Europe’s health IT companies appear convinced that they will avoid recession hitting their businesses. Is the health industry blind to economic reality and guilty of wishful thinking? Philipp Grätzel reports from Medica.
While much of the world stares nervously into the eyes of recession, at the Medica health trade show in Düsseldorf, at least, the ‘r’-word was curiously absent.
The world’s biggest medical trade fair was just as crowded as any other year and health IT once again made a major contribution. Companies from the IT side of the medical industry occupied two out of19 halls, only topped – as usual – by the medical devices industry, in particular diagnostics and imaging.
Listen carefully though and there were some mutterings of recession. At one point, Felix Meierhofer, board member of the German health IT vendors’ association VHitG, became a little more subdued. The moment came on day two of Medica, when news spread that BASF, a global chemistry giant headquartered in Germany was temporarily closing more than eighty factories and putting 20,000 employees on flexible working schedules.
The chemical industry certainly feels certainly closer to healthcare than the car industry or banking and finances. “Still we hope that the healthcare sector will get through the storm without major difficulties,” Meierhofer told E-Health Europe.
But Mierhofer also said that it may be difficult for hospitals to undertake major investments in the short term.
Recession? Doesn’t matter!
Spectaris, another German vendors’ association that represents the medical devices industry, also tried to avoid ill-humoured headlines. “The financial crisis will not leave us untouched. But the consequences will certainly be less severe than in other sectors of industry,” said Spectaris executive Sven Behrens.
He is expecting that 2008 will see a 5% increase in sales for the German medical devices industry reaching €18.2 billion. In 2009, he sees another increase in sales in the range of around 2% to 3%. “Two out of three medical devices manufacturers do not expect a slump in sales in 2009.”
But this prediction already looks highly optimistic. A few days later, on day four of Medica, Netherland based Philips, announced that it intends to cut 1600 jobs in its healthcare business.
Another person at Medica who was ostentatiously optimistic was iSoft’s Gary Cohen, CEO of iSoft’s parent company IBA Health, when asked about the dawning recession, he denied its relevance for healthcare:
“The healthcare market is increasing in size, not withstanding if we have an international financial crisis or not. For governments, to invest in healthcare today is more important than ever,” said Cohen.
No doubt about that. Nevertheless, a recession will inevitably erode healthcare budgets and the effect of this will be more pronounced in the public healthcare systems of Central Europe, where health insurers do not have the opportunity to increase their revenues by raising insurance premiums.
True, this is not an issue right now: in Germany, and in the surrounding economies, unemployment remains at its lowest for more than a decade. However, some time next year this trend is likely to go into reverse. Health IT companies and medical devices manufacturers seem to have decided not to worry about that for the moment.
Agreement on reimbursement for smartcard readers
If not the prospect of recession, what were the big health IT topics at Medica? The German smartcard programme remained a big issue in Düsseldorf.
The national representatives of Germany’s doctors and of public health insurance companies finally announced that they have agreed on the lump sum that doctors and hospitals will receive for upgrading their IT solutions and for buying new generation smart card readers.
With €1020 per private practice for two smartcard readers, the amount is higher than was expected by many. Hospitals, too, will do well, getting a €430 reimbursement for each smartcard reader they need. The maximum will be one smartcard reader per 25 beds, so an average German hospital with 400 beds will get 16 new generation smartcard readers for free.
“This means that the public health insurance companies will have to invest around €20m for smartcard readers in the first phase of the smartcard rollout in the region of Nordrhein,” said Günther van Aalst of Techniker Krankenkasse, a big public health insurance company.
The announcement of the reimbursement scheme means that the next steps for the offline rollout are fairly clear. “We will start to inform our doctors about the smartcard readers in January 2009,” said Gilbert Mohr, a regional representative of doctors in Nordrhein.
Doctors then will have to decide which smartcard reader they purchase by June 2009, the deadline for the lump sum payment.
As soon as all doctors are equipped, health insurance companies can start to issue the new smartcards in the Nordrhein region. They will be followed by the next regions in the rollout.
This means that rest of Germany will probably be equipped with smartcards some time late in 2010 or early in 2011. Conditions apply. Anyway, it will be around five years later than was originally envisioned by the national ministry of health.
A Medica of minor steps
All in all, this was not a year Medica produced clear groundbreaking news. Instead, many companies exhibiting seemed to be very busy in trying to make their pilot products fit for every day use. ICW, for example, is heavily working on its infrastructure solutions for the regional health network of AOK Baden-Württemberg. The necessary software and the hardware router (“Konnektor”) have been implemented in the offices of nearly 1000 doctors in the state Baden-Württemberg.
Compugroup’s subsidiary vita-X has received a certificate for the security concept of its Personal Health Record (PHR) solution. Vita-X is currently being used by 1,500 inhabitants of the state Rhineland-Palatinate.
Compugroup itself is busy with integrating the various products of the different companies that it has taken over in recent years. Hospital IT providers like Agfa, TietoEnator or Meierhofer have all announced only minor additions to their existing HIS solutions rather than fundamental new products.
With economic storm clouds gathering it is to be hoped that Medica 2009 will provide the optimists with a chance to say “we told you so.” The next 12-months will surely test how much of a safe harbour health IT will prove in tough economic times.