It is 15 years since SAP first entered the health-IT business, in that time its solutions for logistics, patient management, accounting and resource planning have been used by thousands of hospitals worldwide, and particularly in Europe.
However, in the area of integrated e-health solutions, SAP has so far been remarkably quiet. Bernard Thibaut, head of the health-related software business at SAP Germany, tells E-Health Europe’s Philipp Grätzel, that this may be the calm before the storm.
In 2003, SAP was involved in the bIT4health consortium which was responsible for conceptualising the architectural framework of the German national health-IT project. Since then, SAP has to an extent withdrawn from national health IT projects, or at least that is the impression one gets. Is your company still interested in e-health-solutions?
Bernard Thibaut: “We are definitely interested in e-health solutions, and we continue to be. After all, SAP makes around ten per cent of its overall turnover in the field of public services, of which healthcare is an important part. Around 1,000 of SAP’s 3,000 public services customers are healthcare providers.
“But it is true that, after bIT4health had ended, SAP chose a more laid-back approach towards the German smartcard project. We are not actively involved in the seven official test regions at that stage. But let’s face it: there has not been much to win for a company like SAP until now. An online system for the “elektronische Gesundheitskarte” (“electronic health card”) is still far on the horizon. Integrated healthcare solutions are envisioned, but they have not been in the focus of the activities so far.
“Having said that: the situation is changing. Healthcare systems in Germany, in Austria, and in other countries are moving towards more integrated scenarios, and they need IT solutions for that – with or without smartcards. This is where SAP comes in, because integrated healthcare solutions will rarely be realised without hospitals. And hospitals are our key customers in the healthcare market, as everyone knows.”
SAP’s key products for hospitals include solutions for logistics, patient management, accounting and resource planning. They are lumped together under the umbrella of “SAP for healthcare”. What are the market shares of SAP on the different European markets?
Bernard Thibaut: “Germany is our core market, obviously, with some 500 customers that use SAP solutions of different kinds. This includes almost all university hospitals, many of the big regional and city hospitals and a number of private hospital chains and other welfare organisations. We are strong in Austria, where around two out of three hospitals use SAP solutions. We have about 40 customers in Switzerland.
“Other important markets in Europe where SAP has a market-leading position today include the Netherlands, Belgium and Spain, while we are entering new European markets including France, Italy and the UK. Outside Europe, SAP is selling healthcare solutions among others in the United States, Mexico, South-East Asia and Israel and a lot of other countries.
Europe is SAP’s homeland. How would you judge the overall market situation in the Old World when it comes to hospital information systems?
Bernard Thibaut: “One has to differentiate a bit. Europe is not solid. Some western European markets, in particular, are increasingly saturated. In Germany, for example, in 2007 it has become difficult to win new customers in a large scale, not for SAP but for the industry as a whole. The number of bid invitations for big deals in 2007 was in the low one-digit range. This looked different three years ago. Many other countries, including Eastern Europe and Southern Europe are in the early stages of investing in integrated infrastructures to increase the efficiency in healthcare.”
Unlike Europe, gaining market shares in the US has proven to be difficult for SAP in the past. For this reason, SAP went into a strategic alliance with Siemens two years ago. The goal was to link SAP’s administrative hospital solutions to the clinical workflow-driven hospital information system Soarian of Siemens. Has this deal fulfilled your expectations?
Bernard Thibaut: “When it comes to SAP’s solution development, the alliance gave us indeed an important momentum. We have made significant investments in the rear-end achitecture of our industry solution, SAP for Healthcare, e.g. building upon a service-oriented architecture leveraging the SAP-NetWeaver platform. What certainly did not fulfil our expectations was the market development in the US. We are indeed winning some customers now as a result of the alliance. But overall, it would be exaggerated to say that we are fully satisfied with how things developed. We are analysing this situation carefully and will adapt our market strategy.”
How big in size must a hospital be to become interesting for SAP as a customer?
Bernard Thibaut: “Difficult question. Obviously, our market share among hospitals becomes smaller the smaller the institutions are. This is especially true for hospitals with less than 400 beds. But how far we can go down depends mostly on our partners. There is in principal no lower limit. Our smallest customer is an institution with no more than 20 beds. SAP, in general, is increasingly targeting middle-sized companies, and this is also true for middle-sized hospitals, where we are increasing our market share together with our partners.
“We are also trying to get into the market of ambulatory and out-patient care. We have recently launched an IT-solution for out-patient departments of hospitals. This solution will also be offered to ambulatory health centres. Another equivalent of a mid-sized company that is definitely interesting for SAP as customers is regional health networks.
To become of interest for the latter, SAP has to offer integrated health-IT-solutions. So far, though, there is no such thing as an “SAP Integrated Care”. Time is ripe, isn’t it?
Bernard Thibaut: “It is. Indeed we are a bit late already. But the programme is running. We went into a partnership with Accenture exactly for that purpose one year ago, and we are rapidly approaching the pilot phase now. The product will be called Collaborative Health Network, or CHN. We are planning to deliver the first release in December this year and then to start pilot projects in due course.
“On this end, we are talking to institutions in various countries including Germany, Austria, Switzerland, the Netherlands and Belgium already. The goal is to network hospitals, rehab facilities, outpatient departments and doctors in private practice.”
This is a field in which SAP will be competing with at least two of its partners, Siemens and T-Systems.
Bernard Thibaut: “True, but this is how the IT-business goes. Partners in one field can be competitors in another. It will all depend on the individual circumstances of a deal. SAP might act as a general contractor in one region. It might offer an integrated healthcare solution in another region, and it might cooperate with Siemens on a “Soarian Integrated Care”-implementation in a third one. Since we are not offering fully-fledged clinical information systems with clinical modules for electronic patient records, it is easy to see for our partners what SAP can and will do and what it won’t do.”
“We are not planning to offer clinical information systems” – Does this statement still hold for SAP?
Bernard Thibaut: “It does.”
Another e-health-topic in which SAP is engaged in is RFID. One gets the impression that this is a technology that has been hyped considerably in recent years, but it has not actually been taking off so far. Is this impression correct?
Bernhard Thibaut: “RFID is definitely a topic that we consider to have a future in the healthcare arena. We have a pilot installation at the University of Jena [Thuringia, Germany] in which the hospital pharmacy uses RFID to increase medication safety. This is a big success story. We are also working on an RFID-solution for asset-tracking in hospitals. But you are right: All this is pilot stage at the moment. Again, SAP as other IT-companies did expect this topic to become commercially relevant earlier. There were analyst’s reports three or four years ago that anticipated a rather quick spread of these solutions, but this turned out to have been a bit preliminary.”
What relevance does business intelligence functionality have for SAP’s healthcare business?
Bernhard Thibaut: “Business intelligence in general has become an important part of SAP’s healthcare solutions in recent years. The more healthcare is changing towards integrated care scenarios and the more individual arrangements between medical institutions and health insurance companies gain importance, the more business intelligence will be needed in healthcare.”
How does the planned SAP-takeover of Business Objects fit into this scenario?
Bernhard Thibaut: “I apologize, but for legal reasons we are not allowed to comment on that at he moment.”