Open Source Model Needed to Rein-In "Unsustainable" Health IT Expenditures, Says Frost & Sullivan

"Healthcare expenditure is reaching unsustainable levels on a global scale" according to the international consulting firm Frost & Sullivan. In a strongly worded press release, Frost & Sullivan says that "there is an urgent need for sustainable business models that can curb expenditure and promote better healthcare delivery." Frost & Sullivan concludes in its recently released analysis that the only way to end these "spiraling expenditure[s]" is to shift "from traditional to newer, more sustainable business models." The analysis specifically recommends a shift to open source as well as software as a service (SaaS), Managed Services, and the Freemium business models.

Some Western European countries have been closely monitoring the performance and cost-effectiveness of their healthcare systems and the delivery of healthcare, according to Frost & Sullivan Senior Research Analyst Simone Carron-Peters, and "as a result of such endeavours, Europe is witnessing a rise in the adoption of innovative business models in healthcare information technology." She says that "business models such as SaaS, Managed Services, Open Source and Freemium are gaining prominence, alongside traditional capital investment and licensing alternatives."

According to Carron-Peters, software service providers should work with hospital management to ensure that their IT goals are aligned with overall business objectives. This would enable hospital staff to focus on their core competencies and provide quality patient care.

Carron-Peters emphasizes that there is a need to devise a business model with a workable core architecture that would provide social and economic benefits, thereby achieving a profound transformation of the health system in the long-term. A partnership-based approach towards managed services will provide the flexibility to face challenges pertaining to changes in technology, regulations and user needs.

"IT managed service providers should focus on long-term relationship building and finding strategic win-win solutions by maintaining regular communication and ensuring mutual adjustment," concludes Carron-Peters. "Software vendors should ensure the safe exchange of medical data across national borders, respecting the need to protect health data and the personal integrity of the patient."

Frost & Sullivan's new report, titled "Strategic Analysis of Healthcare IT Implementation Business Models" provides a comprehensive analysis of the various innovative business models in healthcare information technology in Europe. This research service includes an analysis of Open Source, Software as a Service (SaaS), Managed Services, and the Freemium business models. It also details a value chain analysis, pricing, competitive and impact analysis of these business models. The research also provides information on the market potential of these innovative business models.

Interestingly enough, the report also outlines how these sustainable Health IT business models can not only significantly cut down on out-of-control health IT expenditures, but also provide lucrative market opportunities to vendors that embrace those sustainable business models. The Frost & Sullivan report has an entire section on Open Source sustainable Health IT models, which is then followed by another entire section on the "Market Potential" of the open source business models.

We should note that Frost & Sullivan is not a fly-by-night operation. It is one of the world's leading consulting firms, employing over 1,800 analysts in 40 offices around the world. It is clear that while U.S-based consulting firms, from Gartner to HIMSS Analytics continue to cheerlead and promote the proprietary approach to Health IT, as well as the growing Health IT bubble, Frost & Sullivan has taken a step back and realized that this approach is unsustainable. They have clearly recognized that the open source approach is both the solution and as well as a potentially lucrative business for the vendors that embrace it.

In other words, this Frost & Sullivan report validates the concepts that Open Health News staff have been discussing for over a decade now. It also validates the approach that the U.S. Department of Veterans Affairs (VA) has been taking for the past 35 years. This open source, collaborative and transparent approach is being re-affirmed by the current leadership of the VA as we detail in this article. 

Hopefully this report, coming from such a well-known consulting firm, will have a sobering impact in an industry that is rapidly spiralling down into a financial catastrophe due to the excessive cost of proprietary EHR solutions.

6/22/2012 - Update-Made some small copy-edit changes to the article. RAM