MA

Cloud Spending Among Health-Oriented Agencies

Published: September 22, 2021

Federal Market AnalysisCloud ComputingCoronavirus (COVID-19) PandemicDHAHHSHealth ITInformation TechnologySpending TrendsVA

Reported cloud spending among federal agencies with health-centric missions totaled $5B from FY 2018 to 2020, increasing nearly 66% over the three-year period.

Last week, I wrote about big data spending among HHS, VA and DHA. This week, I will discuss cloud spending obligations at those agencies for the FY 2018 to 2020 period.

As the amount of data mounts among federal health agencies, accentuated by the COVID-19 pandemic, cloud naturally plays a role in advancing health IT capabilities. Among it benefits, speed and elasticity in applications; increased storage; improved data security; and long-term cost savings. Therefore, cloud allows for enhanced analytics, data visualization and help produce evidence-based decision-making.

The COVID-19 pandemic tested cloud capabilities in healthcare settings with the expanded need for employee telework and telehealth services. Additionally, cloud capabilities allowed healthcare stakeholders and researchers to acquire fast, reliable and interoperable data in COVID-19 response efforts. At the onset of the pandemic, for example, the NIH allowed accessibility of genomic data at no cost to research partners through its public cloud platform, Registry of Open Data on Amazon Web Services.

Reported obligations from FY 2018 to FY 2020 reveal cloud’s popularity among top federal healthcare agencies, totaling $5B and increasing 66% in the stated time frame:

Sources: FPDS, Deltek

Observations:

  • The dip in HHS spending is largely driven by a decline under “O&M of Cloud Hosting Infrastructure for the FFM, SHOP, AND PAS Systems” from $256M in FY 2018 to $10M in FY 2019, climbing up to $172M in FY 2020 as HHS’ top initiative by reported spending
  • COVID-19-related cloud spending totaled $175M among the health agencies including HHS ($109M), VA ($63M) and DHA ($3M)
  • Sample COVID-19 cloud initiatives in the three-year period include:
    • HHS: VTC Digital Unified Communications Package at $58M in FY 2020
    • VA: COVID Response Cloud Service at $33M in FY 2020
    • DHA: Workload Management System for Nurses at $1.7M in FY 2020
  • Top HHS bureaus by total cloud spending include: CMS ($1.2B), NIH ($431M), Office of the Assistant Secretary for Administration & Management ($164M) and FDA ($135M)
  • Pure Cloud-related requirements led HHS spending all three years with $1.6B total, as well as DHA with $131M total. Meanwhile, Cloud Engineering-related requirements led VA spending with $1.6B total
  • Total spending from FY 2018 to 2020 by service delivery type includes:
    • HHS: IaaS = $824M, PaaS = $34M, SaaS = $505M
    • VA: IaaS = $1.2B, PaaS = $28M, SaaS = $718M, XaaS = $134M
    • DHA: IaaS = $27M, SaaS = $163M

As cloud implementation continues to advance health IT capabilities in the federal space, data standardization and accessibility is needed to allow for cloud computing efforts at agencies where data is stored and managed its own way. Moreover, federated entities hinder cloud expansion, particularly agencies within HHS, preventing the adoption of enterprise-wide cloud infrastructure initiatives. Indeed, overcoming these obstacles and the continuation of cloud implementation will set the stage for emerging technologies in the health IT space such as artificial intelligence, as well as advances in telehealth.

For more on cloud and other technology influencers within the federal health IT environment, refer to Deltek's recent Federal Health IT, 2021 - 2023 report. Deltek also published its Federal Cloud Computing Market, 2021-2023 with insights to the market factors shaping the federal cloud computing services environment.