Electronic Health Records

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Surging health IT investment numbers signal strong growth prospects

By [email protected]

 

Countless pronouncements have been made in the last couple years about physicians’ interest in electronic health records and other health IT tools. Commentators love dissecting the latest figures on physician adoption rates and analyzing the numbers to decide whether doctors will or won’t accept the technology. But perhaps a more effective way to judge the future prospects of health IT is to follow the money.

 

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If you buy into this approach, then it seems EHRs and other technologies have a bright future. A new report was issued this week that outlines venture capital and merger and acquisition activity in the health IT sectors, and the number are up.

 

 

According to the Mercom Capital report, there has been consistent growth in funding for health IT projects over the course of the last year. There were 27 venture capital deals completed in the first business quarter of 2012 worth a total of $184 million. This compares to just seven deals completed in the first quarter of 2011 worth a total of $35 million. The chart shows a steady increase in funding in between.

 

 

The industry has been busy when it comes to merger and acquisition activity as well. The report indicates that there were 34 deals completed in the first quarter of 2012, compared to just 15 this time last year. Acquisitions by Verisk Analytics, Nuance, and DexCom highlighted the completed deals.

 

 

The authors of the report said that all this activity bodes well for the future prospects of EHRs and other health IT technologies, such as data analytics systems, personal health records, and general health information management systems. The findings of the report indicate that there is plenty of liquidity in the market, which could help spur innovation.

 

 

All this activity also means that investors are betting on a bright future for health IT. People aren’t going to put their money into developing systems that physicians aren’t likely to use. These individuals are clearly expecting growth in the use of medical technology over the next few years, which will enable them to turn their investments into real returns.

 

 

Of course, this doesn’t mean this bet is a sure thing. The history of venture capital is dotted with investors who bet big on a new technology only to see their investments vanish when their next-big-thing company went belly up.But I would guess that these types of investors are winners more than they are losers. And if they are putting their chips on EHRs, I would be inclined to think they have good reason to.

 

 

So more than any one survey of physician adoption rates or figures of doctors who have signed up to participate in the meaningful use incentive program, I would say the amount of money being funneled into health IT companies is a sure sign that the technology is poised for growth.

 

 

When the amount of funding put toward EHR companies in the private sector is combined with the huge investment made by the federal government in getting physicians to adopt the technology, there is simply too much money on the line for the trend to fail. The people writing the checks just won’t let it happen – regardless of whether physicians want it to or not.

 

 

 

 

 

 

 

 

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