Application Outsourcing (AO) in the Healthcare Provider Industry - Annual Report

Topic: IT Outsourcing (ITO) in the Healthcare Provider
Industry – Annual Report 2013: Entering the Big League
of IT Adoption
Copyright © 2013, Everest Global, Inc.
EGR-2013-12-PD-1010
Healthcare Outsourcing
Annual Report: December 2013 – Preview Deck

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Background of the research
The healthcare industry witnessed a rapid increase in IT and business process outsourcing adoption in recent years. Regulatory
reform, consumerization of healthcare, market consolidation, and emergence of new technologies accelerated outsourcing in the
healthcare market. A number and variety of service providers have developed capabilities to cater to this growing market.
With healthcare companies stepping up adoption of outsourced delivery, there is an uptick in demand for research and market
intelligence on demand and supply trends in healthcare outsourcing across the three major market segments – payer, provider,
and life sciences. The need is more pronounced for the vertical-specific IT outsourcing function, where business challenges are
driving greater adoption. Everest Group’s healthcare outsourcing research program addresses this market requirement by
analyzing outsourcing trends and service provider capabilities specific to ITO in the healthcare vertical.
In this annual report, we analyze current trends and the future outlook for large, multi-year ITO relationships for the
healthcare provider market. We focus on:
 Trends in ITO in the healthcare industry
 Market trends and activity for large ITO relationships in the healthcare provider segment
 Service provider landscape for healthcare provider ITO
 Emerging themes driving ITO in the healthcare provider segment
 Outlook for healthcare provider ITO in 2014
Scope of this report
 Industry: Healthcare provider (large health systems, stand-alone hospitals/clinics, pharmacists, physician practices, and
diagnostic labs)
 Services: Large (TCV > US$25 million), multi-year (over three years), and annuity-based application outsourcing
 Geography: Global
 Sourcing model: Third-party ITO transactions; excludes shared services or Global In-house Centers (GICs)
Background and scope of the research

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This report provides an insight into current trends and the
future outlook for large and multi-year ITO relationships in the
global healthcare provider sector
 Private health plans
 Public health plans
Payer
 Pharmaceuticals
 Medical devices
 Biotechnology
 Others1
Life sciences
 Large health systems
 Standalone hospitals/clinics
 Pharmacists
 Physician practices
 Diagnostic labs
Provider
Healthcare
Services industry
 Traditional IO
 Remote Infrastructure
Management (RIM)
 Infrastructure Management
Services (IMS)
 Cloud
IT Infrastructure
Outsourcing (IO)
 Applications development
 Applications maintenance
 Independent testing
 Package implementation
 ERP services
 Business intelligence / data
warehousing
IT Application Outsourcing
(AO)
 BFSI-specific BPO
 HRO
 FAO
 PO
 Contact center
 Knowledge services
Business Process
Outsourcing (BPO)
 IT strategy/operations
consulting
 Business consulting
 Infrastructure consulting
 Infrastructure roll-outs
Consulting
This report analyzes ITO in the healthcare provider vertical with a focus on large (TCV > US$25 million), annuity-based, and multi-year
(over three years) relationships
NOT EXHAUSTIVE
Focus of report
1 Includes healthcare data and information service, and medical products distribution

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Payer
Life sciences
Provider
Service provider landscape and capability profiles
Each report provides:
 Mapping of service providers on Everest Group’s PEAK Matrix for
the specific subsegment
 Capability profiles of service providers capturing their ITO services
experience in specific subsegments. This includes:
– Service provider overview: Details of ITO services capabilities,
key investments, proprietary solutions, and technological
expertise
– Functional / Line of Business (LoB) focus
– Transactions overview for ITO services
– Delivery footprint
Annual report
 Each report provides an overview of the ITO market for the
specific healthcare subsegment
 Analysis includes the following:
– Trends in ITO in the healthcare industry
– Market trends and activity for large ITO relationships in the
specific healthcare subsegment
– Emerging themes driving ITO in the specific healthcare
subsegment
– Future outlook for ITO in the specific healthcare subsegment
Payer
Life sciences
Provider
This report is a part of Everest Group’s series of six reports
focused on ITO in healthcare in 2012

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Table of contents (page 1 of 2)
Introduction and overview 6
Summary of key messages 10
Section I: Healthcare IT outsourcing market overview 13
 Summary 14
 Market size, ITO transaction activity and growth 15
 Factors impacting ITO transaction activity 17
 Transaction trends by segments 18
– Business segments: Healthcare payer, life sciences, and provider 18
– Services segments: AO, IO, and bundled 20
– Geography 21
– Contracts 22
Section II: Healthcare provider ITO market overview 24
 Summary 26
 Challenges impacting the healthcare provider ITO industry 27
 ITO Transaction trends 29
– Geography and provider segments 30
– ITO subfunctions 31
 Key drivers of ITO contracts 33
Topic Page no.

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Table of contents (page 2 of 2)
Section II: Healthcare provider ITO market overview (continued)
 Buyer adoption by segments 36
 Delivery location trends 37
 Renewals 38
Section III: Emerging themes driving healthcare provider ITO 39
 Summary 40
 Emerging themes driving healthcare provider ITO 41
– Analytics 42
– EHR adoption 46
– Payer-provider convergence 48
– Compliance requirements 53
– Digitization 55
Section IV: Outlook for 2014 57
Appendix 60
 Publicly disclosed major healthcare provider ITO transactions 61
 Glossary of terms 63
 Healthcare outsourcing research calendar 65
 References 66
Topic Page no.

