State And Local Health IT Spending to Grow, Report Says

Development of state health insurance exchanges and new quality-based care systems for Medicaid will help drive a $2.7 billion increase in IT spending by state and local health and human services agencies over the next five years, according to a new market report.

IT spending by these agencies will increase from $16.6 billion this year to $19.3 billion in 2017, for a compound annual growth rate of 3.1 percent, according to the State & Local Health Care and Social Services Market 2012-2017 report by Deltek.

Other factors in the anticipated market growth are increasing federal efforts to reduce fraud, waste and abuse in health-care payment systems; the introduction of new guidelines to modernize the architecture of systems supporting benefit programs; and an expectation that state and local revenue streams will begin to stabilize, according to a summary of the report.

“After a sustained period of increases in state and local IT expenditures for health and human services, state and local governments have reached the point where they must bend the cost curve in terms of spending on benefits administration,” according to the report summary. “State and local agencies will again look to technology to meet sustained elevated demand for benefits services. Deltek believes that this will drive the implementation of solutions to boost the productivity of social welfare workers and meet the needs of reconfigured programs.”

Deltek, a Herndon, Va.-based provider of enterprise software and IT solutions, announced Monday it is being acquired for $1.1 billion in cash by the private equity investment firm Thoma Bravo, which has offices in Chicago and San Francisco.