iHT2 Health IT Summit Boston 2013 – Scott Lundstrom, Group Vice President Presentation, IDC Health Insights "IT Strategies for an Uncertain Future - Embracing Change and Innovation"

IT Strategies for an Uncertain Future -
Embracing Change and Innovation
Scott Lundstrom, GVP
IDC Health Insights

© IDC Health Insights. Reproduction is forbidden unless authorized. All rights reserved.
Mega-Trends Driving Healthcare
Aging
Population
Staff
Shortages
Patient
Safety
Government
Regulations
Chronic
Conditions
$300 billion
in
redundant
or
ineffective
healthcare
One in four
seniors
take
between
10 and 19
pills a day
1.5 million
annual
avoidable
adverse
drug events
100,000
annual
avoidable
deaths
Cost
Pressures
$2.5 trillion
or 17.6% of
U.S. GDP in
2009
Doubling to
$4.5 trillion
or 19.3% of
U.S. GDP in
2019

3

Source: IDC
4
Source: U.S. Bureau of Labor
Statistics, Employment Projections
Program; annual growth in $ output
Now the IT Marketplace That Matters

5
5

From IT Productivity to Business
Productivity
Medicine
Supply
Chain
Smart
Buildings
Social
Mobile
Commerce
Payment
Fraud
Management
Connected
Health
– Cloud
– Big Data/Analytics
– Social Business
– Mobility
The Four Pillars and the Growing
Significance of “The 3rd Platform”
Intelligent Industries

The Parable of the 7 Blind Men
and the Elephant
The blind men and the elephant. Poem by John Godfrey Saxe (Cartoon originally copyrighted by the authors; G. Renee Guzlas, artist).
It’s a
Portal
It’s a Data
Aggregation
It’s
Platform-as-a
Service
It’s a
Custom SI
It’s an
Integration
Platform It’s Clinical
and
Financial
Connectivity

 Many IT organizations
reaching end of consolidation
• “Last mile” requires robust
infrastructure and
conservative VM densities
• Greenfield opportunities
become exception
 2nd phase of virtualization is
about application portfolio
management, elasticity and
modularity
 Put “soft” benefits ahead of
hard cost savings
 Looking for value in converged
systems
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 10 20 30 40 50 60 70 80 90 100
PercentofRespondents
Percent Applications Virtualized
Source: IDC Server Virtualization Study
Q. Approximately what percent of your entire
application portfolio is virtualized today?
25%
Private Cloud: the 2nd Phase of
Virtualization

Cloud: Long Term Inflection Points
Over 50% of U.S. companies will have more than 50% of
all their IT assets in third party data centers by 2016
By 2016, over 60% of the enterprise class storage capacity
ships to cloud service providers
Public cloud dominates the Big Data marketplace, and Big
Data emerges as a primary driver of cloud adoption
Cloud players engage in a data "arms race" to
accumulate (via self collection and acquisition)
strongest portfolio of public and "for fee" data sets
In 2017, almost 30% of all high end data center space (100
million sq ft) will be in service provider data centers
Regional and national data sovereignty requirements
prevent consolidation of cloud service providers

Cloud Investment Plans
Payer N = 36, Provider N = 234
Source: IDC Global Technology and Industry Research Organization IT Survey, 2012
Is Cloud computing currently on your organization's technology roadmap?
Currentlyusing
this technology/
service (30.6%)
Planning
implementation of
this technology
within the next
year (22.2%)
Researching and
evaluating
purchase of this
technology/
service (33.3%)
Not evaluating or
using technology/
services(13.9%)
Currentlyusing
this technology/
service (16.5%)
Planning
implementation of
this technology
within the next
year (18.8%)
Researching and
evaluating
purchase of this
technology/
service (33.0%)
Not evaluating or
using technology/
services(31.7%)
Payer Provider
Payers are investing more in cloud technologies than providers

Big Data in Healthcare – The Next
Frontier
Volume
Velocity
Variety
Value
Mobile devices, patient
reported, remote monitoring,
genomics , sensors
Real time data on patient
outcomes, social media,
medication compliance
Unstructured medical record
data, social and
psychological data
Drivers of medical errors,
best practices based on
genomics, fraud and abuse
CSP = communications service provider

Big Data Healthcare Use Cases
Waste and abuse
Outcomes
Technology
Patient engagement
Fraud detection
Chronic disease
Avoidable deathsRegulatory compliance
Quality of care
Medical research
Drug discovery
Clinical trials
Personalized medicine
Environmental impact
Re-admissions
Translational research
Public health
Adverse health events
Patient compliance
Source: IDC, 2012.
Activity

Health Information Exchange:
Aggregating Data Across the Ecosystem

ACOs Will Lay Foundational
Groundwork Before Investing Widely
 Analytics will play an important
role in consumer engagement
strategies.
 Top technology investments for
2013 include analytics, risk
identification, and predictive
modeling, which will help
healthcare organization with
consumer segmentation
 Investment in connected health
technologies for consumer
engagement will be limited in the
next 18 months while ACOs
deploy their analytics strategies.

