The U.S. market for healthcare IT is expected to be worth $4.0 billion in 2009. This should increase to $9.0 billion in 2014, a compound annual growth rate (CAGR) of 17.5%.
The software applications segment dominates the market, generating an estimated $3.4 billion in 2009. This should increase to $7.2 billion in 2014, for a CAGR of 16.4%.
Dedicated hardware is the second largest segment, worth an estimated $636.8 million in 2009. This should increase to $1.8 billion in 2014, for a CAGR of 22.9%.
Since BCC prepared its last report on health care information systems in 2006, the market environment has shifted dramatically. After years of incremental steps toward a national health care IT infrastructure, the American Recovery and Reinvestment Act, the economic stimulus bill approved by Congress and signed into law in 2009-02-15, provides more than $19 billion for health care IT spending, including more than $17 billion to promote the wider adoption of electronic health records (EHR).
The Obama administration has made it clear that this $17 billion is only a down payment on the total cost of a national EHR system, which is generally estimated at $100 billion or more. The administration’s health care reform plan relies heavily on potential savings and efficiencies that would be generated by modernization of the nation’s health care IT infrastructure. As the President said in his March 24, 2009 press conference:
[W]e’ve got the most inefficient healthcare system imaginable. We’re still using paper. We’re still filing things in triplicate. Nurses can’t read the prescriptions that doctors have written out. Why wouldn’t we want to put that on an electronic medical record that will reduce error rates, reduce our long-term cost of healthcare…?
EHR is one of several clinical health care IT technologies that have the potential to increase the availability and quality of health care while contributing to lower costs. In addition to the potential benefits in terms of the quality and cost of U.S. healthcare, this is obviously a significant opportunity for suppliers of health care IT and related technologies. U.S. health care providers presently spend approximately $40 billion per year on all types of IT technologies.
GOALS AND OBJECTIVES
The goal of this study is to provide an understanding of the U.S. market for selected clinical health care IT technologies in the context of dramatic changes in the structure of the U.S. health care sector. Specific objectives include:
Identifying the segments of the clinical health care IT with the greatest growth potential
Analyzing key market drivers and constraints
Estimating the size of each market segment through 2014
Providing other information on relevant laws and regulations, standards, potential funding sources, and other information that will be useful to health care IT suppliers seeking a share of this market
The report is intended especially for health care IT suppliers, as well as government agencies, health care policy analysts and others seeking to understand the cost and preconditions for the success of health care IT modernization initiatives. Although the report is structured around specific technologies, it is largely non-technical in nature. It is therefore less concerned with theory and jargon than with effectiveness, the amount the market is likely to purchase, and the going price.
As such, the report’s main audience is executive management and marketing and financial analysts. It is not written specifically for scientists and technologists, although its findings concern the market for their work, including the availability of government and corporate research funding for different technologies and applications.
SCOPE OF REPORT
This report is an analytical business tool whose primary purpose is to describe and analyze the dynamics of the U.S. market for health care technology. It is particularly focused on clinical IT systems that facilitate or provide input into the care process, as opposed to administrative and financial systems. It covers only software applications, as well as dedicated hardware and online services used to run them.
Current (i.e., 2007 to 2008) and projected markets for health care IT technologies and products through 2014
The findings and conclusions of this report are based on information gathered from developers, providers, integrators, and users of health care IT technologies in the public and private sectors. Interview data were combined with information gathered through an extensive review of secondary sources (e.g., trade publications, trade associations, company literature, online databases) to produce the baseline market estimates contained in this report.
The base year for analysis and projection is 2008, and market projections were developed for the period of 2009 to 2014. These projections are based on a consensus among the primary contacts combined with BCC’s understanding of the key market drivers and their impact from a historical and analytical perspective. The analytical methodologies used to generate the market estimates are described in detail in the Detailed Market Projections section.
All dollar projections presented in this report are in 2008 constant dollars.
Andrew McWilliams is a partner with 43rd Parallel LLC, a Boston-based international technology and marketing consulting firm. He is also the author of several other BCC Research studies of the health care and related industries, including Microelectronic Medical Implants: Products, Technologies and Opportunities (HLC016C),Medical Robotics and Computer-Assisted Surgery (HLC036B), Trends in the Noninvasive and Minimally Invasive Medical Device Market (HLC051D), Patient Monitoring (HLC038B), and The Home Medical Equipment Market (HLC054A).
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The information developed in this report is intended to be as reliable as possible at the time of publication and of a professional nature. This information does not constitute managerial, legal, or accounting advice; nor should it serve as a corporate policy guide, laboratory manual, or an endorsement of any product, as much of the information is speculative in nature. The author assumes no responsibility for any loss or damage that might result from reliance on the reported information or its use.
Published - Sep-2006|
Analyst - Barbara Breindel|
Code - HLC048A
BCC estimates the U.S. healthcare IT market size at $16.38 billion in 2005 and forecasts that it will grow to $18.5 billion in 2006. By 2011 it is expected to reach $34.7 billion in sales, a 13.4% AAGR.
The hospital segment accounts for the larger portion of the market with 52.2% of sales in 2005, 51.4% in 2006 and 48.2% in 2011. The Physician/ home care/ nursing/ hospices sector will overtake hospitals by the end of the forecast period and will be worth 51.3% of the U.S. market by 2011.
The highest growth appears in physicians, home care, nursing homes, and hospices. The market for this sector of the industry was worth more than $7.7 billion in 2005. By the end of 2006 it will grow to almost $8.9 billion and, at an AAGR of 15.0%, reach more than $17.8 billion by 2011.
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