For many years the annual DMEA meeting in Berlin was very much a German affair; however, more recently the show has become Europe’s leading pan-continent digital health IT conference and exhibition. Whilst the agenda at DMEA2023, which will take place from 25 to 27 April, will still have a German bias, issues discussed, and products showcased, increasingly impact healthcare IT development across Europe. Here’s our take on the leading themes.
KHZG: Funding Translating into Contracts
Two years after coming into force, Germany’s Hospital Futures Act (KHZG) is slowly delivering on its goals to digitalise the nation’s hospital network. However, it is taking time for government funding to trickle down to IT vendors.
Two vendors that Signify Research has historically forecast would benefit considerably from KHZG were CompuGroup Medical (CGM) and Dedalus. Whilst both vendors’ business in related markets grew in 2022 (CGM’s Hospital Information Systems group grew 7% and Dedalus’ DACH business is estimated to have grown ‘in the teens’), much more is to come.
To an extent the fund allocation process has resulted in the bulk of the impact being back-loaded towards the end of the funding period (2021-2024). First, hospitals had to apply for funding by pillar. After being allocated funding, IT tendering began, with IT contract awards coming last. This impact was first felt in 2022, with more substantial effects being seen in 2023.
Another reason why the impact has been slower for larger generalist hospital IT vendors is that initial activity was focused on KHZG’s ‘easier’ elements. Funding has been allocated by pillar, across 11 pillars (detailed below), with the initial focus on pillars where overheads, in terms of implementation, were lower. For example, the below shows that Digital Care and Treatment Documentation (mainly comprising dictation solutions) was the most funded pillar, followed by Patient Portals. More complex and costly areas in terms of implementation, such as Emergency Room IT and Process Digitalisation, ranked lower. Expect more to come in terms of more complex pillars over the latter half of the funding period.
Source: November 2022 German hospital digital maturity assessment co-ordinated by Digital Radar (DR)
Many IT contracts to service this funding will now move towards contract allocation. Expect IT vendors at DMEA to position themselves as go-to-vendors for specific pillars, with a handful, such as CGM and Dedalus, positioning themselves as best equipped to support a multitude of pillars.
Record European Government Investment in Digital Health IT
Germany is not alone in allocating significant new public funding for healthcare IT projects in recent years. For many EU countries the post-COVID EU Recovery and Resilience programme was a key vehicle for revitalising and increasing the digital maturity of healthcare IT in general, with large amounts of public money allocated to projects. In specific countries new, well-funded projects were announced during COVID (some linked to the EU programme, some not) to upscale the sophistication of IT in European hospitals and elsewhere in the healthcare ecosystem.
Examples include Gara Sanità Digitale (Italy), Ma Santé 2022 (France) and Le programme HOP’EN (France). DMEA has historically been DACH-focused, but in recent years is becoming Europe’s largest cross-continent digital health show. Vendors positioning themselves as able to deliver the IT required to secure contracts in countries where funding has been ramped up, will be a key feature of the show.
Vendor Consolidation – Local Champions to Regional Heavyweights
More than 500 vendors, from international heavyweights to start-ups, will exhibit at DMEA, a sign of a healthy, competitive ecosystem of IT and device companies addressing the European healthcare technology market. However, the backdrop to this is the recent emergence of several pan-European heavyweights, specifically in relation to hospital IT.
CGM has, for many years, been relatively large, serving many European (and global) geographies; however, 2021 saw it breach the €1Bn threshold for the first time, and €1.1B in 2022. It has grown partly organically but also via ambitious acquisitions, most recently of Medicus, VISUS, New Line and eMDs. Its 2020 acquisition of several product lines from Cerner (now Oracle Cerner) also significantly boosted its hospital business.
Dedalus has also rapidly expanded its business and footprint. As well as being the DACH region’s dominant vendor, it also enjoys tier 1 status in Italy, France and the UK, often in both inpatient and outpatient/primary care markets. This has largely been achieved via acquisitions.
