Activity-based Payments and Pay-for-performance Initiatives Step up the Need for Effective Business Analytics Solutions in the European Healthcare Sector

LONDON – 12 May, 2010 – Business analytics solutions are considered the face of business intelligence (BI) for healthcare providers, as they assist healthcare managers and hospital management to compile, arrange and manage clinical, financial and administrative data in a defined protocol, thereby facilitating informed business decisions. The European healthcare sector has mostly adopted activity-based payments. The current trend is that of diagnosis-related groups (DRGs), which help hospitals minimise patient visits to their premises, increasing the need for efficient analytics solutions. Pay-for-performance initiatives have further fuelled the demand for business analytics systems in the European healthcare sector.

New analysis from Frost & Sullivan (, European Markets for Business Analytics in Healthcare, finds that the markets earned revenues of $205.4 million in 2009 and estimates this to reach $462.1 million in 2016. The segments of the business analytics solution markets covered are the financial and administrative module analytics solutions.

“Business analytics solutions provide a substantial return-on-investment (ROI) for healthcare organisations, thereby driving the adoption rates of these systems in Europe,” says Frost & Sullivan Industry Analyst S. Priyan. “These solutions allow the user to control operating costs and streamline revenues.”

Effective healthcare business analytics solutions, along with BI solutions, provide ROIs ranging from 100-300 per cent. This is extremely significant to the already cost-sensitive healthcare sector. Furthermore, it enhances the overall workflow efficiency of healthcare management.

However, stringent hospital budgets towards information technology (IT) deployment challenge the growth of the European markets for business analytics in healthcare. Hospitals’ IT budgets spent on infrastructure and devices reduce the investments in IT systems.

“On an average, the IT budget of a hospital is about 1.5 per cent of its total annual expenditure which is extremely low when compared to the budgets allocated towards devices and other hospital infrastructure,” explains Priyan. “IT continues to be considered as expenditure rather than an investment.”

Hospitals should increase their investments in IT and procure more cost-effective systems that provide greater value for money.

“The IT expenditure of the hospitals should be stepped-up to at least to 3.0 to 3.5 per cent of their total annual expenditure,” concludes Priyan. “Additionally, the vendors should enhance the value proposition provided by the systems so that the hospitals get value for the expenses incurred.”

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