Involve to evolve

MARKET STUDY OF ELECTRONIC MEDICAL RECORD SYSTEMS IN EUROPE

Results from a survey conducted by Logica and Nordic Healthcare Group January 2012

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This white paper shows insights of the European Electronic Medical Record (EMR) systems market in context of the broader Clinical Information Systems (CIS) market. The paper is based on an independent study commissioned by Logica.The initial study was carried out by Nordic Healthcare Group from October 2011 to January 2012. All published material available was utilised and interviews were carried out in 19 countries: Finland, Denmark, Sweden, Netherlands, UK, France, Portugal, Austria, Belgium, Bulgaria, Croatia, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Romania and Slovenia. Findings from the study were released in January 2012.

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WHY EHEALTH?It’s no surprise that healthcare is in the spotlight. It is one of the biggest industry sectors in all European economies, and gets allocated a high percentage of gross domestic product (GDP) in every country. The share is expected to increase because population is getting older and medical technology is developing fast, leading to health expenditure growing faster than GDP.

Demographic change will have a dual impact on healthcare. On the one hand, baby boomers of healthcare professionals will retire leading to a reduction in workforce (supply side) since not enough people can be trained as doctors and nurses. On the other hand, baby boomers of all populations will grow the number of people in need of healthcare (services demand side). Therefore demand is growing at the same time when the supply is reducing. Eventually, there will not be enough healthcare professionals to deliver services ‘in the old way’. It means that healthcare providers must radically change the way they take care of patients. This change offers new opportunities for growth of businesses and economies in general.

An inability to change processes and utilise technology to its maximum potential does not lead to skyrocketing expenditures, as some have feared. But it does result in services which do not address quality or demand. It means people will be left untreated - and that is surely something nobody wants. In a PricewaterhouseCoopers study 60% of healthcare leaders rated new technology as the number one way to raise productivity (Figure 1).

Figure 1. The methods healthcare leaders say they trust to gain efficiency.

Source: PricewaterhouseCoopers. You Get What You Pay For. A Global Look at Balancing Demand, Quality and Efficiency in Healthcare Payment Reform. Health Research Institute Survey, 2008.

Electronic Medical Records have been used for over ten years in some pioneer countries such as Finland, Denmark and Sweden. These countries have had 100% penetration in both primary and secondary care and have been evaluated the best in various reports by the European Commission, Information Technology and Innovation Foundation (ITIF) and Accenture. These countries have extensive experience of the benefits IT can create in healthcare, as well as the hurdles that have to be overcome to succeed. Logica is the number one healthcare IT provider in Finland and Sweden.

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Figure 2. Estimated hospital-based EMR adoption rate projections by country

Source: Accenture. Overview of International EMR/EHR Markets. Results from a Survey of Leading Healthcare Companies. August 2010.

There is emerging scientific data showing how IT can leverage both clinical quality and efficiency. One must always bear in mind that IT is only a tool, it doesn’t make anything better by itself. But industry leaders in other sectors have been able to use technology to improve quality and efficiency.

As expectations for improved healthcare continue to evolve, older IT systems increasingly struggle to deliver a truly integrated flow of information, and healthcare professionals increasingly experience healthcare technology that is below expectation. Newer EMR systems have become available which have sophisticated user-friendly cloud based infrastructure (like the iPad), which can easily integrate to the current clinical IT systems used by hospitals, and which can streamline and automate certain processes.

Gartner calls them fourth generation EMR systems (or using Gartner language, CPR) that will replace systems that pioneer organisations have used for over ten years. In addition to these pioneers there are plenty of organisations still using paper that are thinking about going electronic - and there are plenty of reasons for them to do so!

Digital records can hold the full details of an individual’s medical history in a secure and easy to use interface, accessible everywhere by anybody (qualified), which ultimately helps to direct diagnostic and therapeutic decisions when a patient enters the healthcare system. New generation systems provide decision support capabilities, which combine dynamic patient information (such as diagnoses, allergies, current treatment, etc.) to static medical knowledge. These help clinicians make the right decisions on how to treat certain conditions (such as pregnant women with epilepsy, diabetics with a raised risk of lactic acidosis, acutely sick children with genetic predispositions, etc.).

