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THE EURO: ANOTHER IS DEADLINE

May 1, 1998
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THE EURO: ANOTHER IS DEADLINE

The encroaching reality of economic union in Europe will begin with the hotly contested transition to a single currency, slated to launch on January 1, 1999. Barring an 11th-hour derailment, qualifying countries for the common currency will be chosen this month, based on strict economic criteria set forth in the Maastricht treaty of 1992. To make the cut, countries must lower budget deficits to three percent of GDP while keeping debt, interest rates and inflation in check. Once chosen, the estimated 11 countries will have roughly three-and-a-half years to ready the business community before the euro takes over for good in January 2002.

Aside from the financial strain the Europeans have been undergoing to prepare for convergence--even Europe’s strongest economy, Germany, suffers from double-digit unemployment and an overburdened social welfare system--the IT implications are vast. Any information system that handles financial transactions or stores financial data will have to be modified to accept the euro. Many companies and software providers are writing code now that will allow systems to handle both currencies--the euro and the local currency--for the three-year interim period. Common currency will also affect multinationals and anyone else doing business in Europe. With the monstrous year 2000 problem already strapping resources in IS departments, companies that have not planned ahead for the euro may be in for double trouble as the millenium nears.

Because of the expense and the risk, most companies will not tackle euro conversion and year 2000 at the same time, according to Diego Lo Giudice, president and managing director of consulting firm Genesis Development Corporation, Milan. He says the IT impact of the euro will involve not just the addition of fields and rules, but converting historical data and managing interfaces with supplier and customer systems.

GOOD NEWS FOR U.S. FIRMS
Just as with year 2000, the euro will create new market opportunities for the information systems industry, in both consulting and the delivery of new applications and replacement systems. "More than 75 percent of existing companies see the introduction of the euro as an opportunity to introduce substantial changes in their information systems," Lo Giudice says.

Once the euro is launched next year it could open up the flood waters for U.S. healthcare information systems providers, particularly clinical systems which have more applicability in Europe, according to Ray Falci, healthcare IS analyst with Bear Stearns, New York, Falci attributes this to both the demand for replacement systems in Europe that has been stalled until the euro is finalized, and the growing maturity of clinical systems.

Shared Medical Systems (SMS) is busy modifying its patient accounting and general ledger applications to handle the euro. SMS--the U.S. healthcare IS industry’s biggest international player in terms of overseas revenue--will provide the modifications as part of existing upgrade and service agreements with customers. Other customers will have to pay for the enhancements. The euro may help companies like SMS create a new competitive advantage.

"Many of our European competitors do not have the necessary strength and resources to undergo changes for year 2000, the euro and national government requirements," says Roger Wallhouse, business area director for SMS’ Northern Europe operations, based in the U.K. Wallhouse also perceives a big administrative advantage internally by dealing with just one currency.

However, the euro switchover will not include one of the larger European markets: the U.K. has made plans to stay out of the euro and is not expected to reconsider for the duration of newly-instated Prime Minister Tony Blair’s four-year term. Companies with significant U.K. customer bases--HBOC and Meditech--are moving cautiously. Glenn Rosenkoetter, senior VP at HBOC and director of the U.K. office, says the company has not had to address the euro yet since its European business is largely in the U.K. and focused on outsourcing and service contracts rather than product licensing--yet he hinted that euro conversion could be a bigger mess than year 2000. Meditech spokesperson Paul Berthiaume says the company has not made plans yet for euro conversion. "Our software is structured such that this impending change shouldn’t be a big deal," he says.

The advent of the euro is also expected to lower the risk and hassle of doing business in a region with multiple currencies. Siemens expects an annual savings in the double-digit million range from the elimination of hedging costs associated with currency dealings and transaction costs from cross-border payments, according to Elisabeth Rameisberger, company spokesperson in Munich. She says the company predicts conversion costs of roughly three percent of the total IS budget, but also expects major payback down the road from economic integration in Europe: "This will strengthen Siemens’ European business and provide the company with a solid foundation for further expansion in the fast-growing Asia/Pacific region, the Americas and Eastern Europe."

Polly Schneider is senior editor at Healthcare Informatics.


STANDARDS GAIN GROUND IN EUROPE

The same economic force hurrying along "plug-and-play" interoperability within the U.S. healthcare market is at work in Europe: the integration of systems. In the U.S. what’s driving IT standardization is the merger of healthcare organizations; in Europe, it’s the coalescing economies of its many nations. And while the drivers may be different, the engine is identical--the need to reduce costs and improve quality.

