Healthcare is one of the fastest growing vertical markets for information technology (IT) and telecommunications services. The total US healthcare industry is estimated to be a $2 trillion ecosystem of hospitals, physicians, pharmaceuticals, and insurance providers all seeking to treat patients while at the same time searching for means to improve healthcare quality and reduce costs through technological innovation. Healthcare costs have risen eight percent per year since 1999, and are projected to grow by 7.2 percent through 2015. High demand for healthcare employees has positioned these jobs among the fastest growing occupations, projected to grow at 3.3 percent per year, which is two and one-half times the total employment growth rate.

It is our thesis that forces external to the healthcare industry (e.g., an aging population, worker shortages, etc.) will limit healthcare supply and increase demand—and that it is this pent up demand that will spur the industry to find alternative approaches to current business practices that rely heavily on IT and telecommunications services. Much of the high costs inherent in the current system are related to the proximity of the patient and provider as well as to the archaic administrative systems used to manage records and exchange information. Technology can bridge these proximity gaps, providing patient's with access to providers and specialists as well as providing a normalized set of baseline data that is secure yet can be shared among those responsible for healthcare delivery.

The IT and telecom opportunities that are arising in the healthcare industry will be influenced by four major factors:

- Healthcare technology adoption: Historically, healthcare technology adoption has lagged other industries, but this trend is likely to reverse.
- Fragmented industry structure: A heavily-fragmented industry is consolidating and seeking technology solutions that can contain costs while improving quality of care.

- Industry marketing: Healthcare providers have limited IT resources with which to manage increasingly complex IT networks. Service providers who can deliver complete healthcare solutions will thrive in this area.

- Government influence: The US government tries to influence healthcare technology, but the private sector will dictate the future of healthcare technology solutions.

Table I-1 provides an overview of the major healthcare sectors that will drive demand for telecommunications and IT services. Each of the segments will be examined to distinguish between different buying patterns and the rate of technology adoption. Generally, the larger healthcare companies represent the greatest penetration opportunity for vendors, as they have a clearer vision of an advanced healthcare network and the resources to implement changes across multiple facilities...

Market Segmentation

Total US Healthcare Telecom Service Spending
Wireline
Wireless
Other

US Healthcare Wireline Spending
Broadband
Local/Metro
WAN

US Healthcare Wireless Spending
WLAN/UMA
Cellular

Total Telecom Service Spending by Healthcare Provider Type
Hospital
Physician
Other Practitioner
Nursing Care
Clinics and Labs

Cellular Telecom Service Spending by Healthcare Provider Type
Hospital
Physician
Other Practitioner
Nursing Care
Clinics and Labs

US Telemedicine Services by Provider Type
Hospital
Physician
Other Practitioner
Patient Connection

Health Information Exchange
Telecom Service Revenue
Number of Health Information Exchanges