State and local government HIT spending expected to reach $19.3B by 2017

According to a new research report, healthcare IT spending among state and local governments is projected to grow by $2.7 billion through 2017.

The study, released Dec. 18 by Deltek, Inc., a provider of software and information solutions for professional services firms and government contractors, shows the demand for information technology among U.S. state and local health and human services agencies will increase from $16.6 billion in 2012 to $19.3 billion in 2017, bringing $2.7 billion in new spending to the market at a compound annual growth rate of 3.1 percent.

[See also: 8 healthcare spending trends by state]

According to the report, key forces currently shaping this market include:

  • renewed efforts (by most states) to implement health insurance exchanges (HIX) and quality-based care systems for Medicaid, following the recent U.S. Supreme Court decision on the Affordable Care Act;
  • gradual stabilization of state and local revenue streams;
  • implementation of architectural guidelines to incrementally modernize systems supporting mean-tested benefit programs; and
  • increased federal direction and mandates to reduce waste, fraud and abuse (i.e., improper payments).

“Despite the political rancor over federal health care reform, federal, state, and local leaders are committed to reducing the burden of healthcare costs on Medicaid, children’s health insurance, and public health care facilities,” said Chris Dixon, Deltek’s senior manager of state and local industry analysis, in a press release about the research report. “The real question is how governors want to use IT to attack the major concerns of reducing improper payments and moving the health insurance programs toward quality-based care.” 


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