The top story ViVE2023 wasn’t a major product launch, new legislation, or a mega-merger. Instead, the entire industry seems to be waiting for better times to arrive. Vendors are waiting for the economy to turn around. Providers are waiting for labor costs to stabilize. Investors and funders are waiting for companies to show more market traction. Only must-do projects and must-have solutions continue to have momentum.
The Big Question
Because the Healthcare IT Today team speaks to so many attendees and exhibitors at conferences, we often get asked what we think the biggest or most interesting story is. Normally my answer is the latest policy drop or company merger. Occasionally it’s an unexpected partnership or new product launch.
At ViVE2023, none of these emerged as the biggest story.
Almost everyone I spoke to responded with a variation of the same statement: “We are not making any significant investments right now, but we hope to in Q3 or Q4 when our financial situation becomes clearer.” It didn’t matter if the organization was a provider, a health IT vendor, a consulting company, or a venture firm.
I did not get the sense that organizations are retreating from the market or hunkering down like they did in the early days of the COVID-19 pandemic. At ViVE2023, everyone seemed to be adopting a wait-and-see approach for the next 6 months. Projects that were already underway would continue, but new projects and new investments were on hold, unless absolutely necessary.
No one I spoke to was panicking…well no one except companies who are in need of additional funding.
Positive Signs
What are the positive signs that people are waiting for? Here were the most popular responses:
- For the Fed to stop raising interest rates
- For the Fed to start lowering interest rates
- For layoffs to stop
- For talk of “down rounds” to stop
- For labor costs to stop rising at double digit rates
This last one is the most troublesome for health IT vendors.
According to a report by Syntellis and the American Hospital Association, contract labor expense for healthcare providers rose 257.9% from 2019 to 2022. Although this meteoric rise is expected to slow down in 2023, experts expect it to still be low triple digits – far above pre-pandemic norms. This means healthcare organizations will need to continue to adjust their budgets to compensate for this market reality leaving little room for projects that are not must-have.
That will be the key challenge for Health IT vendors for 2023 – to demonstrate that their solutions should be considered by providers as “must-have”. Those that don’t may be in for a long wait.
