- Lloyd Price
Bain & Company - KLAS Research 2023 HealthTech Report: Key Points for Providers, Vendors & Investors
Exec Summary:
The 2023 Healthcare Provider IT Report by Bain & Company and KLAS Research finds that US healthcare providers are spending heavily on IT, reflecting how technology has become a leading strategic priority.
In a survey of 201 US healthcare provider executives conducted in June 2023, 56% of the respondents cited software and technology as one of their top three strategic priorities, compared with 34% in 2022. Around 75% of respondents expect growth in software and technology spending to continue over the next 12 months.
The report also finds that providers are prioritizing their IT investments in certain key areas, such as:
Revenue cycle management (RCM): RCM is the process of managing the financial aspects of patient care, from billing and coding to collections and denials. Providers are investing in RCM software to improve their efficiency and accuracy, and to reduce costs.
Patient intake: Patient intake is the process of registering new patients and getting them started in the healthcare system. Providers are investing in patient intake software to improve the patient experience and to streamline their administrative processes.
Cybersecurity: Cybersecurity is a top concern for all healthcare organizations, as they are increasingly targeted by cyberattacks. Providers are investing in cybersecurity software and services to protect their data and systems.
In addition to these specific areas, providers are also investing in IT to improve clinical care, enhance patient engagement, and support population health management.
The report also highlights some of the key trends in the healthcare IT market, such as the rise of cloud computing, artificial intelligence (AI), and machine learning (ML). Cloud computing is allowing providers to access and manage their IT resources more efficiently and cost-effectively. AI and ML are being used to develop new tools and applications that can help providers improve clinical care, reduce costs, and enhance the patient experience.
Overall, the report finds that healthcare IT is a rapidly growing market, and that providers are investing heavily in technology to improve their operations and deliver better care to patients.
Here are some of the key implications of the report for providers, software players, and investors:
Providers: Providers should carefully consider their IT priorities and invest in the technologies that will have the greatest impact on their organization. Providers should also focus on developing a strong IT strategy and on aligning their IT investments with their overall business goals.
Software players: Software players should focus on developing solutions that meet the specific needs of healthcare providers. Software players should also work closely with providers to understand their challenges and to develop solutions that can help them improve their operations and deliver better care to patients.
Investors: Investors should look for healthcare IT companies that are developing innovative solutions that meet the needs of providers. Investors should also look for companies with strong track records of execution and that are well-positioned to benefit from the continued growth of the healthcare IT market.
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Key Points from the 2023 Healthcare Provider IT Report
The Bain and KLAS healthtech report is an annual report that examines the state of healthcare IT investment and trends. The 2023 report found that software investments remain a top priority for healthcare providers, with 56% of respondents citing software and technology as one of their top three strategic priorities. This is up from 34% in 2022.
The report also found that providers are focusing their software investments on revenue cycle management, patient intake, and cybersecurity. Providers are also streamlining tech stacks and looking to their electronic health record providers and other existing vendors for new tools before turning to other offerings.
The report's authors conclude that the healthcare IT market is poised for continued growth in the coming years, as providers continue to invest in software to improve their efficiency, quality of care, and cybersecurity.
Prioritising revenue cycle management and clinical workflow optimization Driven by financial challenges and shrinking margins, the study shows executives prioritize investments in areas with clear, near-term ROIs, such as revenue cycle management (RCM) and clinical workflow optimization software. Patient engagement has moved up the list of priorities, particularly among more advanced or digitally mature providers. In addition to RCM and clinical workflow optimization, the survey found freestanding hospitals and physician groups are prioritizing other core systems, namely electronic health records (EHR) and IT infrastructure.
Providers want fewer vendors and seamless EHR integration Providers continue to express a preference for fewer vendors. The survey showed nearly two-thirds of respondents saying they look first to existing vendors, especially electronic health record providers, for new functionality before evaluating new vendors and offerings. While 94% of respondents are open to looking elsewhere if existing vendors lack a solution or have a significant functionality gap, seamless EHR integration is a key purchasing criterion for all healthcare providers evaluating IT solutions.
