Report Examines Implications for Payers and Service Providers Leveraging IT Outsourcing Strategies to Reduce Costs, Wring Insights from Data
DALLAS, July 16, 2013 — A widening diversity of payers globally are turning to IT outsourcing (ITO) strategies in an effort to prepare for regulatory shifts while leveraging new technologies to gain useful insights from the mountains of data they collect, according to a report just released by Everest Group, an advisory and research firm on global services.
The report, ITO in the Healthcare Payer Industry – Annual Report 2013, provides an overview of the ITO market for the healthcare payer industry. Analysis includes key trends in market size and growth, demand drivers, adoption and scope trends, emerging themes, key areas of investment, and implications for key stakeholders. The report also provides specific updates on the readiness of the various stakeholders from the perspective of payer reform mandates.
Payer provider convergence, regulatory reforms, consumerization, growing focus on analytics and infrastructure, and emergence of new technologies have accelerated outsourcing in the healthcare market.
In this annual report, Everest Group analyzes trends driving for large, multi-year ITO relationships for the payer market. The report also provides specific updates on the readiness of various stakeholders from the perspective of payer reform mandates.
“Payers are killing two birds with one stone,” said Jimit Arora, vice president at Everest Group. “They are embracing sourcing strategies to not only address new regulatory requirements, but to gain quality of service and patient outcomes insights through business intelligence and big data analytics. And interestingly, we see the strongest deal growth coming from mid-market payers.”
Key findings in the report include:
- Mid-market payers are entering the IT outsourcing market in a big way. We are likely to see aggressive investment in this target segment by service providers.
- Infrastructure Outsourcing (IO) services are witnessing increased traction. Legacy modernization, health insurance exchanges and access portability requirements are creating opportunities in this space.
- Five key themes (The “Five Cs:” Contingency, Consolidation, Coordination, Consumerization and Competition) are driving payer technology investment strategies.
Trends analyzed in the report include:
- Healthcare was the only major IT buyer segment that saw growth in the number of outsourcing transactions
- Growing ITO activity from public sector and government in the healthcare sector is an established trend
- Growth was witnessed from deals originating from Europe and in new contract signings globally
- Smaller payers (less than US$10 billion in revenue) have driven the growth of ITO, with their IT spending more than other payer segments combined.
- The spike in payer spending in 2012 was driven largely by the nearing reform deadlines, with the key themes being public Health Insurance Exchange and International Classification of Diseases (ICD) 9-10 conversion.
- While North America continues to be the largest geography in terms of contract signings, EMEA has steadily grown to become a significant signing region for large payer ITO deals.