Performance Driven IT Solutions Critical to Reduce Fragmentation in Australia's Healthcare System: Frost & Sullivan
~More than half of hospitals in Australia spend $1.5m on IT, but improvements and benefits disproportionate to expenditure
SYDNEY, May 6, 2015 /PRNewswire/ -- In comparison to other Asia-Pacific (APAC) countries or the US and Europe, Australia's healthcare system allows easy access and provides quality care. However, as of 2014, of all APAC countries, Australia had the highest healthcare expenditure at AUD$6,400 per capita, per annum, and ranks amongst the highest healthcare spenders in the world. 67% of Australia's total health expenditure is government funded.
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After Japan, Australia is the second largest market for medical technology adoption in APAC. The Australian healthcare Information Technology (IT) market, which includes clinical, financial, and administrative software and software related services (excluding hardware), devices and connectivity solutions, is expected to be worth AUD$1.20 billion by the end of 2015, accounting for 18% of the total healthcare IT spend in the APAC region. The market is expected to grow at a compound annual growth rate (CAGR) of 12.3% between 2013 and 2020.
On average, Australian hospitals spend 3%-5% of their total expenditure on IT. Large, public hospitals are the highest and most frequent spenders. In 2014, Frost & Sullivan estimated that 54% of hospitals in Australia spent at least AUD$1.5 million on health IT. This trend is expected to continue to rise in the coming decades in order to effect improvements in the health system and control costs in the long run. Penetration rates are expected to increase to 57% by the end of 2015.
Natasha Gulati, Industry Manager, Connected Health, Asia Pacific, Frost & Sullivan, said, "Although health IT penetration is expected to continue to rise, it will be mainly in the form of facility upgrades and hi-tech adoption across existing hospitals, and to a lesser extent, in the emergence of green-field digital hospitals. By 2020, health delivery is expected to rise to the level of digital hospitals, with first movers being St. Stephen's at Hervey Bay, Fiona Stanley Hospital in Western Australia, and the Royal Adelaide Hospital."
"While the significant spend on health IT contributes considerably to the high medical expenditure, because Australia's healthcare system is severely fragmented, the expenditure on IT has not delivered proportionate improvements or benefits across the healthcare system," said Gulati.
Fragmentation in the healthcare system prevents information that has been collected from being managed, shared and used effectively. Data collected across systems not communicated safely and efficiently is a hazard for consumers who are subject to unwanted repeated diagnostic tests, misdiagnosis, delayed treatment, insufficient long-term care, and medical errors. Also, continued episodic care is more costly to both the consumer and the provider.
"Healthcare in Australia is provided at numerous levels by various types of providers, starting from home care, primary and community care, all the way to tertiary hospitals. Across these facilities, private and public services operate very differently from each other. Compounding the complexities, payments are fragmented across government reimbursed, private insurance and out-of-pocket spend," added Gulati.
Australia already faces resource constraints with many public and private hospitals reporting decline in profit margins. A shortage of nurses and physicians, especially in specialties such as anaesthesiology and emergency care is expected over the next two decades. Yet, there is tremendous wastage in the provider environment. Australian hospitals are reported to be inefficient in hospital inventories, management of devices and consumables, and even staff scheduling. Arrant inefficiencies exist with administration of goods as well as processes; with medical staff spending a sizeable amount of their time on unproductive activities, such as searching for devices across departments, manually capturing patient notes, or frantically chasing colleagues for queries and clarifications.
Compared to other Asia-Pacific countries, Australia is categorised as an advanced health IT market, gauged by spending on clinical information systems rising further than hospital IT spending, with many providers investing in niche departmental solutions that help to integrate information with the patient's electronic health record (EHR). Integrated healthcare IT is expected to reduce day-to-day inefficiencies, with the larger goal of addressing the country's major health challenges, including controlling healthcare costs, improving healthcare access; especially in remote regions, and providing for an aging population. Healthcare providers are interested in data collation and accurate analyses being used to enhance quality of care but better collaboration amongst healthcare providers and governments is crucial to effect integration across the healthcare delivery value chain.
At an industry level, Government incentives and initiatives continue to be the most important driver for healthcare IT growth and adoption. Digitisation of healthcare delivery is being given paramount importance as healthcare policy makers expect that technology will help to reduce cost and improve transparency. Integration of patient information at various levels of care including primary, tertiary, community and home healthcare is a key area of investment. Federal and state governments are providing funding and incentives as well as entering into public-private partnerships to encourage IT investment from the private sector.
With increasing IT penetration in primary and community care, a key area of investment will be care coordination. There is a palpable need for managing care as well as patient information across various healthcare facilities. Providers have realised that care coordination solutions are an integral part of IT that can help them improve patient experience and expand their services beyond the hospital.
While technology theoretically promises to improve hospital workflows, challenges in the real environment have led to underperformance and failure of some turnkey IT projects in Australia. As a result, healthcare providers in Australia are now insisting on investing in "technology that makes sense". IT decision makers as well as end-users in healthcare insist on critically analysing the needs, applications and benefits of various investments.
Nonetheless, the Digital Healthcare Consumer is finally making its presence felt in Australia with the growing adoption of connected devices, including patient monitoring devices, wearables, sensors and mobile devices. Consumer demand for quantified self concepts is growing exponentially due to the high rate of technology adoption. Niche vendors and app developers have already launched products and services that leverage health data and analytics. As a result of increasing generation and collation of patient data, healthcare providers as well as insurance companies have started taking an interest in how this data can be used to improve patient care and reduce cost by exploring Population Health and Risk Management solutions.
These trends indicate that the Australian healthcare IT market is rapidly moving towards predictive and preventative care. However, there needs to be more done on the regulatory side to ensure that people are indeed paying for outcomes, not treatment. While reporting and compliance steps have been taken in this direction, decisive measures that obligate providers to keep patients out of the hospital are missing. In reality, regulatory reform lags far behind technology evolution and that is what needs to change if the Australian healthcare landscape must truly transform in the next five years.
Analysis of Healthcare IT Spending in Australia is part of the Connected Health (http://www.connectedhealth.frost.com) Growth Partnership Service program. Frost & Sullivan's related studies include: Telecommunications Service Providers in Healthcare, Malaysia Healthcare Outlook, and Healthcare Cloud in APAC. All studies included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.
Market Insight white papers on the 2015 Australian Healthcare Outlook and the Australian Health IT Outlook are also now available. If you are interested in more information on any/all of these studies, please send an e-mail with your contact details to Donna Jeremiah, Corporate Communications, at [email protected].
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Analysis of Healthcare IT Spending in Australia
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