In addition to this, these new generation systems may automate some processes such as referral qualification, laboratory scheduling and other pre-diagnostic studies and so on. These functions improve the quality of care delivery, free up time for clinicians to see more patients, and directly contribute to improved patient safety.

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Spain (83%)Australia (78%)

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Even greater benefits will be realised when patients are supported and encouraged to take better care of themselves using eServices. Patients can see their information, add information they measure (or have automatically measured for them), and even consult their doctors online. A good example of this is type 1 diabetes; most type 1 diabetics control their insulin dosages by themselves, and have an immense level of knowledge of their disease. With the help of IT similar levels of expertise can be supported for other chronic conditions.

The benefits that IT offers in helping both healthcare professionals and patients would justify its use in itself, but there is a third category of consequences which may revolutionise healthcare as we know it now. When all information is in electronic form, when we can - as we now do - combine patient history into genomic data it will bring options no one could even imagine earlier. We can research how diseases develop, analyse causalities between risks and results, evaluate how medications work in real life, who benefits and who does not. All this leads into better understanding of how diseases are developed, how they can be fought, and how medicine can be personalised.

When it comes to the healthcare industry, Logica really has its finger on the pulse. We understand healthcare and its processes. We work locally across Europe and know the landscape and recent trends intimately. We are happy to share this knowledge with you in this study and welcome your thoughts and ideas in future discussions.

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OvERALL EUROPEAN EMR MARKETThere is a well-defined demand for new EMR systems in many European countries. Many providers in various countries are stuck with old legacy systems, and users generally are not very happy with their current EMR systems. Many people interviewed expressed a need for new, well-functioning solutions.

Most EMR systems used in Europe now are local design or from neighboring countries. Current R&D efforts for large EMR systems are being mainly conducted in the US. Europe is lacking a pan-European player. However, due to the differences in how healthcare is financed and provided in Europe compared to the US there are many reasons to believe that strong localisation is needed by integrators who have an intimate knowledge of European healthcare organisations, legislation and processes.

The overall market for Clinical Information Systems (CIS) and Electric Medical Records (EMR) in Europe is estimated to be €2.9 to €3.4 billion (not covering hardware). The largest markets are in UK, Germany and France, followed by Netherlands, Italy and Spain. This estimate is based on macro-level data on total healthcare spend and IT expenditure.

Figure 3. Estimated EMR market in European countries (in million euros)

There is a large variation in adoption and penetration rates of clinical information systems. In general Nordic countries have the highest penetration rates, while Eastern Europe is more undeveloped. Market growth differs, with highest growth in unsaturated markets (where EMR/CIS penetration has not reached 100%). In saturated markets, growth results from upgraded functionality and upgraded usability in the form of new-generation systems.

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KEY TRENDS

Market maturity

The wide disparity in sophistication of healthcare IT across markets in Europe has resulted in a number of problems for healthcare providers. Systems are in desperate need of modernisation to overcome the challenges that have arisen over the years - disparate mix of software systems that struggle to share information, infrastructure that hinders rather than helps expansion or growth, and software that is not optimally aligned with clinical workflows. The market is growing fastest in unsaturated markets where not everyone uses EMR/CIS systems. Some markets have a number of competitors while others have only one or few national providers.

States of infrastructure

Although Europe has similarities in the way healthcare is evolving and developing, there are differences among almost every country’s organisational structures, along with the way their healthcare is financed and provision of services administered. There is also wide variance and disparity in levels of adoption of advanced IT solutions that have the potential to improve clinical processes.

Legislation

The impact of regulations on the healthcare IT markets in Europe makes it complicated to ensure a holistic approach to the technology. The market will be driven by governments’ financial incentives and regulations requiring automation in healthcare practices. The market growth is also expected to be driven by increasing need for hospitals to attain cost efficiencies and growing evidence of use of IT in healthcare practices.

