Everest Group Forecasts 12 Percent Growth in Healthcare IT Outsourcing as Healthcare Providers Step Up Investments

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Healthcare providers will drive growth, make up for historical lag in IT adoption in effort to trim expenses and enable innovation

Abhishek Singh, Practice Director, Everest Group

Abhishek Singh, Practice Director, Everest Group

Through new IT investments, healthcare providers will be making up for their historical lag in technology adoption and gearing up for... payer-provider convergence, patient-centric care, evolving reimbursement models, and value-chain digitization.

Facing tapering margins, regulatory reforms and evolving customer-centricity, the global healthcare industry will step up its investments in technology in an effort to trim expenses and enable innovation. Consequently, the global healthcare ITO market is expected to grow at 12 percent compound annual growth rate between 2014 and 2020, reaching US$68.3 billion in 2020, according to a new research published by Everest Group.

“The healthcare provider segment is expected to witness the highest percentage growth in ITO activity during 2014-2020, as compared to the life sciences and payer segments,” said Abhishek Singh, practice director at Everest Group. “Through new IT investments, healthcare providers will be making up for their historical lag in technology adoption and gearing up for various mandates such as payer-provider convergence, patient-centric care, evolving reimbursement models, and value-chain digitization.”

These results and other findings are explored in a recently published Everest Group report: “IT Outsourcing (ITO) in the Healthcare Provider Industry – Annual Report 2015: Building a Coherent Value Proposition.”

The full report provides an overview of the IT market for the healthcare provider industry, which includes large health systems, stand-alone hospitals and clinics, pharmacists, physician practices and diagnostic laboratories. Everest Group’s analysis includes trends in the healthcare industry, market trends and activity related to large contract relationships, the service provider landscape, the significance of technology opportunities and the outlook for 2016-2017.

***Download Complimentary 12-page Preview Report Here*** (Click on report title and click “login to view preview.” Registration is required to receive the free download.) This preview summarizes the report methodology, contents and key findings and offers additional resources for further study.

Other key findings:

  • The global healthcare ITO market reached $34.5 billion in 2014; this healthy 9 percent year-on-year growth was led by strong growth in the healthcare provider and life sciences segments of the market and was partially offset by a decline in the payer segment.
  • Regulatory requirements, payer-provider convergence, customer-centric care and M&As/restructuring will fuel growth in global healthcare ITO market.
  • North America continues to remain the principal region for large-sized provider ITO transaction activity.
  • Within the healthcare provider ITO segment, over US$9 billion worth of contracts are due for renewal between 2016 and 2020.
  • Patient engagement and population health management (PHM) have become the predominant mandates being actualized by healthcare providers through technology.
  • Service provider organizations looking at succeeding in this market need to focus on building expertise in key service lines, developing/acquiring talent and skills demanded by providers, and aligning themselves with the evolving vendor engagement models.

About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, and sourcing. We are trusted advisors to senior executives of leading enterprises, providers, and investors. Our firm helps clients improve operational and financial performance through a hands-on process that supports them in making well-informed decisions that deliver high-impact results and achieve sustained value. Our insight and guidance empowers clients to improve organizational efficiency, effectiveness, agility and responsiveness. What sets Everest Group apart is the integration of deep sourcing knowledge, problem-solving skills and original research. Details and in-depth content are available at http://www.evererstgrp.com and research.everestgrp.com.

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