Payers, providers, and equipment manufacturers in the U.S. healthcare sector have reacted differently to legislative changes over the last year. Many of the challenges & opportunities facing these groups are the same. According to TPI’s latest Momentum Market Trends & Insights Report focused on Vertical Industries, the Healthcare Equipment & Services market has grown every year – with the exception of 2008 – since 1994. With market penetration reaching 36 percent in 2009 and continuing, service providers have a tremendous opportunity to engage one of the smallest vertical markets (19th out of the 27 verticals TPI tracks).
The combination of high demand for services with patients who cannot fully pay for services has led companies in the industry to rigorously manage costs, innovate, and develop business agility to remain viable. The landmark passage of healthcare reform will without question be a turning point; not only for how care is administered when 32 million previously uninsured enter the system, but to how businesses offer services for profit. While its effects on the system will not be fully understood for years to come, it is clear that transformational change and innovation are now imperative.
Nearly three fourths of companies have BPO contracts (much more than the broader market) for document management, HRO, and industry-specific solutions. IT outsourcing will be the more popular solution set sought by healthcare organizations going forward.
- Providers, though reluctant to adopt outsourcing, continue to use it mostly for IT and some highly specific clinical and healthcare delivery functions.
- Payers are seeking transformation solutions to prepare for changes they know are on the way, creating new sourcing opportunities for financial, customer contact, and HR functions.
- Medical device makers continue looking for ways to reduce costs, since hospitals have long been reducing or deferring equipment spending. A fresh look at how outsourcing can help may lead them to offshore application development & maintenance (ADM) work as well as infrastructure.
In some areas, there is reluctance to act due to political uncertainty and a weak economy. Service providers will benefit by offering these organizations their vision for how outsourcing can provide innovation.