Deltek Predicts Strong Federal Health IT Market over the Next Three Years

Federal Health Information Technology Market, FY 2021 - 2023

The COVID-19 pandemic brought unprecedented challenges, demands, and opportunities for federal health mission agencies. It has fueled a renewed federal focus on health and medical research, disease surveillance, and public health security and innovation, which has resulted in additional health IT investments. As the nation still struggles to recover and emerge from the pandemic, federal agencies with health missions are prioritizing patient care, disease tracking, population health, biomedical research, and improved medical outcomes. 

Additionally, rising federal expenditures on healthcare drive federal investments in health IT to improve care, deliver better outcomes, reduce healthcare fraud, and gain efficiencies. The CMS Office of the Actuary forecasts a 6.7% annual increase for federal healthcare spending from 2021 to 2028 due to increased Medicare and Medicaid costs and enrollment.

Implementation of VA and DOD EHR systems further influences federal health IT spending over the forecasted period. DOD and VA EHR implementations, along with associated IT infrastructure upgrades, are the prominent drivers for federal health IT spending in the next three years. The revised schedule and budget for VA’s EHR rollout will greatly affect spending in this federal market area. The drop in projected spending in FY 2023 is due to a decline planned by VA in its original EHRM implementation budget. VA’s EHRM has the potential to increase in the years outside of this forecast period as VA develops a new plan.

The Biden Administration supports data-driven decision-making and mission achievement as related to health mission agencies. Several executive actions early in the administration indicate this support. In addition, the FY 2022 budget request contains health IT-related investments, such as the modernization of public health data at CDC. 

Providing further evidence of strong federal demand in this market area, total federal spending on health IT rose over the last five years, and contract spending on the health IT Special Item Numbers (SIN) for GSA Multiple Award Schedules (MAS) grew exponentially over the last three years.

Deltek expects health mission agencies to continue to invest in telehealth, virtual care, analytics, big data solutions, AI, machine learning, automation, infrastructure modernization, cloud computing, and cybersecurity. At HHS, FDA, CMS, NIH, CDC, and FDA are making investments to modernize data and IT infrastructures, and the Indian Health Service is in the early stages of replacing its aging EHR system.

Find more information about the federal health IT market in Deltek’s recently published report, Federal Health Information Technology Market, 2021 – 2023.