North American Healthcare IT Market: Growth, Size, Share, and Trends

Drivers: Growing need to curtail escalating healthcare costs

The overall cost of healthcare delivery has grown significantly in the past few decades. Increasing health insurance premiums, growing demand for quality healthcare services, the increasing number of elderly people, and the growing incidence of chronic disorders are driving the demand for healthcare services across North America. Other factors contributing to the high expenditure on healthcare services include patient readmissions, medical errors, and administration costs. According to a CMS report, health spending in the US grew 9.7% in 2020, reaching USD 4.1 trillion or USD 12,530 per person. Projected demographic changes and increased spending on public pensions are expected to increase healthcare spending over the next 20 to 50 years. According to the UN Population Division, the aging population in North America is set to increase from 880 million in 2011 to 2 billion by 2050, representing 22% of the world’s population. If left unchecked, healthcare spending is expected to increase by 25% by 2030, largely because of the aging population. Currently, the US is facing major challenges in countering the rising healthcare costs. The CMS projected that, by 2028, healthcare spending would reach USD 6.19 trillion and account for 19.7% of the GDP, up from 17.7% in 2018. Before the COVID-19 pandemic, the agency had projected health spending would continue to grow at a rate of 5.4% per year, reaching nearly USD 6.2 trillion by 2028. If those increases continue unabated over the next 20 years, health spending can reach USD 11.8 trillion by 2040. According to an OECD study on healthcare expenditure, the US spends 43% more on healthcare than Switzerland (ranked second) and 66% more than Norway (ranked third). With the increase in healthcare spending, the purchasing power of the end users will also increase, leading to an increase in the adoption of these solutions in the coming years. Governments and healthcare systems in North America are focusing on controlling soaring healthcare costs by minimizing patient readmissions, medical errors, and administration costs with the effective utilization of various healthcare IT solutions. The successful adoption and implementation of healthcare IT solutions are expected to save billions of dollars for healthcare systems by ensuring smoother workflows, better care coordination, as well as reduced labor costs and compliance risks. The US Department of Health and Human Sciences estimates that the widespread adoption of healthcare IT solutions will result in annual savings worth USD 80 billion to USD 100 billion by automating care delivery systems and another USD 100 billion by reducing medical errors and wastage throughout the healthcare system.

Restraints: High cost of deployment of healthcare IT solutions for small and mid-sized organizations

The cost of various healthcare IT solutions is considerably high, making it difficult for small and medium-sized healthcare organizations to implement them. This is mainly due to difficulties in implementing multiple networks with health setups, a lack of wireless connectivity options, and the need to install subsequent security layers to avoid data breaches. Moreover, support and maintenance services, which include modifying and upgrading software as per changing user requirements, represent a recurring expenditure that accounts for a large share of the total cost of ownership. Also, post-sales custom interface development for device integration requires additional verification and validation to ensure solution accuracy and completeness. This further increases the total cost of ownership for healthcare providers. Small hospitals and healthcare organizations cannot afford these additional costs.

Considering the lack of internal IT expertise in the healthcare industry, it is essential to provide training to end users to maximize the efficiency of interoperability solutions. This, in turn, adds to the cost of deploying connectivity solutions for healthcare organizations. In addition to the high total cost of ownership, procurement decisions among healthcare organizations are also affected because it is difficult to evaluate the impact and benefits of interoperability solutions in healthcare settings. Also, the infrastructural costs for implementing EHR systems and associating them with different devices with distinct interfaces are major obstacles for this market, especially in emerging regions. Hospitals often prefer investing in core technologies directly linked to patient care quality rather than technologies for allied departments.