it application outsourcing (ao) in the healthcare payer
TRANSCRIPT
Healthcare Outsourcing Annual Report: July 2012 – Preview Deck
Topic: IT Application Outsourcing (AO) in the Healthcare Payer Industry
Copyright © 2012, Everest Global, Inc. EGR-2012-12-PD-0711
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Background of the research The healthcare industry has 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 have 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 Applications Outsourcing (AO) 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 IT AO in the healthcare vertical. In this report, we analyze current trends and the future outlook for large, multi-year AO relationships for the healthcare payer market. In addition, we identify the leading and upcoming service providers in this segment. We focus on: Trends in AO in the healthcare industry Market trends and activity for large AO relationships in the payer segment Healthcare payer AO service provider landscape leveraging the Everest Group Performance | Experience | Ability | Knowledge
(PEAK) Matrix Drivers for change and future outlook for AO in the payer segment Implications for healthcare payer buyers and service providers
Scope of this report Industry: Healthcare payer (public health plans, private health plans) Services: Large (TCV >US$25 million), multi-year (>three years), and annuity-based application outsourcing Geography: Global Sourcing model: Third-party AO transactions; excludes shared services or captives
Background and scope of the research
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This report provides an insight into current trends and the future outlook for large, multi-year AO relationships in the global healthcare payer 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 IT AO in the payer vertical with a focus on large (TCV >US$25 million), annuity-based, and multi-year (>3 years) relationships
NOT EXHAUSTIVE Focus of report
1 Includes healthcare data & information services, and medical products distribution
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From a landscape of 30+ service providers, Everest Group assessed eight service providers for their capabilities in payer AO space on the Everest Group PEAK Matrix
Service providers assessed on PEAK Matrix
Assessment based on: RFIs submitted by service providers1
Everest Group Transactions Intelligence database Service provider disclosures and interviews Everest Group’s interaction with healthcare payer
buyers
Criteria for inclusion in the assessment Success in large payer AO
relationships, i.e., – >US$25 million TCV – >3 years relationship
duration – Active as of December
31, 2011 Everest Group’s
experience and RFI response
1 Assessment for Accenture and IBM GS is based on Everest Group’s proprietary Transaction Intelligence (TI) database, service providers’ disclosures, and Everest Group’s interactions with healthcare payer buyers
Source: Everest Group (2012)
Service provider outreach (partial list)
Other service providers analyzed in this report
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Table of contents (page 1 of 2)
Section I: Introduction and overview 5 Section II: Key insights 15 Section III: Healthcare IT outsourcing market overview 20 Market size and growth 21 Overall healthcare ITO transaction trends 23 Transaction trends by segment 25
– Geographic segments 25 – Business segments: Healthcare Payer, Life Sciences, and Provider 26 – Function segments: AO, IO, and bundled BPO 27
Section IV: Payer AO market overview 28 Payer AO transaction trends 30 Adoption trends for large-sized payer AO deals 31
– Geography, payer type 31 – AO subfunctions 32 – Buyer size 33
Delivery location trends 34 Renewals 35
Topic Page no.
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Table of contents (page 2 of 2)
Section V: Payer AO service provider landscape 36 PEAK Matrix for payer AO 41 Other payer AO service providers 42 Section VI: Emerging themes and future outlook in payer AO 46 Key growth themes 48 Implications for buyers 56 Implications for service providers 57 Appendix 58 Glossary of key terms 61 Research agenda 63 References 65
Topic Page no.
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The report provides an overview of the AO market for the healthcare payer subsegment. Analysis includes key trends in market size & growth, demand drivers, adoption & scope trends, emerging themes, key areas of investment, and implications for key stakeholders. The reports also provide an introduction to the service provider landscape for the healthcare payer subsegment and a mapping of service providers on Everest Group’s Performance | Experience | Ability | Knowledge (PEAK) Matrix
Healthcare ITO market overview
Payer AO market overview
Overview and abbreviated summary of key messages
Payer AO transaction activity peaked in 2010-2011, coinciding with the passage of the Patient Protection and Affordability Care Act in the United States
Large transactions (>US$ 25 million in TCV) accounted for a significant portion of the payer AO activity during the last five years
North America (primarily the United States) is the dominant market for large payer AO transactions; private health plans have adopted offshore outsourcing to a greater extent as compared to public health plans
Offshore penetration in the payer services market is currently low, and presents an opportunity for future expansion. India is the preferred delivery location for AO in payer segment; China, the Philippines, and Latin America are emerging as newer low-cost locations
Some of the findings in this report, among others, are:
The US$20 billion healthcare ITO market leads the global ITO market in terms of growth North America is the most active geography in healthcare ITO; healthcare provider segment
accounts for over half of the transaction activity. Application outsourcing is included in the scope in over 60% of all healthcare ITO transactions
Emerging themes and implications
Key themes driving IT services demand in the U.S.-healthcare payer market include regulatory reform, consumerization, claims transformation, convergence of information across healthcare entities, and consolidation and M&A
Healthcare payer buyers and service providers need to align their strategies with the evolving healthcare eco-system