Buying patterns

Investment in healthcare IT purchases is shifting towards a more coordinated, joint model where hospital chains within a region or doctors’ associations identify a set of ‘preferred suppliers’. In some countries hospitals are relatively independent whereas in others decisions are made at the level of the nation or region. The future might see the private provider hospital market, which is currently not very large in most European countries, but is growing. Over the past ten years there has also been a strong move towards closing down unprofitable and unnecessary hospitals and shifting the focus on improving the profitability of existing hospitals.

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Funding

In most European countries, public bodies still provide the biggest part of funding. However, the individual hospital structures differ greatly across Europe. It’s interesting that the number and size of buyers of IT depends not necessarily on the size of the country, but rather the structure of the healthcare system.

Common standards

In an ever-evolving technology landscape, it is key to set proper standards to define the rules of engagement between systems - for example, how medical information should be stored and communicated in the network. As these standards are defined, the benefits are becoming increasingly tangible. One dramatic benefit which is of fundamental importance to integrated healthcare networks is the ability to scale IT across facilities. There is a slow but consistent move to develop common standards for healthcare services across Europe. Although many countries have tried to design frameworks, there are no functioning examples.

Medical innovation

Western Europe is already moving towards fourth generation EMRs (according to Gartner) and adoption of advanced technological tools and capabilities are accelerating. In the Baltic countries however, the overall infrastructure is still being set up with very low penetration rates. All Swiss hospitals have EMR in place, but less than 50% physicians actually use them, both within the public and private sectors. Latvia has quite a different problem. They have not been able to attract foreign players cost-effectively.

Language barriers

Disparate languages have retarded companies’ efforts towards uniform systems adoption. Overcoming the language barrier has often been a challenge in international healthcare engagement strategies. So it is that countries that speak English see the most entrants from the US; German and French speaking countries share competitors, and competitors in Spain restrict themselves to Latin America and Mexico rather than compete in Europe. Other countries have specialised local players.

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EU COUNTRY STUDIES

Finland

In Finland, the organisation and financing of healthcare services - hospitals, primary and outpatient care - is mainly a public responsibility (75%). Healthcare expenditure in 2011 amounted to €14.8 billion. Of this 2.6% was spent on IT. Electronic Patient Records (EPR) are used virtually in every health care provider. The current EMR/CIS market size of €70-90 million is estimated to grow at an annual rate of 4-6%.

Compared to the other Nordic countries the Finnish system is more decentralised. There are 21 hospital districts in the country. District level hospitals are responsible for making decisions. The 320 municipalities are responsible for arranging and taking financial responsibility for primary healthcare services.

Strong local players

Most of the EMR market is in the hands of Logica and Tieto. In addition there are some small domestic companies. US based system integrators have practically no role in the health IT in Finland.

Ready to upgrade

In the capital area of Helsinki, a new hospital district (HUS) was formed in 2000 in order to improve efficiency and eliminate overlapping of services by merging two former districts in the capital area (Helsinki and Uusimaa) as well as the Helsinki University Hospital. After using developed but independent EMR systems for years HUS region (HUS and municipalities) are looking for next generation, regional EMR. Together those providers have over 5 million outpatient visits and over 5000 beds.

Most of the IT systems used now are second generation and based on paper processes. The potential for new and upgraded IT systems is high. After long history of using EMRs these organisations know the benefits that IT can provide and what is required other than IT.

Denmark

Healthcare in Denmark costs almost €25 billion a year. The National Health IT organisation (National Sundheds-it, NSI) is responsible for country-level initiatives and setting national standards. Denmark has a common infrastructure in the form of the National Patient Registry, which contains long-term comprehensive documentation of its 5.5 million inhabitants. It collects personal data from all hospital in-patients and Common Medicine Card (which has information on medicine purchases over the past two years and up to date drug prescriptions). Information is handled in accordance with the current legislative framework, and EPRs have to be stored for at least ten years.

