Introduction

The healthcare landscape has been subject to significant turbulence on account of a gamut of factors including escalating costs, widespread regulatory amendments, changing business models, and evolution of the patient-centric paradigm (with mobile computing, social media platforms, and “anytime-anywhere” information access). This combination of disruptive and legacy factors has driven healthcare firms to adopt new technologies, while also revamping their existing systems, processes, and interfaces.

As the technology mandate for healthcare enterprises evolves, so do their relationships with IT service providers. This, in turn, is driving the need for relevant research and market intelligence on demand and supply trends in healthcare outsourcing across the three major market segments – payer, provider, and life sciences. Everest Group’s healthcare outsourcing research program addresses this market requirement by analyzing outsourcing trends and service provider capabilities specific to ITO in the healthcare vertical.

The global healthcare (payer and provider combined) ITO market is expected to grow at 12% CAGR during 2014-2020, reaching US$68.3 billion in 2020. This will be fueled by factors such as regulatory requirements, payer-provider convergence, customer-centric care, and M&As/restructuring. The deal activity in 2014 was led by strong growth in life sciences and provider subverticals, and was partially offset by the payer subvertical.

Factors impacting healthcare IT demand include multiple value chain (core functions) and horizontal elements (enabler functions), which have subthemes that directly align with the technology imperatives. Service provider organizations looking at succeeding in this market need to focus on building expertise in key service lines, developing/acquiring talent and skills demanded by provider, and aligning themselves with the evolving vendor engagement models.

In this annual report, we analyze the current trends and future outlook of large, multi-year ITO relationships in the provider market. The report also provides specific insights into building a coherent value proposition for healthcare IT.

This report is structured across four key sections, each containing insights into the provider IT market, with a focus on large-sized contracts:

• Healthcare and life sciences IT market overview: Analysis of the overall healthcare and life sciences outsourcing market and transaction trends:
• Market size and growth
• Transaction trends for IT outsourcing in healthcare and life sciences
• Segment-level analysis of healthcare and life sciences IT transactions, including:
• Business segments: Healthcare payer, provider, and life sciences
• Function segments: Applications Outsourcing (AO) and Infrastructure Outsourcing (IO)
• Geographic segments
• Provider IT market overview: Analysis specific to the provider IT segment with a focus on large transactions:
• Transactions activity and growth trends
• Demand characteristics for life sciences IT services by geography, IT subfunctions, buyer type, and buyer size
• Delivery trends for provider IT services, including offshore leverage and global delivery locations
• Renewal opportunity till 2020
• Special feature: Enabling a go-to-market strategy for healthcare IT:
• Healthcare IT opportunity: Beyond the existing value chain
• Drivers of change in demand
• Key categories: Core vs. enablers
• Go-to-market components:
• Service lines driving IT demand across demand categories
• In-demand engagement models, capabilities, and vendor engagement models
• Skills in demand: Healthcare enterprises’ demand in ITO trickles down to specifics skill sets and capabilities
• Outlook for 2016-2017: Analysis of the outlook and implications for IT for the coming year:
• Outlook for overall healthcare and life sciences IT
• Outlook for provider IT