Looking Forward

“As every senior executive worth his salt will appreciate, to be competitive and to sustain his competitiveness, one must steadily evaluate himself, the organization, its products and services, and the customer’s response” (Chorafas, 2002). Accurate predictions about the future of the homecare technology industry have serious implications for software vendors.

If the graphic below appears cluttered, it properly reflects the point that the homecare industry is being impacted by many new technologies. Coupled with these changes is a 2008 reduction in home health reimbursement of 2.7% per year starting in 2008 with an additional 2.7% decrease each over the next four years (Center for Medicare Services, August 2007). New efficiencies will be necessary for home health to cope with these nation-wide cuts. For home health, MIS technology is important, but it must also be affordable. Alternatives to expensive client server applications are emerging. The most promising solutions include web based technology offered along with hosting and services (SaaS).

Gartner states “by 2011, 25% of new business software will be delivered as SaaS” (Lheureux, 2006) and “software as a service will grow seven times faster than on-premise software deployments during the next three years” (Lheureux, 2006, p. 2).

Such a stunning change in the homecare IT market would impose serious new requirements including:

· A switch from initial licensing fee (ILF) and recurring license fee (RLF) revenue model to a subscription and services revenue model

· A total system re-write to support web based user access

· Maintenance of a dual support system for current customers

· A significant new capital investment for vendors

· A significant culture change for vendors as well as customers

· A change in what is sold and managed by traditional vendors

If the above challenges are accepted by the market, new customer/vendor relationships will emerge:

· By partnering for commercially available software infrastructure services (implementation, support, system administration, storage), vendors could elect to devote intense, singular focus on developing value added functionality to customers.

· Because of the subscription revenue model, vendors could experience more predictable revenues, reducing revenue spikes attributed to large software deals. This advantage would be particularly attractive to investors.

· Because of singular focus on development, vendors could expedite release schedules and get features to market quicker than competitors.

· Replacement sales for SaaS vendors might increase, as no current major homecare technology vendor offers a SaaS solution.

The above opportunities for innovative change are technology based and are therefore, not without problems. Keeping information safe in a web environment will continue to be a major healthcare provider concern. Homecare providers are entirely dependent upon a mobile workforce, thus an unlimited set of Internet access points is required for a large organization. However, the typical homecare agency is a good fit for a secure web enabled solution. Characteristics of homecare organizations can be matched to those described by Firstbrook (2007) as well suited to a SaaS technology option. Homecare organizations typically have:

· A large remote workforce

· Numerous small and geographically distributed offices

· I.T. staffing constraints

· High turnover and attrition among the clinical staff users

· Low capital resources

· Frequent changes in rules and regulations that affect the software functionality

If software as a service becomes a viable homecare technology delivery model in the next 3-5 years, some progressive vendors will be prepared. Design and development time lines necessary to re-architect current solutions for a web enabled environment will take a minimum of 3 years.

References

Center for Medicare Services. (August 2007). Summary of final home health refinements compared to current home health PPS payment system. Retrieved Jan 1, 2008, from http://www.cms.hhs.gov

Chorafas, D. N. (2002). Enterprise Architecture and New Generation Information Systems. London: St. Lucie Press.

Firstbrook, P. (2007). Pros and Cons of SaaS Secure Web Gateway Solutions: Gartner, Inc.o. Document Number)

Kyte, A., & Clark, L. (2006). Hype Cycle for Software as a Service, 2006 (No. G00141122): Gartner, Inc.o. Document Number)

Lheureux, B. (2006). Predicts 2007: Software as a Service Provides a Viable Delivery Model. (I. Gartner Research o. Document Number)

Sangwan, R. (2006). Global Software Development Handbook. New York: CRC Press.