Crunch reins back Orion

The economic downturn has slowed the previously stellar growth of Orion Health as it waits to cash in from an expected huge increase in health information technology spending in the United States.

Chief executive Ian McCrae says sales in the year to March were "pushing $60 million", up from $53m last year. In November, the Auckland firm forecast 20 to 30 per cent revenue growth. About 90 per cent of revenues come from exports.

Mr McCrae says the credit crunch has had an effect in some markets, such as the US, where the health sector is largely commercial and hospitals have found it harder to raise money through the sale of bonds.

US President Barack Obama made an election commitment to pour US$50 billion over five years into upgrading health-sector technology.

"It is a funny situation in America," says Mr McCrae. "Even though there is going to be a huge investment over the next three years, in the last six months there have been hospitals that have been struggling."

Staff numbers at Orion and sister company HealthLink have fallen from 350 to 320. Orion has laid off overseas staff, while hiring in other areas.

Orion recently sold its Rhapsody software to Iowa's largest health provider, Iowa Health Systems, and The London Clinic, a private hospital in Harley St.

The software typically sells for US$50,000 to US$250,000.

Mr McCrae believes Mr Obama's initiative could kick in during the final quarter of this year, or early next year.