Latest News  

US: IT outsourcing for healthcare sector to grow 40% by end- 2017

Black Book estimates the demands of data security, population health and value based benefits solutions, and revenue cycle modernization to drive the evolving payer ITO market in excess of US 60 billion by Q4 2017.

2015-11-23 16:55:56



The payer IT outsourcing market is expected to grow over 40% in next two years through the volatile environment, as better software solutions have accelerated IT expenses faster than anticipated with no corresponding lift in revenues for many health plans.

Black Book surveyed 829 health plan ITO users from Q2 to Q4 2015 to determine trends in the shifting marketplace of service providers and client expectations.The regulatory overhaul of reform mandates such as Affordable Care and ICD10 are rapidly changing US health plans' operating models are creating opportunities for modernized legacy systems and applications outsourcing.

"Health insurance niche software and services vendors are once again offering outsourcing as a cure-all for organizational cost controls," said Doug Brown, Managing Partner of Black Book Research Group.

Still less than one in ten of health plan IT executives surveyed are considering full or end-to-end offshored solutions. "With concerns over hostile offshore locations and escalating health data security and privacy issues, fewer payers are entertaining having a third party overseas corporation between them and their IT nervous systems in 2016.

Until as recently as January, 75% of reporting health plans were cautious of major outsourcing initiatives, particularly using offshore vendors as data breaches increased their fears of unsafe operations.

Health plans are budgeting at least twenty percent increases in outsourcing spends for 2016 for the following service models and functions:

Only 5% of health plans with over 100,000 members are considering full, end-to-end outsourcing in 2016 strategic IT planning. However, individual projects and support centers see significant increases in outsourcing support including:

Application Support, with a leap to 69% of all health plans in 2016, up from 35% in 2015
Desk Top Support and Help Desk Support, could experience a rise to nearly 80% of larger health plans turning to outsourced vendors in the next 12 months.

The largest increases from both large insurers and small health plans, according to surveys, are projected to be in Security and Privacy Projects, and Cloud Initiatives, both expected to grow to over 50% of all new outsourcing business initiatives for 2016 in managed care organizations.
Additionally, new project strategies and reforms are pushing payers to focus on three additional outsourcing areas by Q3 2016: Comprehensive Software in Core Administration, Care and Network Management, and Constituent Engagement.

"Changing government regulations are leading insurers to outsource more IT functions including big data and data base management, analytics as a service, mobile applications, population health, and security solutions," said Brown.

Black Book expects that by 2018, half of all health plans will demand substantial risk sharing with their outsourcing providers as operational efficiency will become critical at four in ten of the nation's small health insurers and plans, resulting in the development of more intense data-driven payer strategies.

While many industries began utilizing IT outsourcing as a concept by the 1990s, healthcare payers did not immediately embrace it. "The decision health insurance companies have been among the slowest to adopting outsourcing," said Brown. "However, shrinking margins, higher claim disbursement, and increasing competition have forced health insurers to look at outsourcing at this point in time to prove efficiencies and focus resources toward the core functions of product development and innovation."

Black Book reports that the number of viable payer sector IT outsourcing suppliers has grown smaller over the past ten years, particularly as many health plans are narrowing their options to US-based managed services vendors only.

Black Book research shows that more than half of the top revenue producing US health payers already outsource at least some part of their IT infrastructure management.

44% in Q1 2014 soared to 72% in Q3 2015.

93% of health plans surveyed plan on outsourcing analytics related projects by Q1 2017.
"Health plans are also investing in member aka consumer facing mobile applications, remote health monitoring, and virtual care which will create more demand for big data and analytics to support heath plan population health indicatives," said Brown.

The opportunity for information technology vendors in the health plan marketplace are accelerating, but so are instances of shorter deal lengths, incumbent vendor replacements, mergers and acquisitions and rising concerns for member data security.

The payer ITO market place adoption rate failed to change markedly from survey year to survey year. Among all payers, public and private, small and large plans, 63% outsourced two or more information technology functions in 2014. In 2015, 66% of all payer organizations outsourced two or more information technology functions. Only 3% of new health plan outsourcing clients were first time adopters in 2015.

Specifically, 2015 payer ITO users include specific applications development and maintenance outsourcing (83% of all payers outsourced this single function in 2015), infrastructure including remote infrastructure management and cloud infrastructure outsourcing (64% outsource), business intelligence, data warehousing and analytics outsourcing (23% outsource), quality assurance and testing outsourcing (19% outsource), and professional IT management services outsourcing (10% outsource).

Black Book also found that 80% of pending Q4 2014 and Q1 2015 ITO contracts were delayed as prospective clients confirm vendor provisions to safeguard member and plan data before executing deals. 77% of current payer ITO clients have launched initiatives to confirm their vendors' data security capabilities in 2016.

"Recent data breaches in the health plan sector have IT outsourcing clients assessing confidence in their vendors' operations and procedures as a safeguard to ensuring member data privacy in an effort to avoid all that comes with a data breach," said Brown.

The payer market place for claims modernization, big data/population health, security and analytics outsourcing services is projected to rise at a 39% compound annual growth rate, with most significant demand in the next twelve months from start-up health plans, provider-based plans, IPAs, and medium sized insurers.

