Report: By 2011 state and local health and welfare IT markets to hit $12 billion

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State and local government spending on healthcare and welfare IT should increase from $7.6 billion currently to $12.2 billion by fiscal year 2011, according to a report from Input, a research firm devoted to analysis of governmental business.

There has been a lot of activity in the health IT area of late — including new legislation and the certification of EHR systems by the Certification Commission for Healthcare Information Technology (CCHIT), as examples — and this is just the type of push that will spark the market in coming years.

"Both the amount of action and the type of action we are seeing are indicative of forward momentum for health IT," said James Krouse, acting director, public sector market analysis at Input. "This is the first time that we’ve seen CMS provide grant funding for health IT and at a level 300 percent greater than what the Department of Health and Human Services will likely issue this year. We are seeing notable health IT projects from numerous states essentially serving as laboratories for the national efforts."

In addition to health IT initiatives, spending also will be driven by efficiency gains as well as fraud and abuse reduction which will inevitably result in the consolidation of healthcare and welfare systems. In the near future states likely will start exploring data warehousing projects to pull data from multiple sources for reporting and trending purposes that predicate the larger effort, Input said.

"How Medicaid and welfare systems will be impacted by health IT initiatives is not clearly defined yet," said Krouse. "But, the events of the past month are first steps down that long road. Vendors should keep an eye on developments with health IT over the next 12 to 18 months, as it should prove to be a watershed period as key prototypes and studies are concluded and related legislation makes it way through Congress resulting in a large influx of funding and more clearly defined direction for the allocation of these funds."