Many of Europe’s once single-country-focused vendors, such as TietoEVRY, Mesalvo (the merger of iSolutions and Meona), Cegedim and Cambio have attempted to scale internationally, sometimes organically, but more often via M&A. Further, the two dominant US inpatient health IT vendors, Oracle Cerner and Epic, now also hold a substantial presence across Europe.
A key debating point at DMEA is whether Europe is heading in the same direction as North America, where most large digital health IT contracts (particularly inpatient EHR/HIS) are mopped up by a small number of incumbent vendors with the scale and resources to address increasingly demanding tender requirements.
Signify Research’s view is that this will not happen. There will be increased consolidation, benefitting the likes of CGM, Dedalus and Epic, but at a slow pace. However, the specific geographic nuances of each country, the fact that European EHR and Clinician Information System (CIS) markets are still relatively independent, and the entrenched position of many leading local vendors (think Maincare (France), SystemC (the UK), Ines (Switzerland), Engineering (Italy)) will result in a healthy, and relatively fragmented, competitive ecosystem for the foreseeable future. The plethora of vendors that have already benefited from KHZG funding adds weight to this argument.
New Models of Care Leveraging Integrated Data
“New perspectives on health data use and analysis”, one of the key themes on the DMEA congress agenda, underlines the drive to develop connected healthcare ecosystems in many European countries. This has been a focus of German healthcare IT investment over recent years in the form of Gematik Telematikinfrastruktur (TI), a programme to connect the multitude of IT systems used across the healthcare network.
However, whilst successful IT-wise, the programme has not ultimately changed how healthcare is organised and provided across Germany. There are examples in other European countries where data connection/integration programmes were a component of a broader reorganisation of healthcare towards a more integrated, holistic, predictive (as opposed to reactive) system. These include the creation of Integrated Care Systems in the UK, and Territorial Professional Health Communities (CPTS) and GHTs in France. To some extent these programmes mirrored US Value-Based Care/ACO programmes, although all have been slow to deliver on their promise.
A key theme at DMEA will be how to accelerate the integrated care agenda across Europe, which models offer the best opportunity to tackle the increasing burden of healthcare provision across the region and, specifically, how this is implemented in DMEA’s home territories of Germany, Austria and Switzerland.
Scaling Digital Therapeutics and Remote Patient Monitoring
In November 2019 the German Bundesministerium für Gesundheit (Federal Ministry for Health) launched, with great fanfare, the Digital Healthcare Act (DVG). Core to this was €200M($240M) annual funding to 2024 for Digitalen Gesundheitsanwendungen (DiGA) apps. These were digital apps prescribed by healthcare providers to support the management of a range of medical conditions from depression, panic attacks, obesity, anxiety, and osteoarthritis. Solutions could range from patient-focused decision support software, apps to manage medication dosage or solutions to monitor and collect data on patients related to therapy or condition.
The launch was initially plagued by challenges, from delays in testing and authorising solutions on the official DiGa app register, to a lack of engagement from physicians in prescribing solutions to patients. In subsequent years, there has been some progress, but the programme is still far from delivering on the original fanfare.
The DiGa experience is representative of many digital therapeutics and remote patient monitoring (RPM) programmes across the continent. For many countries, including Germany, making the step from small, regional trials tied to specific pilot programmes to scaled solutions addressing large sections of the population managing chronic conditions and mental illness remains an unmet challenge. Patients managing chronic conditions and mental illnesses are some of the most expensive cohorts in terms of healthcare provision. Grasping the opportunity that digital health offers to limit these costs must be prioritised.
Europe has, largely, still not passed the latency inflection point in the product life cycle for both digital therapeutics and RPM, unlike the US which is now clearly growing owing to clearer funding mechanisms and a more holistic spending viewpoint via VBC. Much discussion at DMEA will relate to what is needed to move the dial on this topic across Europe.
DMEA’s coverage will be broad, and these themes represent what we believe will the leading topics. A range of other issues will be addressed, from cloud migration, virtual care post-COVID, to the increasing influence of big tech in Europe’s health IT markets. In general Europe has lagged the US in healthcare digitisation. DMEA will be a bellwether as to whether the post-COVID influx of IT funding is narrowing this gap.