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TECHNOLOGY: Health tech spending grows

Gartner says healthcare IT spending is going to $41 billion next year and will be $46 billion in 2005. This sounds like a very big number to me. Back when I was looking at this intently in the late 1990s, estimates of healthcare IT spending varied from $4 bn to over $2O billion. Of course it all depends what you mean by health care and what you mean by IT spending.  The $4bn number probably only really means software and some hardware for the provider sector–and is equivalent to the revenues for the top 100 health care software companies. The bigger number probably includes communication technology as well as hardware and all software for all health care companies including the pharma market.

In any event the reasons given for the increase are HIPAA concerns, increased pressure for CPOE and the move to wireless.  That’s clearly all true, and given the reduction in IT spending in other industries, it’s good news for the health care IT industry.  It’s hard to parse out the data for those HC software companies as the two biggest, SMS and HBOC are part of Siemens and McKesson respectively.  McKesson’s information unit (the old HBOC) only had a 4% year on year increase last quarter. However, another big player, Meditech,  does post its numbers in its Annual report, which show a big revenue increase from $216 million the dark days of 2000 to $256 million last year–more than a 10% annual growth rate.

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