Businesses selling hardware, software and IT services to the health care sector will be in great fiscal shape for the next four to five years, according to technology consulting and analytics provider Compass Intelligence.
The latest data predicts total health care IT revenue will eclipse $73.1 billion this year and grow at a compound annual growth rate (CAGR) of 4.5 percent a year in the next five years, bringing total IT spending by hospitals, doctor's offices, medical centers and health care organizations to more than $85 billion by 2014.
Most of the growth will be a byproduct of the U.S. government's push to electronically store all patient's medical records -- an effort facilitated by the 2009 Health Information Technology for Economic and Clinical Health Act (HITECH) Act -- as well as the proliferation of mobile devices in the health care industry.
With nurses, doctors and administrators increasingly relying on smartphones and tablet PCs for patient care and records management, leading software vendors such as Oracle (NASDAQ: ORCL), Microsoft (NASDAQ: MSFT), Hewlett-Packard (NYSE: HPQ) and IBM (NYSE: IBM) are all either making acquisitions in the health care sector or developing their own applications and services for this high-growth market.
"The federal stimulus funding in the HITECH Act has sparked the health care industry to invest in systems, software and network infrastructure to support [electronic health records] implementation," Stephanie Atkinson, managing partner at Compass Intelligence, said in the report.
"The push for compliance is uncovering pent-up demand and giving light to delayed technology investments," she added.
The rosy outlook for health care IT mirrors the slow but steady improvement seen throughout the rest of the technology sector. Companies are hiring more IT workers, moving forward with long-overdue corporate upgrade cycles and finally embarking on new, strategic IT implementations.
Compass Intelligence reports that demand for mobile health care applications will be particularly acute in the next five years, with companies expected to spend more than $700 million this year and annual growth rate for this niche in IT spending will grow faster than the 4.5 percent CAGR predicted for the sector.