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This study offers four distinct chapters providing a deep dive into key aspects of healthcare payer AO market; below are four charts to illustrate the depth of the report
Source: Everest Group (2012)
20% 14% 11%
24% 28% 29%
56% 58% 60%
2009 2010 2011
Healthcare ITO transaction volume
100% =
Payer
Provider
Life sciences
North America EMEA
Scope of contract
Signing region
Latin America APAC
Payer AO adoption levels Payer AO activity across various regions
Based on number of transactions
High Medium Low
537
780 577 536
786
515
2013 2014 2015 2016 2017 2018
Payer AO contract renewals TCV of contracts coming up for renewal 2013-2018; US$ million Number of transactions
Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix for large payer AO relationships
High
Low Low High Delivery capability
(Scale, scope, domain investments, and delivery footprint)
Mar
ket s
ucce
ss
(Tra
nsac
tion
activ
ity)
HH
GG
FF
EE DD CC BB
AA
Emerging Players
Leaders
Major Contenders
Payer AO PEAK Matrix
Major Contender Emerging Player
Leader
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Healthcare outsourcing research agenda (page 1 of 2)
Current Upcoming
July-2012 This report provides an overview of the application outsourcing (AO) market for the healthcare payer industry. Analysis includes key trends in market size & growth, demand drivers, adoption & scope trends, service provider landscape, emerging themes, key areas of investment, and implications for key stakeholders. The report also provides an introduction to the service provider landscape for the healthcare payer industry and a mapping of service providers on Everest Group’s PEAK Matrix
IT AO in the Healthcare Payer Industry – Annual Report
July-2012 This report provides a comprehensive assessment of the service provider landscape for application outsourcing (AO) services in the healthcare payer industry. It maps the leading service providers on the Everest Group PEAK Matrix and includes detailed profiles of these service providers. It also identifies other emerging service providers in the payer AO space
IT AO in the Healthcare Payer Industry – Service Provider Landscape
Q3-2012 This report provides an overview of the application outsourcing (AO) market for the life sciences industry. Analysis includes key trends in market size & growth, demand drivers, adoption & scope trends, service provider landscape, emerging themes, key areas of investment, and implications for key stakeholders. The report also provides an introduction to the service provider landscape for the life sciences industry and a mapping of service providers on Everest Group’s PEAK Matrix
IT AO in the Life Sciences Industry – Annual Report
June-2012 This report analyzes the pecking order of WITCH (Wipro, Infosys, TCS, Cognizant, and HCL) group in terms of financial performance, industry vertical performance, and geographic performance
Report Card for the Indian IT Majors – Pecking Order Analysis of the "WITCH" Group
Topic Goals of the research Release date
Published
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Healthcare outsourcing research agenda (page 2 of 2)
Topic Goals of the research Release date
Q3-2012 This report provides a comprehensive assessment of the service provider landscape for application outsourcing (AO) services in the life sciences industry. It maps the leading service providers on the Everest Group PEAK Matrix and includes detailed profiles of these service providers. It also identifies other emerging service providers in the life sciences AO space
IT AO in the Life Sciences Industry – Service Provider Landscape
Q4-2012 This report provides an overview of the application outsourcing (AO) market for the healthcare provider industry. Analysis includes key trends in market size & growth, demand drivers, adoption & scope trends, service provider landscape, emerging themes, key areas of investment, and implications for key stakeholders. The report also provides an introduction to the service provider landscape for the healthcare provider industry and a mapping of service providers on Everest Group’s PEAK Matrix
IT AO in the Healthcare Provider Industry – Annual Report
Q4-2012 This report provides a comprehensive assessment of the service provider landscape for application outsourcing (AO) services in the healthcare provider industry. It maps the leading service providers on the Everest Group PEAK Matrix and includes detailed profiles of these service providers. It also identifies other emerging service providers in the provider AO space
IT AO in the Healthcare Provider Industry – Service Provider Landscape
Current Upcoming Published
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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. Healthcare: Trends for Q1 2012 (EGR-2012-8-R-0692); 2012. This research is part of Everest Group’s periodic Industry Trends reports
which provide industry specific data, developments, and insights that enable Global Sourcing Managers to navigate through the complexity and make clear, effective decisions contextualized and suited to their specific industry. These reports provide deep-dive into transaction activity, captive developments, service provider market share, and key outsourcing transactions specific to a particular industry
2. IT Application Outsourcing (AO) in Healthcare Payer Segment – 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 the 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 the Payer AO PEAK Matrix
3. Outsourcing and Offshoring Trends in Pharmaceuticals (EGR-2011-2-R-0600); 2011. This research report provides an in-depth analysis of outsourcing and offshoring in the pharma industry, with focus on outsourcing transactions in the industry, buyer adoption of outsourcing and service provider landscape. The report also comments on the key future trends to watch, for buyers and service providers and other industry stakeholders
For more information on this and other research published by the Everest Group, please contact us: Jimit Arora, Vice President: Mridul Gupta, Senior Analyst: Service Provider Intelligence Team:
Phone: +1-214-451-3110 Email: [email protected]
Everest Group Two Galleria Tower 13455 Noel Road, Suite 2100 Dallas, TX 75240
[email protected] [email protected] [email protected]
Additional healthcare research references
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About Everest Group
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