Healthcare CRM Set to Grow

Customer relationship management in healthcare field grows three times faster other verticals

Customer relationship management in healthcare field grows three times faster other verticals

New York — January 13, 2005 — Enterprise software solutions that handle the relationships between an enterprise and its customers, having been widely adopted in other industries, are now able to offer benefits to the healthcare sector, according to a new report by independent market analysis firm Datamonitor.

The report, "CRM and ERP technologies in Healthcare," estimates the combined investment by the healthcare sectors in the United States and the major Western European markets of France, Germany and the UK, in customer relationship management (CRM) software, will have a compound annual growth rate (CAGR) of 9 percent over the next six years. This compares with just 3 percent for the CRM market in all verticals.

Likewise, spend on enterprise resource planning (ERP) applications is predicted to have a 7 percent CAGR from 2004 to 2010.

Few industries are as important to the lives of all consumers as healthcare, the report said. Although other industries may describe their decisions or relationships as being a "matter of life and death," in hardly any instances is that the literal truth. Healthcare has always been at the cutting edge of technology in general, so it is a surprise to see how little use healthcare has made of IT, Datamonitor commented. This is changing rapidly as the industry begins to realize the full potential of these technologies.

According to the report, a combination of factors is causing this relatively rapid growth in a previously moribund market, which include:

* Rising costs and spending — The growing proportion of older people and the constant development of new treatments means demand for healthcare is rising. Although funding is rising rapidly, healthcare providers need to use products like CRM to control costs and more effectively automate their operations.

* More demanding consumers — As the quality of other goods and services improves, consumers of healthcare are no longer willing to tolerate the levels of service once deemed acceptable, according to Datamonitor. This generates demand for CRM systems in healthcare payers and providers who had previously examined success purely in customer survival and now need to consider the overall customer experience.

* Second-generation technologies — Maturing CRM technologies are now stable and cheap enough to be attractive to healthcare.

ERP is also a growth area in healthcare. France, Germany, the UK and the United States will grow by an average of 7 percent annually over the next six years, the analyst firm said.

Hospitals and other healthcare providers have the opportunity to benefit from the human capital management and financial solutions that are an established feature of most enterprises. Sales of ERP applications to healthcare are expected to grow with a CAGR of 7 percent from 2004 to 2010. This compares with growth of less than 2 percent for the ERP market as a whole.

James Adams, Technology analyst at Datamonitor and author of the study, commented, "Healthcare is a rapidly growing and potentially profitable niche for enterprise application vendors. Whilst clinical applications will take up much of the budget and most of the attention, ERP and CRM can will make a significant contribution to automating operations and ultimately to improving patient experiences."