EUROPE: U.S. VENDORS WEIGH RISKS | Healthcare Informatics Magazine | Health IT | Information Technology Skip to content Skip to navigation


August 1, 1998
by Jeffrey Elliott
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by Jeffrey Elliott

Europe is teetering on momentous change as it enters the new millennium, most notably: expanding the number of countries in the European Union and converting to a common currency. But the impact of these events is still unclear and the economic uncertainties have put much of the market for healthcare IT on hold, says Ray Falci, a healthcare IT analyst for Bear Stearns in New York.

Healthcare IT companies face an additional challenge in Europe: Selling products to diverse, government-operated healthcare systems that are well behind the U.S. in terms of automation. Combined, these factors are affecting corporate earnings.

After posting international profits of $7.5 million and $6.1 million in 1995 and 1996, respectively, Malvern, Pa.-based SMS, the U.S. healthcare IT firm with the most overseas revenue, saw a complete reversal in 1997. SMS reported a $6.7 million loss in its international operations on revenues of $108 million--a major portion of that business in Europe.

The challenges for U.S. healthcare IT developers are slow procurement cycles and the lack of critical mass in Europe, says Phil Birchall, U.K. sales director for database company Intersystems Corp. "The U.S. is a far more consistent market with more spending."

Cognizant of economies of scale, many U.S. players have shown their skepticism. Kansas City, Mo.-based Cerner Corp., struggling with the bureaucratic purchasing system in healthcare, signed over its European marketing rights to Siemens Nixdorf Worldwide Health Systems Solutions Group in Stockholm, Sweden in 1996. Atlanta’s HBOC, even with its recent purchase of AT&T’s healthcare division in the U.K., is taking a cautious approach, choosing to establish distributor relationships in favor of investing heavily in European sales and marketing efforts, says president and co-COO Jay Gilbertson.

Even Misys Plc, the U.K.’s largest independent software developer, is seeking a more lucrative market for healthcare IT. The company, which already owned a healthcare software business in the U.K., is focusing most of its healthcare strategy on the U.S. market through practice management IS company Medic Computer Systems in Raleigh, N.C., which it acquired for more than $900 million in 1997. "Misys is very much a global business. If you’re trying to build a big business, it makes a great deal of sense to operate in a big market," says Medic CEO Mike O’Leary of Misys’ entrance to the U.S. market.

"I think the market is so big here, that it’s foolish not to focus on where you can do a better job," says IDX Systems Corp. CEO Richard Tarrant. The Burlington, Vt., software company has one international customer, a U.K. provider that IDX acquired when it purchased Phamis last year. Tarrant says his company will keep its eye on Europe, but has made no plans to market products there.

However, Falci believes there is potential in Europe, particularly for clinical data repositories and enterprisewide clinical systems. He cites a project that the U.K. is undertaking to implement a nationwide master patient index. But the only way for U.S. healthcare IT companies to have any success in Europe is through partnerships in each country, Birchall says. Regardless of European Union, countries will still be culturally independent. "It’s impossible for healthcare IT companies to have a canned solution in all of Europe," he says.

Jeffrey Elliott is business editor at Healthcare Informatics.


by Barbara Hesselgrave

A new state-of-the-art hospital in Ireland has teamed up with a U.S. healthcare organization to jump-start an aggressive 12-point IT strategy. Tallaght Hospital in Dublin--a 589-bed hospital formed from the consolidation of four healthcare facilities--struck an alliance with the University of Tennessee College of Pharmacy in November 1997. What began as a typical student exchange program evolved into a relationship where Tallaght became the European beta site for a pharmacy management system the college is joint marketing with developer Comprehensive Pharmacy System (CPS), Memphis, Tenn.

"In our discussion to link up with Tallaght, we learned that Tallaght was committed to becoming the European leader in pharmacy management," says Jim Gourley, dean of the UT College of Pharmacy. "We envisioned the opening of Tallaght as an ideal opportunity to test COMSTAT in a European environment." Gourley says the liaison is part of the pharmacy college’s ongoing initiative to become a global institution. The college has eight other foreign exchange programs.

COMSTAT is a Microsoft Windows-based software package that can interface with remote and host devices, hospital information systems and automated dispensing systems, as well as any other COMSTAT system around the world. The system will run on palm-top computers, and will provide pharmacists and clinicians with drug performance, outcomes, dispensing, drug interaction and disease management information, plus various options for report generation, according to Brendan Carr, Tallaght’s IT director. The system was scheduled to launch at the official June 21 opening of Tallaght, according to sources at press time.


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