The 51 public hospitals belong to five regional “networks”. The regions have their own health IT organisations (Regionernes Sundheds-it, RSI), whose primary purpose is to consolidate and coordinate supply of Health-IT systems.

The Danish healthcare system is publicly funded. IT investments are funded mostly from the general budget that is allocated to the regions, and by different development funds. Regions are in charge of managing their own projects and observing the framework and requirements laid down at the national level. They can decide use of the funds on IT. Private clinics choose their own systems.

Consolidating healthcare

The path is being paved for consolidating towards a more coherent national technical infrastructure. The whole healthcare system is under consolidation. At the primary care level 2,100 clinics with 3,400 GPs are being consolidated. IT applications in the field of health are already deeply rooted at a local or regional level and mature systems are in place not only for communication between health professionals, but also for patient access and data management.

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Yet there is disparity in sophistication of healthcare IT systems, with some public hospitals still stuck at first generation EMR not integrated with Health Information System (HIS). Also, over 2,000 Danish doctors have put their signatures on a protest being unhappy with IT systems that don’t function well enough. There will be new development on the National Patient Index (NPI), Denmark’s approach to the creation of a patient summary and the answer to the problem of inadequate access and overview of patient data. Capital region of Copenhagen is also looking for a modern EMR system to replace its current one.

There are virtually only five large buyers and a few small private hospitals in the market for CIS. The ten players catering to the GP market were all originally domestic or offered domestic solutions. International firms have acquired some of these, and are also predominant in niche markets like laboratory systems, PACS, medication and booking. The tough competition in the EMR market does not leave much room for multiple players. However, opportunities arise when regions that are running old systems want to upgrade.

Sweden

Healthcare delivery and finance in Sweden is mainly a public responsibility. The percentage of private providers at both hospital and primary care levels is small. The Swedish market, while comparatively small, exhibits sophisticated use of EMR. Healthcare spend was €28 billion in 2010.

As Sweden mainly has a decentralised healthcare system, the basic responsibility for financing and organisation of health services rests with the counties. The Swedish government is not at all involved in the market, and counties pay for their own CIS solutions. The national eHealth programme is also mostly financed by the counties. The government supports national eHealth programme with small budget allocation, but does not cover adoption of solutions.

Swedish residents have direct access to their own medical records, but today the information is manually searched and put together. The carer owns patient records. Patients must give their full consent before healthcare professionals can access their data.

There will be no large changes in the near future. Progress is expected on the regionalisation of counties, resulting in six to nine regions instead of 21 counties today.

Moving towards modernising

National eHealth projects are ongoing and solutions will be implemented in the next couple of years. One example is implementation of the national patient summary. CIS systems will have to be integrated and share information with national care services and quality registers. There are 70 quality registers for various purposes. The government recently allocated 1.5 billion SEK to modernise, consolidate and improve these registers.

Currently all of Sweden’s EMR solutions are locally developed systems, which most organisations and users feel unhappy about. There is growing need for investments in next generation IT.

Netherlands

Healthcare in the Netherlands costs €63 billion a year. Unlike Northern Europe and some other nations, the Netherlands has a private health care system for its 16.6 million inhabitants. The majority of hospitals in the Netherlands are private and non-profit.

Dutch hospitals are organised into academic and non-academic. The latter buy modules for each department that their IT department then integrate. This is not an efficient or cost effective model.

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Most family physicians and other primary care professionals work in small groups. Today, almost 97% of Dutch GPs use an EMR system - a utilisation rate similar to those being achieved in Nordic countries. Dutch GPs can choose among seven suppliers offering clinical information systems. In practice, they are organised within regions, and EMR choices are made as a group rather than by individuals.

The government has put a law in place mandating the use of electronic patient records, but is not directly involved in CIS. Organisations choose and pay for CIS systems themselves. There is a national network in the Netherlands covering 50% of the pharmacists and GPs. This results from a national EHR programme, which fell through because public financing was no longer available.

