Essentials of the U.S. Hospital IT MarketO P E R AT I O N S A P P L I C AT I O N S

Spring 20149th Edition

E X E C U T I V E S U M M A RY

Essentials of the U.S. Hospital IT Market | Operations Applications | Spring 2014. 9th Edition 2

Introduction

The Spring 2014 edition of the Essentials of the U.S. Hospital IT Market, HIMSS Analytics (the premier collector of hospital information technology (IT) inventory information in the world) leveraged the information in the HIMSS Analytics® Database and historical information from the Dorenfest Integrated Healthcare Delivery System+ (IHDS+) Database™ to profile the IT applications supporting the operational efforts of a hospital. A total of 26 operational applications covering six categories are profiled in this report. The categories and applications included in the report are: General Financials General Ledger Accounts Payable Business Intelligence

Financial Business Intelligence Financial Decision Support

Financial Modeling Budgeting Contract Management Cost Accounting Financial Data Warehousing/Mining Executive Information System Human Resources Personnel Management Benefits Administration Time and Attendance Payroll Staff Scheduling Supply Chain Management

Enterprise Resource Planning (ERP) Materials Management Asset Tracking/Management Real Time Location Solution (RTLS)

Essentials of the U.S. Hospital IT Market | Operations Applications | Spring 2014. 9th Edition 3

Revenue Cycle Management

Enterprise Master Person Index (EMPI) Patient Billing Patient Scheduling Electronic Data Interchange (EDI) – Clearing House Vendor Credit/Collections ADT/Registration Bed Management Medical Necessity Checking Content

K E Y F I N D I N G S Market Penetration

When analyzing the Q4 2013 U.S. hospital market penetration of the 26 operational applications covered in the Spring 2014 edition of Essentials of the U.S. Hospital IT Market (Chart 1), the applications can be classified together into three distinct groupings: 1. Saturated applications: These applications are installed in at least 75 percent of U.S. hospitals and include the following applications:

■ Accounts Payable

■ General Ledger

■ Patient Billing

■ ADT/Registration

■ Payroll

■ Materials Management

■ Patient Scheduling

■ Time and Attendance

■ Credit/Collections

■ Benefits Administration

■ Personnel Management

■ EDI

■ Budgeting 2. Mature applications: Applications installed in at least 50 percent but less than 75 percent of U.S. hospitals. These applications include the following:

■ Cost Accounting

■ Contract Management

Essentials of the U.S. Hospital IT Market | Operations Applications | Spring 2014. 9th Edition 4

■ Executive Information System

■ Medical Necessity Checking Content

■ EMPI

■ Financial Data Warehousing/Mining

■ Staff Scheduling

■ Financial Business Intelligence 3. Maturing applications: Applications installed in fewer than 50 percent of U.S. hospitals, including:

■ Bed Management

■ Financial Modeling

■ ERP

■ Asset Tracking/Management

■ RTLS Chart 1: Market Penetration of the Operations Applications

NOTE: Total number of hospitals in HIMSS Analytics Database on December 31, 2013 = 5,467

0.0%2 0.0% 40.0%6 0.0% 80.0%1 00.0%

Accounts Payable

General Ledger

Patient Billing

ADT/Registration

Payroll

Materials Management

Patient Scheduling

Time and Attendance

Credit/Collections

Benefits Administration

Personnel Management

EDI

Budget

Cost Accounting

Contract Management

Executive Information System

Medical Necessity Checking Content

EMPI

Financial Data WarehousingMining

Staff Scheduling

Financial Business Intelligene

Bed Management

Financial Modeling

ERP

Asset Tracking/Management

RTLS

Essentials of the U.S. Hospital IT Market | Operations Applications | Spring 2014. 9th Edition 5

Projected Sales Volume

To fully appreciate the significance of an application’s current market penetration level, the Spring 2014 report projected the five-year trajectory of each application’s sales volume (first time and replacement buyers) . Factoring in a multiplicity of variables to include historical growth rates, the applications reflect the following three trajectories (Chart 2):

1. Positive: The following seven applications are projected to experience an acceleration of one percent or more in their annual growth trajectory:

