Deltek Analyzes and Forecasts the Federal Health IT Market

Federal health mission agencies rallied to overcome extraordinary challenges and demands over the last two and a half years in response to the COVID-19 pandemic.  With unprecedented investments in biomedical research, disease surveillance, vaccines, public health infrastructure, and health IT due to the pandemic, federal funding is leveling off as the country settles into a new normal.  Agencies are prioritizing patient care, public health infrastructure, disease surveillance, population health, biomedical research, and improved medical outcomes as they prepare for the future.  HHS, VA, and DHA are leveraging information technology for health programs to strengthen and empower care, advance research, expand health equity, track disease permeation, and improve medical supply chains. 

In addition, federal expenditures on healthcare are on the rise, expected to reach $2.2 trillion by 2030 according to the Office of the Actuary at the Centers for Medicare and Medicaid Services. This trend is driving federal investments in health IT to improve care, reduce healthcare fraud, drive efficiencies, and deliver better outcomes. The pace of Electronic Health Records (EHR) implementation at VA and DOD are major influencers on HIT spending. However, the pace of VA’s progress has slowed, resulting in stagnant funding for much of the forecast period. Other HIT investments to modernize data and infrastructure at HHS agencies help sustain the market.

Key Research Findings:

• Biden Administration Support. Several executive actions early in the administration, as well as the FY 2023 budget request, indicate support for investments facilitating data-driven decision-making and health IT capabilities for health mission agencies.
• EHR Deployment. Expected federal health IT spending in the next three years is largely driven by VA’s EHR implementation, along with associated IT infrastructure upgrades. The revised schedule and budget for the rollout will greatly impact spending in this federal market area.
• Legislative Investments. Continued progress under the 21st Century Cures Act and legislative investments made during the pandemic are paving the way for more interoperability, health records exchange, individual access to one’s own records, and advances in health and medical research.
• Past Spending Growth. Total historical federal budgets for health IT rose over the last five years. Contract spending on the health IT Special Item Numbers (SIN) for GSA Multiple Award Schedules (MAS) grew exponentially over the same time period.
• Expected Investments. Deltek expects health mission agencies to continue to invest in telehealth, virtual care, virtual/augmented reality, 5G capabilities, analytics, big data solutions, artificial intelligence, machine learning, automation, data and infrastructure modernization, cloud computing solutions, and cybersecurity.

Deltek’s Federal Health IT Market, 2022-2024 report is now available. It takes an in-depth look at the policies, budgets, and technology drivers that are shaping federal health IT and provides an outlook for the marketplace over the next three years. The report helps federal IT contractors identify key health IT priorities and investments, and provides actionable intelligence for strategic planning and business development.