EHR’s To Drive Federal Health IT Spending To $8.1B By 2023

Dive Brief:​

  • Spending on vendor-provided federal health IT goods and services is estimated to increase from $6.1 billion this year to $8.1 billion in 2023, according to a Health IT News summary of a market outlook report. That increase will largely be driven by EHR projects at the Department of Defense and Veterans Affairs.
  • Spending will top out at $8.5 billion by 2022 and dip down to $8.1 billion the following year as systems roll out.
  • The Coast Guard announced this week that it will be adopting DoD’s $4.3 billion Cerner EHR project, and the State Department is expected to adopt an EHR soon.

Dive Insight:
Federal health IT spending will be stimulated by agencies’ focus on improving patient accessibility, paying for performance, modernizing health IT systems and implementing new technologies over the next five years, according to the report by Deltak, an IT company that works with federal contractors. Much of that spending will be led by the VA.

Former VA secretary David Shulkin, ousted from his post last month, last year said the agency would implement a new Cerner system, similar to the DoD’s. The $16 billion project will take 18 months to launch and up to eight years to fully transition from the agency’s homegrown system.

The DoD contracted Leidos to build its EHR system, MHS Genesis, over the course of 10 years for $4.3 billion. The Coast Guard issued a letter of intent earlier this week to roll into the contract, which “will be updated to accommodate the additional services and capabilities” required by the DoD bringing in new agencies.

While the VA’s boom in health IT spending tops costs at 40% according to Health IT News, the Deltak summary says federal healthcare spending will also increase due to a “growing Medicare population and increased military and veteran health costs” that will force federal agencies to “prioritize costs in areas of efficiency and improved outcomes.”

The report’s authors also argue that budget cuts to federal health agencies will slow the growth of health IT expenditures.

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