Central Europe: Where Opportunities Equal Challenges

Significant sales opportunities exist in Central and Eastern Europe for medical equipment manufacturers as the region begins to evaluate the advantages of integrating and expands its IT-based services into health care delivery and implementation programs, according to a new research report from IDC .

This is good news for electronics component vendors in the medical equipment market, but it comes with hurdles as challenging as the potentially huge sales identified by the research firm.

In recent years, the medical sector has proven a source of stable growth for the electronics industry. National governments, local authorities, and service providers have rushed to upgrade IT systems and implement electronics recordkeeping to reduce errors and improve operations. The beneficiaries of this push have included not only OEM equipment marketers like General Electric Co. (NYSE: GE), but also component vendors, distributors, contract manufacturers, and consulting companies.

The industry has focused in recent years on the matured markets of Western Europe and North America while seeking opportunities in parts of Asia, especially China, which has moved rapidly to integrate IT services into health care. However, it appears future growth will be centered on developing economies.

Industry analysts believe IT and medical equipment vendors should not ignore Latin America (Argentina, Brazil, Mexico, and Peru come to mind), Central and Eastern Europe, or Asian nations like India, the Philippines, and Vietnam, all of which are nascent but still quite important market segments.

Central and Eastern European nations are in a distinct category; they offer rapid sales growth mixed with irritatingly complex adoption problems. The region has been long plagued with major health challenges, including high and rising pharmaceutical costs, lack of adequate recordkeeping (especially electronic documentation), worker shortages, and increases in incidences of chronic conditions. In a report, IDC analysts said they believe "information technology holds a great deal of potential to help CEE countries meet their healthcare challenges." The researchers state further:

While numerous large healthcare providers in CEE have implemented health information technologies, such as digital patient records and serialization solutions, few of these are interoperable with those in use at other hospitals. IDC believes that this situation is limiting the ROI on health IT investments and feeding uncertainty over the value of health IT among clinicians in the region.

Some may see these hurdles as potential dealkillers, but I believe they represent opportunities for determined service providers and electronics equipment vendors. The lack of interoperability of health IT systems can be resolved, though at a high cost to governments and hospitals. Medical equipment OEMs can offer financing and easy-pay options that will make it easier for service providers to adopt newer systems. OEMs should also be willing to assist with consulting services such as installation, maintenance, and continuous monitoring.

Medical and electronics equipment OEMs seeking opportunities in the Central and Eastern European health market may find themselves doing some handholding and organizing educational sessions to explain how their products can help the region improve the delivery of health care. Also, I think it's important to explain the return on investment the governments and institutions in the region can expect from investing in medical IT equipment.

IDC warned that medical equipment manufacturers will have to figure out the most appropriate sales and marketing strategy for the region. Importing a cookie-cutter system from Western Europe or North America simply won't work, Heather Keyes, a senior researcher with IDC, said in the report. "There is this tendency among EU-level policymakers and even some IT vendors to use countries in Western Europe or North America as models for CEE countries, when there is a lot to learn from providers in the region."

The bottom line, in my opinion, is that a new market opportunity is opening rapidly for electronics, medical equipment, and IT consulting companies in the Central and Eastern European health sector. The companies that will benefit most from the increased sales opportunities will use unconventional sales and marketing methods. The market exists, but tapping it is obviously not for the faint-hearted.