Shifting to a new way

Hospital budget based finance will give way to result-based financing. There is also a move towards more additional private insurances on top of the obligatory national insurance with basic care.

There is a perceptible trend where IT spend is moving to a strategic level where IT enables healthcare processes instead of just supporting them.

Empowering patients

The degree of automation of national registration bodies is low. Patient data is not stored at a central point. All medical data is to remain in local repositories under responsibility of individual hospitals, but Dutch patients have the right to inspect their EHR and ask for copies. In a new law that is still not binding, healthcare providers are obliged to inform patients. Images are sometimes stored in a private cloud. Aggregated data for inspection is required by hand and collected by inspection systems.

Only healthcare professionals who are directly involved in treatment are allowed to share patient data without consent. For most other purposes, informed consent is needed. Patient empowerment will change the position of the information chain and the importance of information delivery, and thus IT.

It is anticipated that a more modular approach – possibly from the bed of the patient, or by the drive of mobile devices – will force infrastructures to open up to these new applications.

United Kingdom

Most healthcare in England is provided by the National Health Service (NHS), England’s publicly funded healthcare system, which accounts for most of the Department of Health’s budget (€120 billion). The national programme for IT (NPfIT) is currently focused on providing a set of national services like a national summary patient record, access control record (authorisation and identification of healthcare professionals), booking programme for GP’s appointments, national HR and payroll services for NHS and financial and payment systems.

The UK is organised into 172 acute trusts, of which 82 are foundation trusts that enjoy more independence. There are 60 mental health trusts and 147 primary care trusts. There is a wide

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disparity in systems within the trusts. There are large segments of legacy systems, some have advanced systems, and only a few systems for mental health trusts. Primary healthcare services choose systems from a standardised supplier list (GPSOC). New entrants will face tough competition in the mature GP market. In the UK, legislation protects the privacy of patient information, allowing only clinicians with a relationship to see the data. Data cannot leave the shores.

Wales and Scotland are attempting to centralise framework purchases of key systems like operating theatres, radiology and EPR. In England the attempt to do this failed, leaving the responsibility of CIS purchases to trusts. The future will see efforts to consolidate regionally, for example in pathology systems.

Changing fund system

IT investments are funded by the trusts, who need to persuade payers to provide money for investments. Foundation trusts have more independence and can collect savings and increase revenues by increasing demand.

The funding system is changing. Money, other than capital spending, will be managed by GPs who can contract trusts.

Keeping an eye on costs

There is a move to reduce costs by limiting treatment options and referring patients to social care. The acute sector will try and attract private patients. In the CIS markets, there will be large reductions in national level initiatives, which may leave more money for IT investments in trusts. Hospital IT in the UK has large chunks of legacy systems that need immediate attention or tactical changes. Many trusts are running outdated systems. This offers a window of opportunity to potential entrants.

However it is expected that local IT spend will continue to feel the pressure to reduce costs, and is unlikely to exceed 2.5% of revenue spend. In the same vein, major enterprise HIS initiatives will be limited by cost. Providers will also need to consider the British scepticism to examples from other countries, risk aversion and inclination to build on old systems than change completely to new ones.

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Portugal

In Portugal, like the United Kingdom, there is both a public and private healthcare system. The public sector dominates service provision in the hospital sector in Portugal. Approximately 85.7% of beds belong to the public sector, the remainder are provided by private hospitals. Primary care is provided wholly by private practitioners.

As part of the government’s intention to modernise and revitalise the health services it is studying the feasibility of implementing a national Electronic Health Record (EHR) system. This will have a combined portal for professionals and patients, giving them secure and smooth access to health information.

There is also a move towards national databases for surgical procedures and vaccinations. An EPR is being developed for the whole primary care network. This will take care of the poor adoption of CIS by the 345 social healthcare centres and 1,180 social healthcare centres’ extensions that comprise the primary healthcare services.

