Major opportunity for healthcare ICT vendors as tech spending gathers pace

Ovum report reveals market attitudes to ICT in healthcare are reaching 'a tipping point'

The budgetary and performance challenges facing the healthcare industry will present a major opportunity for ICT vendors in 2014, according to industry forecasters.

We believe that attitudes to ICT in healthcare are reaching a tipping point, as more budget holders realise its intrinsic value and necessity to effective healthcare transformation and increased efficiency, government project failures notwithstanding

Despite costs and efficiency remaining a major battleground, ICT spending overall remains healthy, with health informatics identified as a major investment priority for the next few years.

According to Ovum’s 2013 ICT Enterprise Insights report1, more than 50% of survey respondents reported budget increases ranging from 1% to 6%. At the same time, latest forecasts from global analysts predict that the healthcare industry will generate global ICT revenues of $185billion by 2018, up from $110billion at the end of 2012, with a CAGR of 8%.

Government incentives continue to spur spending, as does the long journey towards effective EHRs, data digitisation and the rise of patient relationship management (PRM). Business intelligence (BI) and analytics spending will also see increased traction over the next few years, with a positive impact on adjacent areas such as computer assisted coding (CAC), clinical documentation improvement (CDI), and Big Data, according to Ovum’s 2014 Trends to Watch paper2.

“Although many healthcare systems face overall tightening budgets, public systems in particular, our enterprise survey and various healthcare organisations' reported results show significantly different growth rates in projected ICT spending,” said Charlotte Davies, head of Ovum’s healthcare technology practice.

The past year has seen a slew of cloud-based vendors either entering the market or ramping up their healthcare portfolios and activity. This is injecting agile momentum into the vendor market and spurring organisations to seek the economies of scale and flexibility offered by cloud-based solutions

“Overall, we believe that attitudes to ICT in healthcare are reaching a tipping point, as more budget holders realise its intrinsic value and necessity to effective healthcare transformation and increased efficiency, government project failures notwithstanding.”

However, the daunting aggregate sum of these investments means customers will increasingly look for proven healthcare business expertise, flexibility and competitive pricing from vendors.

“The past year has seen a slew of cloud-based vendors either entering the market or ramping up their healthcare portfolios and activity. This is injecting agile momentum into the vendor market and spurring organisations to seek the economies of scale and flexibility offered by cloud-based solutions,” said Davies.

“As ICT becomes embedded into service transformation, many providers will also look to greater co-creation in order to retain and develop in-house IP. This provides an opportunity for smaller, more agile local vendors and poses a threat to larger vendors that are slow to adapt.”

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