Standards setters and implementors on both the North American and European continents are paying attention to each other’s efforts. And despite such differences as language, governance and modes of healthcare delivery, they are working to collaborate on a clear and common way to exchange healthcare information.

"There’s a tremendous amount of collaboration. Everybody realizes they don’t have the resources to do this on their own," says Jack Harrington, principal systems architect for Hewlett-Packard’s medical products group and AWG technical chair.

For healthcare IT companies with international business, standardization could lead to more sales. HBOC has been building systems for the U.K.’s National Health Service since 1991, but because of the lack of standards, the company has had to create special interfaces, a step that adds to the cost of the product.

Says HBOC’s Ted Klein, senior technical advisor: "I don’t think we’ve had lost sales because of lack of standards. Europeans are still willing to pay for development of interfaces." But widespread adoption of standards like HL7 "will help drop the cost of sales," he adds.

Standards Activites in Europe

European and North American IT experts sit on the governing board and special interest committees of Health Level Seven (HL7). (www.hl7.org)

One-third of HL7’s membership is from Europe (the remaining two-thirds are from North America, Australia and New Zealand).

HL7 specifications are available in German, Dutch, Finnish and American English, and many European countries have their own HL7 chapters.

Just two years into its existence, plug-and-play catalyst and HL7 partner the Andover Working Group (AWG) boasts nearly 30 core members (among them such international giants as HBO & Company, SmithKline Beecham, and SunquestInformation Systems, Inc.) and 269 supporting members (including 62 internationally based organizations).

(www.hp.com/go/awg)

The healthcare standards working group European Committee for Standardization, which gets its support and authority indirectly from the European Union, is open to international participation. (www.centc251.org)

Kathleen Kimball-Baker is a Minneapolis-based healthcare writer.


INTERNATIONAL DEALS

Medical records software vendor MedPlus, Inc., Cincinnati, Ohio, will partner with European IT Solutions (EITS), a U.K.-based consultancy, to develop a market entry strategy for MedPlus in Europe. EITS will research and develop an indirect sales channel for MedPlus, including the identification of potential business partners in Europe, and will also provide implementation and support services for MedPlus products.

Hypercom Corp., Phoenix, has signed a $5 million agreement with Latin America telecommunications provider ImpSat Corp., in which ImpSat will use Hypercom’s point-of-sale terminals and software to implement a swipe-card system for healthcare providers in Argentina. Using the technology, healthcare providers can access patient insurance information, authorize prescriptions and communicate with health plans over ImpSat’s network.

Coopers & Lybrand Consulting has signed an agreement with Greville Campbell, a U.K.-based data warehousing and decision support firm, as a reseller of Greville Campbell’s HiPPO suite of healthcare applications in Canada. HiPPO (Health Intelligence Portfolio) is a data warehousing application that works as a central repository for existing systems in a healthcare organization.

--P.S.


CORBAMED EXPANDS TO EUROPE

The Object Management Group (OMG), Framingham, Mass., has recently put more force behind its international membership, opening up a new Southern Europe liasion office in Milan, and forming a CORBAmed European chapter to focus on healthcare’s application of CORBA (Common Object Request Broker Architecture) on the Continent. "The European chapter of CORBAmed will improve the communication between Europe and CORBAmed activities, promote CORBAmed within the European health informatics community and coordinate and propose European work item activities," explains C. Peter Waegemann, director of the Medical Records Institute and CORBAmed co-chair.

CORBA is a standard for developing object-oriented middleware for plug-and-play interoperability across disparate systems and networks. It has been incorporated into Java and Netscape technology. CORBAmed was started as an OMG task force four years ago to address healthcare-specific applications.

The European market lags behind the U.S. by at least two years in terms of implementation of CORBA, according to to Dr. Diego Lo Giudice, head of the new OMG office in Milan. However, he says there is growing interest in and development of CORBA applications: "Many government offices in Europe have adopted CORBA as the standard for distributed systems." Diego says the OMG will be increasingly important in Europe as software developers search for an open architecture to help with changes like the euro, year 2000 and the Internet.

Microsoft is also beginning to promote its standard for plug-and-play computing, ActiveX, in Europe and HL7 has made some inroads in Europe, but regional standards like the CEN TC251 from the European Commission muddy the standards landscape even further. "Individual countries have adopted different approaches," says Robert Powell, Microsoft’s European Healthcare Industry Manager.

--P.S.



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