AI strategy moves from the IT department to the C-suite Around 70% of health system respondents indicate they believe AI will have a greater impact on their organization than last year, moving AI strategies from the IT department to the C-suite. While only 6% of respondents have a generative AI strategy today, the survey found about 50% of respondents are actively developing a strategy or planning to do so in the near-term. Relative to other provider segments, AMCs lead in AI adoption both today and over the next year. Providers with more advanced AI strategies, especially AMCs, have positive AI sentiments overall due to the potential for greater efficiency, improved patient outcomes, and cost savings.
Key Points for Providers, Vendors & Investors
Overall, the Bain & Company - KLAS Research 2023 HealthTech Report provides valuable insights for all stakeholders in the healthcare IT market. Providers, vendors, and investors should all carefully consider the findings of the report to develop informed strategies for the future.
Key Points for Providers:
Software investments are a top priority, with 56% of respondents citing software and technology as one of their top three strategic priorities.
Providers are focusing their software investments on revenue cycle management, patient intake, and cybersecurity.
Providers are streamlining tech stacks and looking to their electronic health record providers and other existing vendors for new tools before turning to other offerings.
Emerging technologies such as artificial intelligence and machine learning are gaining interest, but providers are still cautious about adoption.
Key Points for Vendors:
The healthcare IT market is poised for continued growth in the coming years.
Providers are looking for vendors that can offer integrated solutions that address their specific needs.
Vendors need to invest in emerging technologies such as artificial intelligence and machine learning in order to stay competitive.
Vendors need to build trust with providers by demonstrating the value of their products and services.
Key Points for Investors:
The healthcare IT market is a growing market with a lot of potential.
Investors should focus on companies that are developing innovative solutions to address the challenges facing healthcare providers.
Investors should also consider investing in companies that are well-positioned to benefit from the adoption of emerging technologies such as artificial intelligence and machine learning.
Final Thoughts
The Bain & Company - KLAS Research 2023 HealthTech Report is a comprehensive and informative report that provides insights into the state of the healthcare IT market. However, the report has also been criticized for some of its findings and recommendations.
One of the main criticisms of the report is that it is too focused on the needs of large healthcare providers. The report found that large providers are investing more in healthcare IT than small providers, and it recommended that small providers should focus on streamlining their tech stacks and looking to existing vendors for new tools.
However, some critics have argued that the report does not adequately address the challenges faced by small providers, who often have fewer resources and less bargaining power than large providers.
Another criticism of the report is that it does not adequately address the issue of healthcare IT costs. The report found that healthcare IT costs are rising, but it did not provide any specific recommendations for how to reduce these costs. Some critics have argued that the report should have provided more specific guidance on how providers can invest in healthcare IT without breaking the bank.
Finally, the report has also been criticized for its focus on emerging technologies such as artificial intelligence and machine learning. Some critics have argued that the report overstates the potential of these technologies to improve healthcare, and that it does not adequately address the challenges associated with implementing these technologies.
Overall, the Bain & Company - KLAS Research 2023 HealthTech Report is a valuable resource for anyone who wants to understand the state of the healthcare IT market. However, it is important to be aware of the criticisms of the report and to consider multiple viewpoints when making decisions about healthcare IT investments.
Engage with the HealthTech Community
HealthTech M&A Newsletter from Nelson Advisors - Market Insights & Analysis for Founders & Investors. Subscribe today! https://lnkd.in/e5hTp_xb
HealthTech M&A Advisory by Founders for Founders, Owners & Investors. Buy Side, Sell Side, Growth and Strategy mandates - Email lloyd@nelsonadvisors.co.uk
HealthTech Thought Leadership from Nelson Advisors - Industry Insights & Analysis for Founders, Owners & Investors. Visit https://www.healthcare.digital
