Healthcare Dot-Com Era?

Is Healthcare IT investment activity about to tick up? This Business Week post suggests that is happening. Having spent many years in Healthcare IT, I've always had a lot of trepidation about software companies in this arena (I haven't touched the medical device space arena as I know very little about that segment of the market). Why the trepidation? It's a paradoxical market where cutting edge technology is used on the medical side of things, it's in the twilight zone from an information technology perspective. Various federal mandates like HIPAA have provided some impetus for automation but things still move slowly. I believe there are a few factors that have gated IT adoption in the past.

• The "cost-plus" billing model bred inefficiency that wasn't penalized for a long time. The other side of that coin was that it didn't attract (for the most part) the best and brightest in the IT world.
  
• There are additional factors such as risk aversion due to the stakes being high if mistakes are made. I used to tell my colleagues at Microsoft that while some markets claimed they had mission critical system requirements, healthcare had life critical requirements. The unfortunate thing is that thousands die each year due to avoidable mistakes such as systems to avoid negative drug-drug interactions. Even if there was a flaw from time to time with a computer system, I think it would be the equivalent of a plane crash where it only happens rarely but it causes disproportionate fear.
  
• Yet another factor impairing technology adoption is seasoned MDs hold a lot of power at hospitals so a group that is relatively computer-phobic can refuse to use technology. Since they are usually independent from the hospital and the hospital is dependent on them for their business, it puts them in a tough position.

With all of those barriers, one has to look at opportunities very carefully. Ultimately, someone will figure it out. One way it may get rolling is new models for healthcare delivery that don't have legacy issues. An example is some of what Steve Case is working on as reported in the NY Times with this "Revolution" venture (sub req).