The Pressure's On For the VARBusiness 500 And Health-Care IT

Health-care information technology is a burgeoning market. That should come as no surprise: The United States is currently providing health care for some 34 million senior citizens--a number that will balloon as an estimated 76 million baby boomers prepare for retirement. As that number swells, the hunt will be on for ways to curtail costs and increase efficiencies. IT solution providers specializing in this field can bring their expertise to the table--and find themselves very welcome guests.

"The U.S. health-care system is in a difficult position as it tries to deliver quality care to a rapidly aging population, while reducing the actual cost of health care," notes FrostSullivan industry analyst Konstantinos Nikolopoulos in a recent study: The U.S. Healthcare Market and Implications for the Healthcare IT Industry. "Health-care information technology will have an important role to play in the future of the U.S. health-care system due to its ability to assist with or directly address these issues."

One solution provider that's taking a cue from such reports is Optimus Solutions (2006 VARBusiness 500 No. 241). On April 23, Optimus announced the launch of a new practice area focused on serving the needs of health-care clients.

The health-care practice focuses on the IT needs of hospitals, physicians' groups, insurance providers and integrated delivery networks. Led by Bob Shapiro, an IT veteran in health care and life sciences who was previously practice leader for health- care workflow transformation at IBM Consulting Group, Optimus has a roster of health-care clients that includes Cardinal Health Care, Gwinnett Medical Center and Atlanta's Northside Hospital.

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"The health-care industry today is at a crossroads because technology promises to dramatically transform the way medical professionals deliver care to patients," says Mark Metz, CEO of Optimus. "Optimus Solutions is uniquely positioned among VARs to help guide this transformation through the services we offer, our successful partnerships with industry leaders like IBM and Cisco, and our established base of health-care clients. Not only do we understand information technology, but we also understand the unique needs of hospitals and other institutions in the health-care field."

Optimus will provide clients with disaster recovery, business continuity and security solutions--such as encryption of physician e-mails--to protect confidential patient information.

A look at the recent earnings report of Cerner (VAR500 No. 65), illustrates the financial potential in the market. Cerner's bookings in the first quarter of 2007 were $353 million, up 35 percent over the year-ago quarter and a record for the first quarter. First-quarter 2007 revenue rose 14 percent to $365.9 million, compared with $321.2 million in the year-ago quarter.

Some of those VARs that have experienced the market's potential are expanding their offerings.

GE Healthcare, which a year ago bought solution provider IDX Systems (VAR500 No. 72), announced in mid-April that it had acquired Wave Biotech, which supplies disposable manufacturing technologies to the biopharmaceutical industry. The acquisition will help GE Healthcare expand its portfolio of products and services.

Ann O'Hara, general manager of GE Healthcare's bioprocess business, says the combination of the two companies will allow the solution provider to offer more applications and expand its value-added tools and services for biopharmaceutical manufacture. "This acquisition reflects where we see the growth and opportunities within the industry," she says.

Indeed, the FrostSullivan report revealed that doctors and health-care professionals working in hospitals are more likely to embrace technologies than their smaller counterparts. That's partly because the return on investment typically is realized more quickly at larger institutions than at smaller ones, according to the report.

VARs can tell skeptical potential customers about the University of Pittsburgh Medical Center (UPMC), which recently began using the virtualization capabilities within IBM's AIX operating system. Although the staff of the IT Transformation Group at UPMC hasn't grown, it's now supporting 150 percent more server capacity, while the amount of space required for the servers has shrunk by almost 40 percent.