In contrast, a 12% CAGR predicted for infrastructure and cloud services, and 9% CAGR for applications development and maintenance initiatives, attributed principally to renewals and new contracts from large health plan organizations.

Dell led the healthcare payer sector in overall IT outsourcing client satisfaction in 2015. Dell also ranked highest for payer IT outsourcing sectors in population health, application development and mobility, security solutions and cloud initiatives across all health insurance organizations surveyed.
Top vendors were honored by clients for outstanding health plan performances across eighteen key performance indicators in additional to Dell through Q1 2015. These top rated vendors include: Deloitte, Accenture, Cognizant, Trizetto, and IBM.


0 COMMENTS ^ Go back to Top
WRITE A COMMENT ^ Go back to Top
 
Your email address will not be published.
Nickname
Email
Comment
Validation Code
   
 
 
NEWS
Bittnet Systems plans merger with Gecad Net

IT&C solutions provider Bittnet Systems announced it plans to merge with Gecad Net with the goal to consolidate its position within multicloud area, according to representatives of Bittnet Systems.

 Read Full article »
Dedeman to implement Sap solutions for more efficient internal communication and employee management

Local retailer Dedeman will use SAP SucessFactors solution in order to get its recruiting, internal communication and training programs to a more efficient scale. The program will be used to manager over 9.000

 Read Full article »
EY: Global mining and metals sector faces digital disconnect

According to latest report of EY regarding the digital transformation in mining and metal sector globally, 15 percent of survey respondents say digital isn't on the agenda in their organization.

 Read Full article »
ABSL presents the 3rd edition of Iasi Business Mixer on 25th of April

The Association of Business Service Leaders in Romania (ABSL Romania), the organization that represents the local business services sector, will host the 3rd edition of the most important event dedicated to the

 Read Full article »
French energy operator Total opened support services center at Bucharest

Total, one of the largest major integrated oil and gas companies in the world, with activities in more than 130 countries and 98.000 employees opened a corporate support services center at Bucharest in March th

 Read Full article »
Accenture Report: Banks show confidence in cybersecurity but lack real-world testing

Many senior bank executives are confident about their cybersecurity strategy, yet a lack of comprehensive, practical testing is leaving gaps in their defense, according to a new report from Accenture.

 Read Full article »
Computaris reports positive 2016 results and outlook for 2017

Computaris International Ltd., specialized provider of software development and system integration services for software vendors and communication service providers, reports positive 2016 results and outlook

 Read Full article »
Stefanini plans 25 per cent growth of turnover in Romania this year to 45 million Euro

Brazilian global leader in IT outsourcing and software application development Stefanini looks at 25 per cent growth of turnover in Romania in 2017, to 45 million Euro, as stated by Marco Stefanini, the founder

 Read Full article »
ABSL organizes third edition of Iasi Business Mixer on April 25

ABSL Romania will organize the 3rd edition of the most important event dedicated to the Business Services sector in Iasi, on April 25, starting with 9:30 AM, at Palas Hotel.

 Read Full article »
Grégoire Vigroux appointed the new Vice-President Marketing of TELUS International Europe

Grégoire Vigroux has been named Vice-President, Marketing of TELUS International Europe. Over the past decade, he co-founded and sold several fast-growing companies locally, including CallPoint. The 36 year-ol

 Read Full article »
 
MOST RECENT VIDEO
 
 
MOST READ ARTICLES
» Grégoire Vigroux appointed the new Vi...
» Capgemini to open new office at Suceav...
» ABSL organizes third edition of Iasi B...
» TELUS International Europe: Four quest...
» Oracle reaches 4,200 employees and pla...
» Exclusive OT print issue: Genpact may ...
» Manpower:Romania has world's third hig...
» ROMANIAN OUTSOURCING AWARDS FOR EXCELL...
» Romanian Online Support at Tech Giant ...
» Business accelerator in Cluj has 1 mil...
 
EDITOR CHOICE
TELUS International Europe: Launching your first customer support outsourcing project? Avoid these eight pitfalls

When properly planned, outsourcing your customer support can bring a boost to your business. It can help expand operations, reduce costs and even improve customer relationships

 Read Full article »
Romanian Outsourcing Awards for Excellence designates the industry winners on May 11

Outsourcing Today, the integrated communication platform of the business services sector, presents the Third Edition of the annual Romanian

 Read Full article »
TELUS International Europe: More proactive, personalized customer experience, thanks to the Internet of Things (IoT)

Industry research is apt to say we're on the cusp of a future full of "smart" devices — that is, billions of everyday items embedded with wireless internet connectivity

 Read Full article »
Romanian Outsourcing Summit: Focus on the added-value of business shared services in Romania

This year's edition of Romanian Outsourcing Summit joined representatives of the government and top representatives of leading companies operating in the sector of business shared services and related industrie

 Read Full article »
Romanian Outsourcing Summit reaches its third edition

OUTSOURCING TODAY, the integrated communication platform of the business services sector, powered by The Diplomat Bucharest, presents the Third Edition of the ROMANIAN OUTSOURCING SUMMIT on March 23rd 2017, at

 Read Full article »
Latest News  
 
about us | newsletter | contact | members area
Copyright © 2015 by Diplomat Media Events Design by Diplomat Media Events