■ Financial Modeling

■ ERP

■ Bed Management

■ ADT/Registration

■ Contract Management

■ Financial Data Warehousing/Mining

■ Medical Necessity Checking Content 2. Marginal: The following 10 applications are projected to experience a marginal acceleration or deceleration (between ± one percent) in their annual growth trajectory:

■ Benefits Administration

■ Executive Information System

■ Staff Scheduling

■ Financial Business Intelligence

■ Budgeting

■ Personnel Management

■ Payroll

■ General Ledger

■ Accounts Payable

■ Patient Billing

Essentials of the U.S. Hospital IT Market | Operations Applications | Spring 2014. 9th Edition 6

3. Negative: The following seven applications are projected to experience a deceleration of one percent or more in their annual growth trajectory:

■ Materials Management

■ Credit/Collections

■ EMPI

■ Time and Attendance

■ Cost Accounting

■ EDI

■ Patient Scheduling

Chart 2: Projected Sales Volume

-10.0% -7.5%- 5.0% -2.5%0 .0%2 .5%5 .0%7 .5%1 0.0% 12.5%1 5.0%

Financial Modeling

ERP

Bed Management

ADT/Registration

Contract Management

Financial Data Warehousing/Mining

Medical Necessity Checking Content

Benefits Administration

Executive Information System

Staff Scheduling

Financial Business Intelligence

Budgeting

Personnel Management

Payroll

General Ledger

Accounts Payable

Patient Billing

Materials Management

Credit/Collections

EMPI

Time and Attendance

Cost Accounting

EDI

Patient Scheduling

Essentials of the U.S. Hospital IT Market | Operations Applications | Spring 2014. 9th Edition 7

Market Penetration/Projected Sales Volume

Pulling the market penetration and projected sales volume analyses together into the following matrix (Table 1) provides us with a valuable view of the opportunities in the operational application landscape.

Table 1: Market Penetration/Projected Sales Volume Matrix

Decelerate Marginal Accelerate

Saturated Credit/Collections EDI Materials Management Patient Scheduling Time and Attendance

Accounts Payable Benefits Administration Budgeting General Ledger Patient Billing Payroll Personnel Management

ADT/Registration

Mature Cost Accounting EMPI

Executive Information System Financial Business Intelligence Staff Scheduling

Contract Management Financial Data Warehousing/ Mining Medical Necessity Checking Content

Maturing Bed Management ERP Financial Modeling

Based on the above matrix, a few observations are warranted:

1. Many of the applications in the operational applications market can be characterized as standard business tools. With a “standard business tool” being defined as one reflecting a high market penetration level, 13 of the 26 applications considered in this analysis reflect market adoption rates of 75 percent or more. Both of the applications in the General Financial category (Accounts Payable, General Ledger) as well as four of the five Human Resource applications (Benefits Administration, Payroll, Personnel Management, Time and Attendance) reflect the characteristics of a standard business application. 2.Replacement sales are expected to drive the accelerated sales volume in the saturated markets. The applications in the “saturated/accelerate” and “saturated/marginal” sections are foundational applications for business operations and as a market are poised to grow where these applications will be replaced by newer systems. 3. A multiplicity of forces appear to be at work driving first-time purchase decisions. Three varied applications present with the most attractive opportunities for first time sales because the markets are not saturated and the sales volumes are projected to grow; Revenue Cycle Management: Bed Management, Supply Chain Management: ERP, Financial Decision Support: Financial Modeling. 4. The Financial Decision Support applications reflect an attractive portfolio of products for vendors. Three of the six applications in the Financial Decision Support category (Contract Management, Financial Modeling and Financial Data Warehousing/Mining) are projected to be in demand with a sizeable market yet to be harvested.

HIMSS Analytics supports improved decision-making for health care organizations, and healthcare IT companies and consultng firms by delivering high quality data and analytical expertise. The company collects and analyzes health care organization data relating to IT processes and environment, products, IS department composition and costs, IS department management metrics, healthcare delivery trends and purchasing related decision.

HIMSS Analytics is a wholly-owned, not-for-profit subsidiary of the Healthcare Information and Management Systems Society (HIMSS). The HIMSS Analytics Database was originally derived from the Dornfest IHDS+ Database™ in July, 2004. The database is now known as the HIMSS Analytics™ Database.

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