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
3Pillar Global hired 72 professionals this year, looking for further recruitments

Global custom software development company hired 72 IT specialists in 2019, adding to the team of 500 professionals working in the company's Romanian offices located at Cluj-Napoca, Iasi and Timisoara.

 Read Full article »
JLL: Total office space in Bucharest to reach 3 million sqm

The second quarter of 2019 reconfirmed the increased interest for the office market in Romania. Over 115,000 square meters of office space were leased over this period at the national level, a value similar wit

 Read Full article »
Horváth & Partners launches Steering Lab, Big Data and Machine Learning-based excellence center

Management consultant Horváth&Partners announced it launched an excellence center in Romania, Steering Lab, AI-based and using tools of Big Data and Machine Learning.

 Read Full article »
Colliers International takes over the property management of Vastint's Business Garden Bucharest

The real estate consultancy company Colliers International will be in charge with the property management of the office compound Business Garden Bucharest, developed by Vastint in Orhideea area in Bucharest.

 Read Full article »
Survey: Romanians switch to a lower-paying job for other advantages

One out of five Romanians took at least once throughout their career a lower-paying job and two out of five would take a lower-paying job in exchange for other advantages they see as more valuable, a survey con

 Read Full article »
Fujitsu named a leader in Gartner Magic Quadrant for Data Center Outsourcing and Hybrid Infrastructure Managed Services, Europe

Gartner has once again named Fujitsu a Leader in the 2019 Gartner Magic Quadrant for Data Center Outsourcing and Hybrid Infrastructure Managed Services, Europe. This is the seventh consecutive year that Fujitsu

 Read Full article »
KKR enters exclusive negotiations with GBL for Webhelp Group

KKR, a leading global investment firm, announces it has entered into exclusive negotiations to sell a majority stake in the Webhelp group to Groupe Bruxelles Lambert (GBL). GBL will invest alongside Webhelp's

 Read Full article »
TELUS International continues to grow in Bucharest

In order to support the extensive hiring planned for TELUS International in Bucharest this year, the company has acquired 1,200 sqm more space, in addition to the 8,800 sqm office space it has in AFI Park.

 Read Full article »
EY: Four out of five companies plan to reduce their legal spend over the next two years

Eighty-two percent of companies plan to reduce their legal function costs over the next two years, with 42 per cent of respondents planning on doing so by more than 10 per cent, according to a new report releas

 Read Full article »
ANCOM: About 15 million connections affected by security

About 15 million connections were affected in 2018 by security incidents that had in view the security and integrity of electronic communications networks and services, most of them being about mobile telephony

 Read Full article »
 
 
 
MOST READ ARTICLES
» Raiffeisen Bank Romania outsources onl...
» Horváth & Partners launches Steering ...
» JLL: Total office space in Bucharest t...
» Colliers International takes over the ...
» SSC in Romania. Who takes the lion's s...
» Oracle results pushed down by a strong...
» Survey: Romanians switch to a lower-pa...
» Genpact, Luxoft and Oracle, top lessee...
» Romanian employers report the stronges...
» Eucom: Nine out of ten corporate Roman...
 
EDITOR CHOICE
My HR Lab: Research of suitable candidates and giving feedback to rejected ones, the biggest challenge in HR

During June 2019, My HR Lab company run an online (social media platforms) survey "Challenges of the recruitment process" which enrolled over 100 professionals working in HR and recruitment in Romania.

 Read Full article »
The local market needs more added-value and complex projects to be developed by the companies

The statement has been uttered within this year's Romanian Outsourcing and Shared Services Summit by Catalina Dodu, Country Manager at Atos, pointing to the local enablers that could enhance the innovation and

 Read Full article »
The office market at a glance: The round for tenants is on

Data provided by CBRE show that the office spaces segment will continue to grow rapidly in 2019, and 15 new projects covering 304.000 sqm will be delivered. According to the real estate consultancy agency, curr

 Read Full article »
People Empowering Business Forum 2019 to take place on October, 30 at Bucharest

Latest trends like demographic upheaval, globalization, digital technology, and changing social values and worker expectations, are disrupting business models and radically changing the workplace. These are req

 Read Full article »
Addressing the mantra of cyber-security: Confidentiality, integrity and availability

The fast advancement of technology in all the aspects of everyday life, either personal or professional, and the emerging of AI (Artificial Intelligence) and ML (Machine Learning), not to mention cloud technolo

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