Stimulus package offers healthcare IT vendors new opportunities

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The healthcare IT funding provisions of the American Recovery & Reinvestment Act (ARRA) provides welcome news to technology suppliers in light of a projected 0.1 percent growth rate for the U.S. economy in 2009, according to new research from IDC's Industry Insights Companies.

"With all the uncertainty surrounding the specifics of the new economic stimulus package, one thing is certain--there will be a large amount of government money flowing toward technology spending," said Meredith Whalen, group vice president and general manager of IDC's Vertical Market Business Units. "This new government money will flow to both the private sector and directly to federal, state, and local government."

Included in the $787 billion ARRA is approximately $20 billion in funding for healthcare IT, including incentive payments to physicians who implement and use eligible EMR systems under conditions laid out in the legislation.

"The approximately $20 billion in ARRA funding allocated to healthcare IT investment will have a positive impact and will begin the transformational process the U.S. healthcare industry so desperately needs to remain viable and competitive," said Health Industry Insights' program directors for healthcare provider IT research, Lynne A. Dunbrack and Marc Holland. "That said, even if implementation proceeds as intended, a number of issues still loom."

Industry Insights analysts said it will be imperative for the vendor community to be both aggressive and agile in their strategy to capture the newly addressable market. This flood of new technology money requires a new way of finding and following opportunities. Success will not come from traditional business development via relationships and RFPs. While some of these new monies will be allocated via grants and accelerated acquisitions contracts, there will be new ways of engaging with the government.

"Technology monies will not necessarily be identified as such, but as an element of new and urgent government initiatives," said Teresa Bozzelli, chief operating officer and managing director of Government Insights. "Vendors must understand when and how to upsell existing contracts when expediency is critical. The vendors must also offer new engagement models to the government, where reward is directly tied to the results achieved against the promise of the economic recovery designed within the stimulus package."