Study: Opportunities Still Available For HIT Vendors

Not long ago, my colleague John Lynn wrote a piece arguing that the era of easy EMR money and abundant customers is over. In that post, he contends that the “Golden Age of EHR Adoption” has fled, leaving vendors with the unenviable task of attracting the late adopters to the table.

Well, at least one research firm seems to disagree. According to a trend report from Berkery Noyes, there are still many openings in the HIT marketplace for entrepreneurs who can address pain points, Healthcare IT News reports.

The Berkery Noyes report analyzes M&A activity in the healthcare sector taking place during the first three quarters of 2013, and compares it with data from 2012.  Markets covered include information and technology companies servicing the pharmaceutical, payer and provider sectors.

At present, the researchers say, the healthcare market is highly fragmented, offering many opportunities for entrepreneurs that find areas of need.  These opportunities include healthcare IT startup, the researchers say.

The market clearly seems interested in HIT plays. Healthcare IT dealflow is strong, seeing a 56 percent volume increase on a quarterly basis, according to Healthcare IT News. HIT deals also accounted for almost half of the industry’s aggregate M&A volume, as opposed to just 31 percent in the previous quarter.

In fact, the standout deal of the quarter. booking the overall industry’s highest value, was Vitera Healthcare Solutions’ planned $644 million acquisition of EMR vendor Greenway Medical Technologies. And this may not be this year’s biggest deal; researchers note that “large strategic buyers” are looking to buy unique content/software solution in the healthcare market.

All that being said, it’s worth noting that it’s not as though every promising healthcare technology company has suitors at the door.  Buyers want companies with proprietary technology/content, scale in their markets, high (double digit) revenue growth, a high percentage of recurring revenue and a large total addressable market opportunity, noted Tom O’Connor, managing director at Berkery Hoyes, in a recent press release.

So, net net, it looks like there’s money out there for the right health IT play, but not so much for startups early in their growth path, or health IT players struggling to capture the rapidly shrinking Meaningful Use-fueled market. So I’d argue that the report’s enthusiasm for entrepreneurial opportunities should be qualified a bit. Still it’s good to know that investors are bullish on health IT generally.

About the author

Anne Zieger

Anne Zieger

Anne Zieger is a healthcare journalist who has written about the industry for 30 years. Her work has appeared in all of the leading healthcare industry publications, and she's served as editor in chief of several healthcare B2B sites.