Trump Administration impacts Healthcare IT industry
Healthcare-related IT is set for a boom according to international healthcare advisory company, VERTESS.
Every sector of the healthcare industry is struggling to figure out what “TrumpCare” will mean to their businesses. Some will do better under this administration but many expect to do worse. There is one sector, according to VERTESS, which is guaranteed to grow under a Trump administration: Healthcare IT. Here’s why:
First, there will be a sharp uptick in government spending. According to the research firm Winvale, the US Government already spends approximately $6.7 billion on healthcare-related IT. This direct IT spending will dramatically increase over 2017.
$1 Trillion budget
However, this is a drop in the bucket compared to the new Secretary for the Department of Health and Human Services Tom Price’s operating budget. Secretary Price will manage an annual budget of more than $1 trillion.
VERTESS expects Secretary Price will want to maximize every dollar of his limited budget. This means he’ll be looking to improve the performance of the CMS, the Centers for Disease Control and Prevention, the National Institutes of Health, and the Food and Drug Administration, among others. There’s no question that this will drive a significant increase in IT spending.
Second and, more importantly, “TrumpCare” (in whatever form it finally takes) will include an increased emphasis on cost control and outcomes that will drive healthcare providers to use more technology, according to VERTESS. Much of this technology spending will be necessary so that healthcare providers can reallocate costs of care management onto patients.
Increased spending on new systems forecast
This will force post-acute care providers and other segments that are notoriously slow adopters to increase spending on new systems, new technology, and upgrades to existing IT systems.
What does this mean for Healthcare IT firms? A rapidly growing market, obviously, means opportunity for growth. But, history shows that these markets often outpace the ability of companies to grow their business organically. This means that there is likely to be a flurry of mergers and acquisitions in the IT healthcare segment in 2017 and beyond. Some of that activity has already begun, as forward-looking healthcare IT firms position for the oncoming changes. There were several notable Healthcare IT transactions in 2016, which comprised over $1 billion each. Many of those companies will be in Orlando, Florida, during the HiMSS conference this week.
There has never been a better time to sell a healthcare IT firm because the feeding frenzy is already starting. Similarly, and a bit ironically, there’s never been a better time to expand by acquisition. Yes, it’s a seller’s market, but there is so much potential growth in the IT segment that it will be almost impossible to grow organically and keep up with the market.