Stimulus Sparks High-Tech Opportunities

By Mark Brousseau

The American Recovery and Reinvestment Act (ARRA), recently signed into law by President Obama, provides welcome news to technology suppliers who are facing a 0.1% 2009 U.S. growth rate, new research from IDC's Industry Insights Companies, reveals.

"With all the uncertainty surrounding the specifics of the new economic stimulus package, one thing is certain – there will be a large amount of government money flowing towards technology spending," said Meredith Whalen, Group Vice President and General Manager of IDC's Vertical Market Business Units. "This new government money will flow to both the private sector and directly to federal, state, and local government."

Included in the $787 billion ARRA package is approximately $20 billion in funding for healthcare IT, including incentive payments to physicians who implement and use eligible electronic medical records systems under the conditions laid out in the law.

"The approximately $20 billion in ARRA funding allocated to healthcare IT investment will have a positive impact and will begin the transformational process the U.S. healthcare industry so desperately needs to remain viable and competitive," said Health Industry Insights' Program Directors for Healthcare Provider IT research, Lynne A. Dunbrack and Marc Holland. "That said, even if implementation proceeds as intended, a number of issues still loom."

Health Industry Insights believes the combination of near-term stimulus funding for patient care, coupled with significant long term incentives and investments in new core health IT infrastructure will accelerate the move toward digital patient information. New Medicare and Medicaid stimulus money will ease cost pressures for many providers, while direct incentives to physicians and hospitals should ensure aggressive implementation of new patient information systems starting in 2011. Between now and 2011, expect significant new spending on standards development and core federal infrastructure.

Industry Insights analysts believe it will be imperative for the vendor community to be both aggressive and agile in their strategy to capture this newly addressable market. This once-in-a-lifetime flood of new technology money requires a new way of finding and following opportunities. Success will not come from traditional business development via relationships and RFPs. While some of these new monies will be allocated via grants and accelerated acquisitions contracts, there will be new ways of engaging with the Government.

"Technology monies will not necessarily be identified as such, but as an element of new and urgent government initiatives," said Teresa Bozzelli, COO and Managing Director, Government Insights. She added, "Vendors must understand when and how to upsell existing contracts when expediency is critical. The vendors must also offer new engagement models to the government, where reward is directly tied to the results achieved against the promise of the economic recovery designed within the stimulus package."

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