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Monday, February 13, 2017

Healthcare IT Services Market will Reach $68.3 Billion

The healthcare landscape has been subject to significant turbulence due to a broad range of factors -- including escalating costs, widespread regulatory amendments, changing business models, and evolution of the patient-centric paradigm.

That said, controlling rising costs and improving operational efficiency in the healthcare IT sector will be a high priority during 2017, as more hospital and clinic organizations seek to document the quality of their care and ramp up patient engagement.

Healthcare IT Market Development

By 2020, healthcare providers will more than double their spending on technology services, which represents a revenue opportunity of over $9 billion for the healthcare IT outsourcing (ITO) vendors, according to the latest market study by the Everest Group.

The healthcare provider segment is poised to be one of the fastest growing segments in the healthcare IT services market in coming years.

According to the study findings, accelerated IT investments on the part of healthcare providers will be driven in large part by new reimbursement policies taking effect under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).

Under MACRA, providers will earn more or less depending on the quality and effectiveness of the care they provide. As a result, healthcare providers will continue investing heavily in technology that supports initiatives such as compliance, legacy modernization, electronic health records (EHR) and patient engagement.

"MACRA encourages ongoing technology adoption by U.S. healthcare providers by mandating specific tech-related measures," said Abhishek Singh, practice director at Everest Group.

This will translate directly into four IT investment trends that will develop over the course of the next 24 months. First, performance improvement and cost takeout will be a strategic focus; both are critical for compliance and to raise capital from the market.

Second, patient engagement will drive the differentiation strategy. Third, there will be a growing urgency for data security. And, finally, there will be a more demand for IT interoperability, nimbleness and innovation.

Other key findings from the study include:
  • The global healthcare (payer and provider combined) ITO market is expected to grow at 12 percent CAGR during the forecast period, reaching $68.3 billion in 2020.
  • Demand in the provider ITO market has been concentrated in the larger health systems.
  • Currently, application, development and maintenance (ADM), testing and network services rank highest among the IT services included in ITO deals within the provider segment.
  • Given the consolidation and convergence in the market, systems integration (SI), testing and asset rationalization work streams are expected to grow in 2017.