Health IT Spending Will Surpass $34 Billion in 2014

Health IT spending will surpass $34 billion in 2014, according to new reports. Healthcare mandates and a need to modernize infrastructure will result in $34.5 billion in IT spending by payers and providers in 2014, according to a new study from Technology Business Research.

The report claims that payers and providers’ average annual IT budget is $18 million and $12 million, respectively. The funds will be spent on electronic health records (EHR), claims processing and management, and customer call center support, among other workloads.

“Regulatory compliance funds take the priority, absolutely, for the healthcare industry,” said one survey respondent quoted in TBR’s report. “For example, ICD-10 is not a project; it’s a program with an estimated end-to-end budget of $2.5 million. A large part of that is based on consultants’ contributions, because we’re not relying on people who are unfamiliar with this.”

The report is aimed at healthcare IT vendors, to help them understand how payer and provider spending is distributed among business processes, productivity, analytics and other applications. TBR also says it offers guidance on who authorizes the budgets for the IT spend.

“The wide variety of regulatory mandates and changes coming into force in the near term in the U.S. magnifies the pressure on healthcare providers, commercial payers and public sector agencies to maximize the value and ROI of their IT spend to meet these requirements,” said TBR healthcare analyst Joseph Walent. “Health IT vendors able to recognize the IT spending habits of the market segments, and adjust accordingly, will be best positioned to secure market share. The analysis we’re conducting in our SourceIT Healthcare Report will provide our clients with information to make better business decisions in this shifting market.”

According to Health Works Collective, TBR surveyed 225 IT and business decision-makers at large payer and provider organizations in the U.S. and Canada, and interviewed 25 of them to uncover their spending intentions and priorities.

Seventy-seven percent of respondents represented acute and long-term care providers, and 20 percent were health insurance payers, processors and HMOs.

The 25 IT decision makers interviewed included executives in the C-Suite. More than 30 vendors covered in the report include: Accenture, Cerner, Citrix, HP, GE Healthcare, Lawson, IBM, McKesson, Microsoft, Oracle and Salesforce.com.


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