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The report provides an overview of the ITO market for the healthcare provider industry. Analysis includes key trends in market
size & growth, demand drivers, adoption & scope trends, emerging themes, key areas of investment, and implications for key
stakeholders.
Overview and abbreviated summary of key messages
Some of the findings in this report, among others, are:
 Growing ITO activity from public sector and government in the healthcare sector is an established
trend
 Growth was witnessed from deals originating from Europe and in new contract signings globally
Healthcare ITO
market overview
 Regulatory reforms and customer-centricity are key factors driving ITO transaction activity;
healthcare providers also withheld some ITO spending due to approaching reforms deadlines (from
2014), serving a lead indicator of future spurt in technology budgets
 Most of the IT transactions are driven by healthcare providers below US$10 billion in revenue,
making this the most active segment in terms of provider ITO transaction activity
Healthcare
provider ITO
market overview
 There are five key themes driving healthcare provider industry’s IT investments
– Analytics
– EHR adoption
– Payer-provider convergence
– Compliance requirements
– Digitization
Healthcare
providers - Key
themes driving ITO
 Growing prominence of niche provider-specific IT vendors will see growing competition in the
healthcare provider IT space
 Large health systems and ACOs are expected to continue to dominate the ITO activity among
provider subsegments
Outlook for 2013-
2014

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This study offers four distinct chapters providing a deep dive
into key aspects of the healthcare provider ITO market; below
are four charts to illustrate the depth of the report
Source: Everest Group (2013)
ITO in healthcare provider industry vs. other healthcare
segments
Functional adoption of IT services
Maturing delivery model of service providers across
geographies
Evolving ITO imperatives of the healthcare reforms
2009 2010 2011 2012
Distribution of healthcare ITO
transactions by subvertical
Number of transactions
100% =
Payer
Provider
Life sciences
Contract characteristics for healthcare ITO transactions
2009-2012
Provider Life sciences Payer
Average TCV
US$ million
Average contract duration
Number of years
Average ACV
US$ million
Subfunctions in large provider AO transactions
2012; Frequency of inclusion
Package
Implementation (PI)
ADM
Testing
ERP services
Systems
Integration (SI)
Subfunctions in large provider IO transactions
2012; Frequency of inclusion
End-user computing
Helpdesk
Middleware/database
Network
Datacenter
Regulatory
imperatives
Health information exchange
ICD-10 migration
Focus on EHRs and EMRs
Accountable care
organizations
Evolving value-based
reimbursement models
Patient information security
China
Mexico India
U.S.
Philippines
Maturity level: Medium LowHigh

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Healthcare outsourcing research calendar
Topic Release date
IT Outsourcing in Healthcare Payer Industry – Service Provider Landscape with PEAK MatrixTM Assessment and
Profile Compendium 2013 August-2013
IT Outsourcing (ITO) in the Life Sciences Industry – Annual Report 2013: All or Nothing: IT as the Trump Card for
Life Sciences October-2013
December-2013
State of the Healthcare & Life Sciences Industry: Future Outlook Q1-2014
IT Outsourcing in Healthcare Provider Industry – Service Provider Landscape with PEAK MatrixTM Assessment and
Profile Compendium 2013 Q4-2013
SMAC in Healthcare – Drivers and Implications Q1-2014
Published Current
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship June-2013
IT Outsourcing in the Healthcare Payer Industry – Annual Report 2013: Taking the Debate Beyond the Reforms Mandate July-2012
IT Outsourcing in Life Sciences Industry – Service Provider Landscape with PEAK Matrix™ Assessment and
Profile Compendium 2013 November-2013
Value-chain Digitization in the Pharmaceutical Industry October-2013
Webinar Deck: Value-chain Digitization in the Pharmaceutical Industry Is Causing Tectonic Shifts in ITO Strategy October-2013
IT Outsourcing in Healthcare Provider Industry – Annual Report 2013

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The following documents are recommended for additional insight on the topic covered in this report. The recommended
documents either provide additional details on the topic or complementary content that may be of interest
1. Value Chain Digitization in the Pharmaceutical Industry: IT Outsourcing as the Vehicle to the Evolution of the Pharmaceutical
Industry (EGR-2013-12-R-0975); 2013. This viewpoint analyzes the current state and transformational changes occurring in IT adoption
in the pharmaceutical industry. The analysis delves into the imperatives and drivers of digitization in the various value chain elements of
the pharmaceutical industry
2. IT Application Outsourcing (AO) in the Healthcare Provider Industry – Annual Report 2012 (EGR-2012-12-R-0808); 2012. This
report provides an overview of the AO market for the healthcare provider industry. Analysis includes key trends in market size & growth,
demand drivers, adoption & scope trends, emerging themes, key areas of investment, and outlook for the coming year. The report also
provides an introduction to the service provider landscape for the healthcare provider industry
3. IT Application Outsourcing (AO) in the Healthcare Payer Industry – Service Provider Landscape (EGR-2012-12-R-0721); 2012.
This report provides an in-depth analysis of the service provider landscape for AO in the healthcare payer segment. It includes PEAK
Matrix for Payer AO, analysis of service providers in terms of their delivery capability and market success, and detailed profiles of the
service providers featured on Payer AO PEAK Matrix
For more information on this and other research published by Everest Group, please
contact us:
Jimit Arora, Vice President:
Abhishek Singh, Senior Analyst:
Nitish Mittal, Analyst:
Phone: +1-214-451-3110
Email: info@everestgrp.com
Everest Group
Two Galleria Tower
13455 Noel Road, Suite 2100
Dallas, TX 75240
jimit.arora@everestgrp.com
abhishek.singh@everestgrp.com
nitish.mittal@everestgrp.com
Additional healthcare research references

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