It's surprising that resellers traditionally have shied away from the health-care vertical - for many reasons. Some found it difficult to turn a profit, given the vertical's regulations and specialized business practices. However, this trend appears to be changing, and 2008 expects to bring increasing opportunities for resellers. And the timing for this upswing is on health care in the U.S. was expected to exceed $2.2 trillion in 2007.
In order to learn more about this ongoing trend, VSR tapped several distributors for a first-hand account on the changes and the implications for resellers and how they can grab hold of this emerging vertical.
Despite its magnitude and obvious need for technology solutions, the health-care vertical has presented resellers with several obstacles. Can you discuss those?
[Tony Vottima] Health care can be a harder vertical to break into, given its (specialized) lingo and business practices. In addition, large health-care ISVs (independent software vendors) who sell infrastructure along with their applications may prove difficult for VARs to compete with.
[Chris Marlar] Until now, many health-care organizations wouldn't consider resellers unless they had full-blown solutions, and could provide turnkey support. It's only been recently that there have been many "out-of-the-box" solutions for functions such as inventory and asset management and medicine tracking. Health-care organizations also have to comply with various regulations, such as HIPAA. Resellers often decide to focus on verticals that offer more immediate payoffs.
[Steve Cuntz] Some larger health-care organizations, especially hospitals, use buying groups that are given responsibility for their purchases. Most of the groups send out contracts only to the larger resellers that focus on this market.
[Daryl Schuster] Also, health care typically is slower to adopt emerging technology, versus other sectors in the public space.
What are some of the positive trends regarding the health-care vertical?
[Vottima] At Avnet, the health-care vertical overall is showing year-over-year growth of about 25 percent. The VAR channel is proving to be the fastest growing (compared to OEMs and ISVs), increasing about 35 percent annually. While it's harder to break into, once you've established trust and solved a business problem for a hospital, you become a permanent fixture.
[Schuster] The market is definitely on the upswing as far as growth. Health-care organizations are moving to electronic transactions and systems to replace paper and pencil and enable caregivers to automate processes, such as identifying patients and blood samples. Another driver is legislation, such as the requirement for tamper-proof prescriptions, which becomes effective in April 2008.
[Marlar] As communication technology comes down in price and is available through VAR channels, resellers are able to bring solutions to a wider range of health-care organizations, versus just the largest and best-funded groups.
Which areas of health care hold the most promise for resellers?
[John Gaillard] Video surveillance in the public areas is growing. You can put cameras within the network to allow security to see who is in different areas without having to walk the halls every few minutes, and verify that they're supposed to be there. Credentialing technology also is big in health care. Employees use credentials to gain access to different areas of the hospital. Both security resellers and nonsecurity resellers can pursue opportunities with a security focus.
[Cuntz] One application involves identification bracelets that contain patients' medical information. Nurses can scan the bracelets before dispensing medication to ensure they're providing the right amount of the right remedy. Or, the health-care professionals might wear identification badges that would enable them to access health-care records.
Another specialized application would be specimen compliance. Health-care providers can embed RFID tags in test tubes or Petri dishes to reduce misdiagnoses.
[Vottima] Data storage continues to grow, as regulations are prompting health-care organizations to retain patient and billing records almost indefinitely. They need solutions that will help them do this and manage the documents. Networking and IT security are emerging markets. We see more surveys stating that security is a No. 1 issue.
Opportunities also are occurring in organizations such as long-term care and assisted living facilities. Management may look to VARs to host their email, data backup and other functions.
[Schuster] Networking and wireless applications that facilitate caregiver mobility also are growing. For instance, caregivers can be equipped with small, mobile computers that contain patients' medical information. Kiosks and digital signage are also two positive growth areas. They could provide information to families waiting at a hospital. The consumables business in health care also offers opportunity. Paper, for uses such as prescriptions and patient labels, is one example. Many VARs don't think about this, but it provides a constant revenue stream.
[Marlar] Given the difficulty in attracting and retaining nurses, applications that can make their jobs easier or help them work efficiently are popular. Another area is providing long-distance diagnoses with the aid of high-definition video. This will allow patients to more easily access evaluations from specialists.
[Vottima] Virtualization, (in which the server is divided into multiple environments via a software application), as well as server consolidation, are of interest. Even as many health-care organizations are introducing computerized systems, their IT budgets remain tight.
What programs do you have in place to support the channel?
[Vottima] We've seen that much of the business resellers have gained has been a result of taking advantage of opportunities in which they're brought in to solve a particular problem. However, this business often isn't sustainable, as the VARs are not experienced enough in the health-care vertical. Because of this, Avnet built a 'Healthcare University.' During a three-day program of lectures and Q&A sessions, an Avnet team discusses the health-care business with VARs, including how hospitals and clinics are run, industry jargon, typical business problems and new technical solutions geared toward health care.
Avnet also can help resellers identify potential leads from its database of information on the 6,000-some hospitals in the United States.
We are also planning to implement an internship program during the first quarter of 2008. For one week, Avnet and its resellers will shadow managers of a variety of departments, such as the laboratory and medical records areas, from within a hospital as they go about their workdays. At the program's conclusion, the resellers will have a solid understanding of the organization's workflow.
[Cuntz] Blue Star's "Mobile Freedom" is a vertical marketing program for mobile work forces, including health care. We work with VARs to develop marketing plans for solutions geared toward mobile workers. We also host educational programs, such as "Lunch and Learn" seminars focused on a variety of topics, such as RFID applications.
[Schuster] Our ISV program allows the reseller to approach the solution from two different angles. Some of our ISV partners have a reseller program available, so the VAR can resell the solution themselves. Or, they can partner with the ISV. In addition, we really enable our partners to expand their reach within their customer base through partnerships with other resellers that possess experience they lack. Also, our new mobility division offers cellular applications. We can provide resellers with a range of solutions - including wireless, mobility, networking and handheld computing.
[Gaillard] ScanSource Security has a great product line-up for IP video and cameras. We also take a leading role in education, and are hosting a series of road shows that will continue in 2008, focusing on IP technology and security. We're also making our Web site a repository of information, which will include case studies and white papers.
In addition to taking advantage of these programs, how can resellers best leverage the opportunities in the health-care vertical?
[Vottima] Resellers interested in this vertical should consider becoming active in some of the industry groups in their areas, such as the Healthcare Financial Management Association. They'll also want to assemble a potential client portfolio of larger research hospitals and smaller community hospitals. Larger teaching hospitals and research centers invest more in IT, but there is more competition (for their business). With smaller hospitals, the opportunity is greater for the VAR to become a resource.
[Schuster] Because of the complexity of the health-care field, a VAR needs to make sure they are speaking with any and all stakeholders involved in a specific project. Solutions-based projects potentially involve many different departments with a hospital, and all of those departments need to be accounted for in this type of selling discussion.
[Marlar] Resellers really need to understand what health-care providers are looking for. They also need to speak the language, so that help potential customers feel comfortable that the resellers know their sector. Resellers also should recognize that while health care is a vertical, it includes multiple markets, such as inventory and fixed asset management, and wireless RFID applications; it even includes POS in gift shops and pharmacies. They should understand their area of expertise and, if necessary, partner with another reseller to round out their solution portfolio and gain business.
