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Electronic healthcare records mean VAR opportunity, but it's on hold

VAR healthcare IT initiatives, EHR work on hold until "meaningful use" is defined.

The American Recovery and Reinvestment Act includes a healthcare funding package that could generate a wave of electronic health record deployments across hospitals and physicians' offices. So developing work in electronic healthcare records (EHRs) could be a significant VAR opportunity, but it remains stalled for now.

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The main sticking point: The federal government plans to offer nearly $20 billion in incentive payments to healthcare providers that demonstrate "meaningful use" of EHRs. But a formal definition of meaningful use has yet to materialize. In addition, the bulk of the funding won't be available until 2010.

As a result, the market for electronic records has yet to take off.

"The lack of a definition of meaningful use has actually slowed the purchase of those application for the first six months of the year," said Steve Rhodes, president and CEO of Physician's Trust Inc., an electronic medical records consulting firm and reseller of eClinicalWorks products.

"They are really in a holding pattern," said David Hutchinson, director of Healthcare Solutions at Avnet Technology Solutions, Americas.

Hospitals that have electronic records are talking with their ISVs to determine whether existing deployments will meet meaningful use requirements and, if not, what they need to do to comply, he said. Physicians' practices, most of which lack electronic records, also await the final meaningful use definition.

That definition is expected to be ironed out later this year. In the meantime, resellers are landing projects to prepare healthcare providers for the eventual EHR funding and rollouts.

"What we are seeing is a whole lot of interest in developing plans to be ready for getting the funding," said Karen Burton, the healthcare solutions business development manager for Logicalis Inc., a solutions provider with a focus on healthcare. "We are seeing projects on a lot of different levels -- from determining what EHR application to select, developing disaster recovery plans and working through application integration issues," Burton said.

She also said Logicalis doesn't assist with her technology selection, but instead helps hospital customers in the evaluation stage with budgetary numbers for infrastructure requirements. She said the company will also provide the infrastructure once the type of EHR technology is selected.

Hutchinson said Avnet advises its partners, most of which focus on infrastructure, to stick with that business as they work with healthcare accounts. The distributor aims to boost partners' healthcare insight through its HealthPath University program.

"We aren't telling them to go into healthcare talking about electronic medical records, but really talking about infrastructure readiness for medical records," he said. "There's a whole lot of plumbing work that needs to get done."

Hutchinson said providers may need help with centralizing patient information, network infrastructure, storage management and information security.

But some healthcare providers have embarked on EHR projects. Rhodes said community health centers and Federally Qualified Health Centers, have already received federal grant dollars and are "getting into the implementation cycle."

When will the bulk of providers follow? Rhodes said he has seen an uptick in activity this month. "Providers that have been sitting on the fence are starting to move," he noted.

Overall, executives are looking toward a ramp up through year's end, with the greatest number of projects coming to fruition in 2010.

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