Health IT will remain a hot investment sector through 2019 – driven by the need for tools that healthcare providers must have to meet the surge in consumerism, according to a new KPMG-Leavitt Partners 2019 outlook survey.
WHY IT MATTERS
Hospital and health system business decision makers working to decide on where to allocate resources to keep pace or surpass competitors just got a glimpse of what some rivals might be thinking.
The KPMG-Leavitt results follow projections from Forrester that 2019 will mark the beginning of the end of care delivery as we know it and IDC’s 2019 predictions, which suggest that IT leaders will be measured by their ability to implement emerging technologies effectively.
To that end, KPMG-Leavitt’s research found that more than a third (34 percent) of the healthcare professionals surveyed said they were most interested in investing in health IT, the others named as their top interest:
- Care management (31 percent)
- Home health (23 percent)
- Retail-centric medical groups (22 percent)
- Primary care practices (21 percent)
For the overall picture, investors were fairly split over the prospects. The majority (64 percent) of those surveyed said the health IT sector is overvalued, but 40 percent expect the valuations to increase in 2019. About half (51 percent) said they see the value of the health IT market staying the same.
KPMG and Leavitt Partners surveyed 175 respondents online from corporations, health systems, investment banks, venture capital and private equity firms between Sept. 17 and Oct. 21 of this year. Of those surveyed 32 percent were c-suite executives; 29 percent were principal, partner or managing director; 32 percent were vice presidents or directors; 6 percent were analysts/associates and 2 percent held other titles.
THE BIGGER TREND
Consumerism will drive not only the overall health IT market, as providers and healthcare organizations scramble to meet the demands of consumers, but it will also drive the care management sector because of the risk-bearing, highly competitive nature of that sector. Early intervention to prevent and coordinate chronic illness is also a factor keeping this sector hot, the survey said.
“Deals are largely being driven by the need for savings, economies of scale, and improving cash flow or accretive earnings per share,” said Carole Streicher, KPMG’s deal advisory leader for healthcare and life sciences. “Secondarily, there is a bit of a defensive posture motivating investments as healthcare organizations contend with competition and reimbursement models connected to quality and efficiency, as well as the entrance of tech firms investing in the sector.”
We also reported last month another reason for a surge of investment in the health IT sector next year. Integrated delivery networks (IDNs) are demanding product consolidation of electronic health records, revenue cycle and practice management vendors are likely to deliver sooner rather than later, according to new Black Book research.
ON THE RECORD
“We are not surprised by the great deal of interest in health care IT and care delivery outside the hospital,” said Mike Leavitt, founder of Leavitt Partners and former Utah Governor and U.S. Health and Human Services Secretary. “As healthcare continues to march toward value, the emphasis on moving care to lower cost sites and enhanced coordination will continue, and those who can increase quality and lower cost will win.”
Diana Manos is a Washington, D.C.-area freelance writer specializing in healthcare, wellness and technology.
Email the writer: [email protected]
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