling its storage strategy via Chattanooga, Tenn.-based VAR InfoSystems Inc. for Covenant Health Hospital System in Knoxville, Tenn., with six acute care facilities and $1.5 billion in patient revenue and a clinical data system with 4,000 users. "Medical imaging alone is a $1 billion market for storage," says Kathy Smith, IBM's vice president of storage solutions. "Health care total IT spending is a $14 billion market. IBM has put together a life science team and has invested $200 million in this space. We will make 10 times more revenue in 2003 selling HIPAA-related solutions."

* Redwood City, Calif.-based firewall vendor Check Point Software is selling exclusively through reseller channels with VARs such as Westborough, Mass.-based Akibia Inc. (www.akibia.com). Among Check Point's health-care customers: The University of Michigan Health System, with three major hospitals, 30 health centers, 120 outpatient clinics and an IT network of 15,000 devices, including 400 servers and 300 applications.

* The security pitfalls of Instant Messaging is the focus of San Diego-based Akonix Systems with its Akonix L7, which allows healthcare organizations to manage IM use by monitoring communications and preventing the transfer of sensitive information, such as a social security number. Southland Technology is among the 20 VARs involved with bringing Akonix L7 to the healthcare market. An estimated 84 percent of all organizations have IM capabilities, industry research shows.

* Alpharetta, Ga.-based VAR/systems integrator DCS Healthcare is partnering with Reston, Va.-based network security vendor, SilentRunner, to bring its solutions to an estimated 60 hospitals, managed care companies and pharmaceutical companies nationwide. Noting that a Justice Department study revealed last year that 78 percent of internal security breaches were attributed to employee Internet abuse, DCS puts as much emphasis on intelligence as it does firewalls and routers as part of its solution package. "Behavioral patterns are a normal consequence of proper data traffic," says Kevin Arner, executive vice president of DCS Healthcare. "Medical staff converses with medical staff, facilities personnel converse with facilities staff, and likewise patient accounting staff converses with patient accounting personnel. These 'inter-functional' patterns simplistically define normal utilization of data among appropriate audiences. However, the requirement is greater than patterns alone. In order to avoid breach of these provisions, you must combine the monitoring of the behavioral patterns of data traffic with the knowledge of whether the data shared among the entities is sensitive."