Federal health IT spending is expected to grow 86% to $1.7 trillion by 2025 to combat increases in federal expenditures for health, according to a new report from Deltek. The report, Federal Health Information Technology Market, 2016-2021 reveals that health IT investments aimed at digitizing, sharing, analyzing and securing health information will drive strong federal spending in this market segment over the next five years from $6.0 billion in FY 2016 to $6.4 billion in 2021 at a Compound Annual Growth Rate (CAGR) of 1.4%.
Key Market Drivers
Federal agencies acting as health care payers, promoters and providers such as such as the Defense Health Agency and Veterans Affairs will continue to invest in technologies and solutions to improve health outcomes and reduce waste, fraud and abuse. The Defense Health Agency’s worldwide implementation of a new EHR system and the Department of Veterans Affairs’ creation of an entire digital health platform will continue to sustain spending in the federal health IT market.
Other key market drivers from the report include;
– Electronic Health Record (EHR) Investments – Growth in federal health IT contractor addressable spending will be supported by investments in EHR and solutions to improve population health and combat disease.
– New Administration Priorities: Future health initiatives remain largely uncertain under the new presidency. The Trump administration has clearly stated its intent to repeal and replace or modify the Affordable Care Act, which would impact funding for agencies involved in health care delivery and payment. However, Defense and VA spending may be insulated or even increased as part of the new administration’s stated commitment to support the nation’s military and veterans.
– Data-Centricity: Federal health IT areas focus largely on data: data standardization, data integrity, data exchange, data analytics, data storage and interoperability. Other priorities include infrastructure modernization, legacy system modernization, cloud adoption, telehealth and mobile applications.
– Policy and Legislation: Legislation such as the HITECH Act, MACRA, and the 21st Century Cures Act, promote population health and the use of health IT on a nationwide level, but provide relatively limited funds to agencies for the implementation of health IT. Opportunities will largely come from agencies balancing existing funds.
– Provider Market Dominates: Deltek expects the provider market segment, consisting primarily of VA and DoD, to show the most year-over-year growth due to EHR initiatives, as well as VA efforts to implement its digital health platform.
