Industry Analysis
In the face of the increasing healthcare costs, and decreasing third party reimbursement, physicians are looking to streamline their documentation and office procedures and prevent costly mistakes. This has driven the implementation of office automation applications, enterprise resource planning applications and electronic data interchange applications in the healthcare industry. Large medical providers have recently begun to incorporate electronic medical record systems in their hospitals and clinics. Increases in government regulations and the volume of data for which a physician must be responsible have opened the door for educational and expert systems software in the medical industry. Expert systems are already being used for diagnostic purposes and training. VeriType is a natural progression from automation systems to these more advanced analysis systems with respect to reimbursement.
VeriType
MARKET SIZE AND GROWTH POTENTIAL The Healthcare Information Services industry as a whole is estimated to be worth $15 billion. G2 Research, a market research and consulting firm based in Mountain View, CA, forecasts annual growth of 28% in the Healthcare Information through the year 2000. The four biggest companies in the industry right now are shown in the graph to the right. The largest player in this market, HBO & Co. grosses $1.2 billion in revenues representing only an 8% market share. With the emphasis on cost containment in the industry, continued demand for revenue producing and cost reducing services should be strong. TECHNOLOGY FACTORS Healthcare information products currently are geared towards back-office procedures, such as billing and paperless office automation. Most medical products are not designed to interact with clinicians directly. Consequently, it will be difficult for any enterprise level provider, such as those in the graph above, to tailor its product for both back-office and clinician use.
In the medical services industry, two technologies will impact VeriType. The first, voice recognition, is rapidly advancing and being integrated into desktop computers. VeriType software will be used in conjunction with products such as IBM's ViaVoice5 because it requires a digitized medical record as input for analysis. The second, Natural Language Processing, has advanced significantly in the last few years due to the research efforts of Xerox PARC (Palo Alto Research Center), with whom the Al lab at the University of Arizona works closely. VeriType analysis uses natural language processing to recognize the keyword and phrases required by HCFA in the proper context. REGULATORY ISSUES Because healthcare regulation will continue to increase, the need to check documentation for compliance and to educate physicians about regulations will continue. Adding compliance impetus, private insurance providers have also adopted HCFA's documentation standards. The need for continued compliance will generate a very promising opportunity for VeriType. SUPPLY AND DISTRIBUTION Distribution channels for medical software vary widely. Large software companies such as IBM have specific "vertical" practices for the medical industry. Software reps in these practices operate like pharmaceutical reps in visiting clinicians and demonstrating products. Smaller companies often partner with larger software firms to distribute their product. Physicians will listen to representatives from these firms due to their established reputation and clout.