Portuguese law is strict on the privacy of patient information, and prohibits patients from accessing their records. There is virtually no electronic transfer of records among hospitals, but healthcare professionals have almost unlimited access to records of patients being treated in their hospital.

Watching costs

The government does not interfere in the market and does not sponsor programmes to support the adoption of CISs. Public hospitals receive a percentage upon production of expenditure intended to promote renewal/investment. In reality most of this finance goes to cover current expenses. Overall, budgets are being cut and efficiency and waste reduction is called for. The expectations are that investments must demonstrate proof of high returns.

Most hospitals have EMR systems (some of which are very sophisticated) and are active in introducing new features. Portugal is undergoing major reforms at the moment. 25-30 hospital groups are integrating to have a unified EMR software per group. The poor adoption in the primary care network is expected to turn around with the upcoming implementation of a national EMR software. The near future sees a possibility of new entrants from Spain. Meanwhile, system development/upgrades will be delayed by financial constraints and the shortage of public funding may impede all IT investments.

Acquisition is the easiest entry into this tough market. In order to compete it is important to offer visually attractive user interfaces and innovation (for example, develop mobile applications). Gaining the confidence of the hospital boards is an uphill task because doctors tend to trust the systems they have used themselves.

France

The French healthcare system features a mix of public and private services. With a contribution of 80% the State is the main payor in the national health system. About 68% of hospital beds in France are provided by public hospitals. Both public and private hospitals make their own buying decisions. Primary care is wholly taken care of by private services, who make their own independent decisions on purchases.

Room for change

France spends 1.7% of their total healthcare expenditure of €218 billion on IT. Although 80% hospitals and about 68% primary healthcare services have EMR systems, there is room for EMR/CIS adoption, which is expected to rise by 5-6% annually (from its current market size of €700-800 million).

CONCLUSIONHealth is on everyone’s mind and healthcare is big news. In most European economies healthcare is among the biggest industry sectors and offers new opportunities for growth for businesses and economies in general. However, healthcare is not just about business, it’s about health - and health is what we all care for. Due to the retiring of baby boomers there is a rising need for healthcare services, while its workforce is declining. If the healthcare providers cannot change the way they provide services, we won’t have enough of care. Fortunately there is a huge potential in IT enabling new, citizen-centric, high-quality and more effective processes. Let’s do IT!

Currently, for various reasons such as language barriers or differences in healthcare systems, the EMR business is ruled by local players in most European countries. Most of the systems are old, first to second generation products, which lack new intellectual features and support for patient-centric care. It is most probable that in future international systems and providers will take a major share of markets in healthcare IT just as they already lead business in ERP systems and most other IT.

Logica has its finger on the pulse of the current healthcare industry, just as we’ve always had over all these years. We know and understand the European healthcare market and we know what modern technology offers. We can be your trusted partner who will utilise smart ideas and technology to deliver real benefit to you.

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Logica is a business and technology service company, employing 41,000 people. It provides business consulting, systems integration and outsourcing to clients around the world, including many of Europe’s largest businesses. Logica creates value for clients by successfully integrating people, business and technology. It is committed to long term collaboration, applying insight to create innovative answers to clients’ business needs.

Logica is listed on both the London Stock Exchange and Euronext (Amsterdam) (LSE: LOG; Euronext: LOG).

More information is available at www.logica.com.

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Copyright statement

Copyright © 2012 LogicaAll rights reserved. This document is protected by international copyright law and may not be reprinted, reproduced, copied or utilised in whole or in part by any means including electronic, mechanical, or other means without the prior written consent of Logica. Whilst reasonable care has been taken by Logica to ensure the information contained herein is reasonably accurate, Logica shall not, under any circumstances be liable for any loss or damage (direct or consequential) suffered by any party as a result of the contents of this publication or the reliance of any party thereon or any inaccuracy or omission therein. The information in this document is therefore provided on an “as is” basis without warranty and is subject to change without further notice and cannot be construed as a commitment by Logica.

Logica

Ed PercyEuropean Healthcare

E: ed.percy@logica.com

www.logica.com/healthcare