Home Health Home Sensors Body Sensors
SocialMedical KiosksmHealth
Proliferating Technology = Exploding Data

Big Data/Analytics Investment
Plans
Payer N = 12, Provider N = 113
Source: IDC Global Technology and Industry Research Organization IT Survey, 2012
Do you plan to invest in Business Intelligence/Analytics applications in the next 12 months?
Providers trail payers in investing Big Data/Analytics technologies
No (16.7%)
Yes, investing in
enhancements/up
grades to the
existing solution
(58.3%)
Yes,
maintenance only
of the existing
solution (25.0%)
No (49.2%)
Yes, investing in
a newsolution for
the first time
(2.0%)
Yes, investing in
enhancements/up
grades to the
existing solution
(34.6%)
Yes,
maintenance only
of the existing
solution (14.2%)
Payer Provider

Big Data/Analytics:
Long Term Inflection Points
Value-based and transaction-based pricing for analytics
services will become wide spread. Think price per
recommendation.
By 2017, 25% of F500 companies will have artificial
intelligence question & answer systems in place across
consumer industries, operating within call centers, in
retail stores, etc.
Real time monitoring of streaming data will become
pervasive by 2020 (today a combination of off line
and real time)
Lines between service firms and software firms blur.
Data finally becomes an asset.

Social Business:
Social is redefining marketing and support to create a
360° customer view.
By 2020, 40% of the G2000 have redefined the
marketing and customer support functions.
The majority of applications become social
Social enterprise software grows 40+% through 2016
A next generation platform redefines applications as
we know them - componentizing apps into services.
Merging of transaction, decision, and relationship
systems to create the next generation platform
for the enterprise
Company listening skills need to mature and require better
response capabilities – Social listening becomes an
important skill

0% 5% 10% 15% 20% 25% 30%
Drive revenue generation
Acquire knowledge/ask questions
Monitor conversations/activities
Socialize with friends/industry colleagues
Share knowledge/contribute ideas
Communicate with internal colleagues
It is a requirement for my job
Conduct employee training
Make decisions
Create awareness about company product or service
Communicate with customers
Communicate with partners/suppliers
Competitors are doing it
Respond to customer/partner inquiries
Gather feedback on company product or service
How Businesses Leverage Social
Software
Q: Why do you conduct social media/networking initiatives for
business purposes?
#1 in 2011
#8 in 2011
#10 in 2011
#13 in 2011
#11 in 2011

Mobility:
Consumers embrace mobile as there principal form of
communication and data access
Customer engagement is key. Focus moves to real time
updates and context.
Single platform solutions melt away as devices converge
and morph, with 12.5 devices in use per connected WW
household
2 out of 3 smart devices shipped are gesture
controlled by 2020
Customer engagement is key. Focus moves to real time
updates and context.
PCs stabilize; Win 8 is the next developer “hot spot”
platform opportunity
Mobility fuels private cloud with a 50% CAGR

Consumers Begin to Abandon PCs,
Embrace Mobile for Internet Use
 In the U.S., the number of people
accessing the Internet through PCs will
shrink from 240 million consumers in 2012
to 225 million in 2016.
 In 2015, for the first time ever, there will be
more U.S. consumers accessing the
Internet through mobile devices than
through PCs.
Source: Worldwide New Media Market Model 1H-2012
Highlights: Internet Becomes Ever More Mobile, Ever Less
PC-Based (IDC #237459),
 In 2013, consumers will begun to
abandon PC-based Internet usage in
favor of mobile devices as their
default gateway to the Internet
 Consumer engagement strategies
will increasingly include mobile
health applications
 Payers and providers will partner
with mobile health vendors to
accelerate their mobile strategies
 Consumers connect to health
centric communities and social
media sites

 41.7% of respondents to an IDC Health
Insights consumer survey indicated that
they were somewhat interested (32.9%)
or extremely interested (8.8%) in a virtual
online visit. Convenience was cited as a
primary benefit
 Payers (and employers) will increasingly
begin to add online care services to
provide low cost alternatives to more
expensive care settings, increase access
to providers, and support health and
wellness initiatives
 Forward thinking providers will
experiment with online care to reduce re-
admissions within 30 days, manage
patients with chronic conditions, and
create new revenue streams for their
practice
Consumers are gaining familiarity
with videoconferencing technology
services:
 31 million Skype users as of
January 20121
 50 million Skype enabled TVs2
 9% of mobile device users use
video chat on their phone at least
twice a week3
Sources:
1, 2 Skype Journal, Skype Numerology Research Date:
9.28.2012
3 Qualcomm Research (8.23.2012)
The Doctor Will See You Now…
Online

