Market for MMR products
The Market for Our Products
Demand for our medical records products is driven by the U.S. healthcare market and the health information management market. We believe demand for our MyESafeDepositBox product will be driven by consumer and small business focus on disaster preparedness and financial planning.
U.S. Healthcare Market
According to a report published by the Government Accountability Office in April 2008, healthcare spending per capita has grown on average about 2.5% faster than average annual per capita Gross Domestic Product, or GDP, over the past several decades. The report also finds that because this rapid growth in healthcare spending is expected to continue, it poses a fiscal challenge not just to the federal budget but to American business and the national economy. Figures released by the Centers for Medicare and Medicaid Services of the Department of Health and Human Services, or HHS, show that total health expenditures in the U.S. reached $2.1 trillion in 2006, which
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translates to $7,026 per person or 16% of the nation's GDP. The HHS also determined that hospital spending grew 7% in 2006 to $648.2 billion, while spending on physician and clinical services grew 5.9% to $447.6 billion, representing about 22% of overall health care expenditures. HHS figures also show that prescription drug spending reached $216.7 billion in 2006, accelerating for the first time in six years, from a low of 5.8% in 2005 to 8.5% in 2006.
Today's healthcare consumers face a difficult set of factors. We believe that rising health insurance costs, combined with an aging population, makes it essential that people be more aware, and in greater control, of their health status and their personal healthcare information than ever before. We believe our MyMedicalRecords PHR product addresses these challenges by giving users better access to and control of their own personal medical information. By having ready access to their medical records, healthcare consumers are better positioned to share such information with providers, which may avoid duplicative tests that may not be reimbursable. Our MyMedicalRecords PHR product is also designed to make accurate and complete medical information readily available to healthcare providers, which we believe will improve the consumer's treatment experience, if not the healthcare provider's ability to deliver it.
We also believe that recent legislation and statements from President Barack Obama's administration indicate that healthcare reform is primed to be a major national priority in the coming years. President Obama has recently stated his commitment to modernizing the healthcare system through the expansion of health information technology, or health IT, and the use of electronic medical records by every doctor's office and hospital in this country. According to his website at www.change.gov, President Obama has called for expenditures of $50 billion over the next five years for health IT, including electronic health records, to lower the cost of healthcare and, on December 6, 2008, he added health IT to the economic stimulus package currently being negotiated with members of Congress. Tom Daschle, the Health and Human Services Secretary-designate, is also on record as favoring more health IT. We believe that major health IT legislation introduced in 2007 and 2008 in both the U.S. House of Representatives and Senate further underscores a bipartisan push toward widespread adoption of health IT and particularly electronic medical and personal health records. For example, on January 28, 2009, Rep. Patrick Kennedy (D-R.I.) said that he plans to reintroduce a bill that would create a trust fund to pay physicians an incentive for each patient who creates a personal health record. According to Congress Daily, Kennedy's proposal would require the Department of Health & Human Services to establish standards for qualifying physicians and establish requirements for qualified web-based PHRs. We believe this current U.S. administrative and legislative focus on health IT, which likely will result in additional legislation being introduced, provides a significant opportunity for us to meet an identified need in the U.S. healthcare market with our MyMedicalRecords PHR and MyMedicalRecords Pro products.
Health Information Management Market
We believe the growing need to effectively manage health information is a significant marketplace opportunity that is attracting both start-up companies and well-funded technology companies given the recent U.S. government focus on better access to and management of medical and personal health information through Electronic Medical Records, or EMRs.
Despite the significant momentum to adopt EMRs, many doctors, particularly small practitioners, are still resisting conversion to a completely electronic medical records system because of the time and expense associated with the conversion. We are in the process of developing MyMedicalRecords Pro, which is an alternative to EMR geared towards the small doctor's practice. MyMedicalRecords Pro is designed to enable those still paper-based doctor offices to digitize patient records and place them on-line, without the need for the expensive hardware and software investment typically associated with EMR conversion. MyMedicalRecords Pro is expected to be integrated with our MyMedicalRecords PHR product, allowing easier sharing of records between doctors and their patients, which we believe will in turn further drive adoption of our MyMedicalRecords PHR product. We believe this will give us the ability not only to exploit a growing consumer market, but also to have an active presence in the business market.
Driver for MyESafeDepositBox Market
The primary market driver for our MyESafeDepositBox product is the need for individuals and small business to be able to easily, efficiently and securely maintain backup copies of paper-based financial, insurance, legal and other vital business and personal documents.
External data storage is a rapidly growing market. According to IDC Worldwide Disk Storage Systems' Quarterly Data Tracker report published on September 5, 2008, there was nearly $7 billion spent on external disk
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storage in the second quarter of 2008, a 10.7% increase compared to the same period in 2007. Both companies and individuals are seeking solutions that will allow them to safely backup - and quickly restore - any lost data. We believe that our MyESafeDepositBox product meets the need of a sub-set of this vast data storage market, and we intend to target individuals and small businesses who want to find a secure, web-based solution for storing their most critical personal, financial, legal and insurance records, rather than those looking to backup the entire contents of their computer hard drive or corporate network.
In addition, the need for individuals to augment their personal plans for disaster preparedness is reflected in a July 2007 poll conducted by the Marist College Institute for Public Opinion in which 57% of respondents indicated that they did not have a family disaster emergency plan. The poll also reported that 57% of respondents indicated that their family disaster emergency plan did not include all basic essential items. Part of disaster planning is making sure that necessary and vital documents are available to be quickly retrieved in the event of evacuation and we believe our MyESafeDepositBox product meets this need by offering users a safe and easy way to store and access their vital records on-line.
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