The last few weeks saw a tremendous amount of activity in the health IT market. Dell and Xerox were among the companies trying to capitalize on opportunities created by the ARRA incentives and certain market trends, including high demand for HIT products due to the ongoing digitization of the industry and, more generally, the expanding healthcare needs of an aging population in the United States.
Dell is quickly establishing itself as a major player in health IT. In April 2009, Dell aligned itself with Wal-Mart and eClinical Works to supply hardware for Wal-Mart's new EHR system. Last month, Dell rolled out its own EHR system aimed at physicians affiliated with hospital practices, with Tufts Medical Center and Memorial Hermann Health Care System among the early adopters.
Even more significantly, on September 21, 2009, Dell announced its plans to acquire the health IT vendor Perot Systems Corp. for $3.9 billion. Perot is a major player in the healthcare industry: about half of Perot's $2.8 billion in annual revenue comes from the healthcare market; and as much as half of the hospitals that outsource their IT are Perot clients. Perot runs over 3,000 healthcare applications for its clients, though the company does not have a preferred provider arrangement with a specific application vendor.
A mere week following Dell's announcement, Xerox's CEO Ursula M. Burns revealed her company's "game-changer" plan to buy Affiliated Computer Services (ACS) for $6.4 billion. According to IT World:
ACS may be in a good position to get even more business in the next few years as the federal government starts spending billions of dollars to help health care providers create electronic medical records systems. ACS said that health care projects account for about $1 billion of its $6.5 billion in revenue for the year ended June 30.
While Dell and Xerox acquisitions grabbed most of the spotlight this week, other Wall Street giants, like Wal-Mart Stores, Inc., Intel and Google, havemade significant inroads into the health IT market. Healthcare consultants Frost & Sullivan, as cited in Healthcare IT News, see an expanding market which will benefit new players.
Companies with a fresh, outside perspective will be invaluable to improving healthcare delivery and producing the next generation of medical technology <...> The enormous demand for new technology and solutions to address both the clinical needs of patients and the systemic problems of healthcare delivery will create opportunities for companies with the foresight to identify and capitalize on opportunities.
However, Frost & Sullivan also cautions companies against jumping into this industry without considering potential downsides, including the incredibly complex regulatory framework governing U.S. healthcare.
Joseph Conn, "Dell's HIT Power Play," Modern Healthcare (September 28, 2009).
"Dell to Buy Perot Systems for About $3.9 Billion," The New York Times (September 21, 2009).
"Major corporations looking for stake in healthcare, medical technology market," Healthcare IT News (October 1, 2009).
"Doc, you're getting a Dell (EMR)," Healthcare IT News (September 10, 2009).
"Xerox Buys Affiliated, Fueling Shift to Services," The New York Times (September 28, 2009).
"With ACS, Xerox will gain a firm growing quickly offshore," IT World (September 28, 2009).