The CIO Perspective

By 2016, LOB executives will be directly
involved in 80% of new IT investments
Of the new internal IT projects initiated at your
company this year, what percentage will be led
under the following scenarios?
N = 57
Source: IDC 2013 CIO Sentiment
Survey, Fall 2012
 58% of new IT investments in 2013 will
involve direct participation by LOB executives
 Companies will initiate an average of 40 new
IT projects in 2013 (with or without IT)
 Line of business’ participation in IT projects
will grow to 80% in 3 years
 The implications are vast on how the CIO
works with the line of business
Situation Assessment
 Cloud, social and mobile services are the
great equalizers, the balance-wheel of the
corporate machinery
 Notable instances of CEOs and CFOs driving
the migration to Cloud and Managed Services
8%
17%
33%
42%
0% 10% 20% 30% 40% 50%
Project solely led /
managed by the LOBs
Project led / managed by
LOBs, but subject to
review by IT
Project jointly led /
managed by IT and the
LOBs
Project solely led /
managed by IT
9

CIOs and CFOs will move to “zero capital”
and transform the IT financial model
Prediction
 The IT financial model is fundamentally changing
 Businesses will transform the IT financial model by adopting
an IT “service-based” IT operational and financial model
 Zero capital model will enable the business to produce true
product-line profitability by assessing IT (services) costs
Situation Assessment
 In mature economies, 50%+ of all capital equipment is IT
 As expensive as IT is, most orgs do not fully allocate capital
or expenses to business units
 There are major business and economic issues with broad
implications
 Strong business impetus to shift computing platforms to
more capital efficient models – cloud, outsourcing, etc.
Capital Lean
Capital Intensive
11
The Zero-Capital IT financial model means
IT shifts from SG&A to a true product line
expense

Consumer Engagement
– Solution Evolution 2012-2020
Analytics
Actionable Information
Communications / Alerts
Data
Warehouse
Business
Intelligence
Payer Provider
Consumer
Provider Portal
Payment /
Revenue Cycle
ManagementProvider and
Contract Network
Management
Health 2.0 / Social
Networking
Core /
Administrative
Processing
Health / Wellness
PHR / Patient
Portal
Traditional CRM
Risk Segmentation
And Management
Customer Sales
and Acquisition
Provider Patient
Engagement/
Connected
Health
Referral
Management
Contract
Management
HIE
Hospital IS
Clinical IS / EMR
Population Health,
Care and Disease
Management
Through 2020, the care
management vendor market
will lead consumer
engagement investments.
Additional markets actively
incorporating consumer
engagement strategies and
technologies will include:
• Traditional CRM
• Portal
• Health and Wellness
• Analytics and Business
Intelligence
• Communications
Expect active partnerships,
if not acquisitions, among
these vendors through at
least 2016.

Questions?
Scott Lundstrom
Group Vice President – IDC Health Insights
Please feel free to email me at:
slundstrom@idc.com
Or join me and your peers and the
conversations in our
IDC Health Insights Community
The Business of Healthcare + Technology
(http://idc-insights-community.com/health)

Appendix

Acronyms
 ACA Affordable Care Act (aka PPACA)
 ACO Accountable Care Organization
 AHA American Hospital Association
 ALOS Average length of stay
 ARRA American Recovery and Reinvestment
Act of 2009
 BYOD Bring your own device
 CMS Centers of Medicare and Medicaid
Services
 CER Comparative effectiveness research
 EHR Electronic health record
 EMR Electronic medical record
 FQHC Federal qualified health centers
 GDP Gross domestic product
 HCO Healthcare organization
 HIE Health information exchange
 HIX/HXE Health insurance exchange
 HIMSS Healthcare Information and
Management Systems Society
 HIPAA Health Information Portability and
Accountability Act
 HITECH Health Information Technology for
Economic and Clinical Health
 H&W Health and wellness
 HIS Indian Health Services
 IHI Institute for Healthcare Improvement
 IOM Institute of Medicine
 JCAHO Joint Commission on Accreditation of
Healthcare Organizations, now known
as the Joint Commission
 OCR Office of Civil Rights
 OIG Office of the Inspector General
 ONCHIT Office of the National Coordinator of
Health Information Technology
 PaaS Platform-as-a-Service
 PCMH Patient-Centered Medical Home
 PPACA Patient Protection Affordable Care Act of
2010 (also ACA)
 PHI Protected Health Information
 PHR Personal Health Record
 RHIO Regional health information organization
 SaaS Software-as-a-Service

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iHT2 Health IT Summit Boston 2013 – Scott Lundstrom, Group Vice President Presentation, IDC Health Insights "IT Strategies for an Uncertain Future - Embracing Change and Innovation"

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iHT2 Health IT Summit Boston 2013 – Scott Lundstrom, Group Vice President Presentation, IDC Health Insights "IT Strategies for an Uncertain Future - Embracing Change and Innovation"