Government agencies to spend $15 billion on health IT by 2014

Federal agency spending on health IT systems could rise to $5.6 billion

Federal, state and local governments will spend $15 billion on information technology systems to support their public health and health insurance programs in 2014, a $3 billion increase from 2009 levels, according to a new report from the Input  research firm of Reston, Va.

Public agencies spend money to promote public health, provide care, buy health care supplies and pay insurance premiums and the government health IT systems support those activities.

By that definition, federal health IT spending is predicted to rise from $4.5 billion today to $5.6 billion in 2014, and state and local health IT spending is projected to increase from 7.6 billion today to $9.6 billion in 2014, according to the report released Oct. 21 and done by the Input analysis team of Angie Petty and Lauren Jones.

The government health IT systems encompass several types of services, including disease and clinical management, emergency medical services, geospatial information, record locator services, laboratory management, Medicaid management, medical records, patient tracking, e-prescriptions, telemedicine and vital records.

Those figures do not include $19 billion in the economic stimulus law approved by Congress earlier this year to promote adoption of electronic health records and creation of health information exchanges.

That spending comes when budget deficits and lower spending at the state and local level. Because of this, the growth rate of the state and local health IT market will remain relatively low at 4.6 percent, and most of the growth will be in public hospitals, the report said. Input previously released a report providing more details on the state and local market.

Aside from the stimulus law and health care reform, health IT adoption in general is being driven by cost concerns, the report said. With U.S. health care expenses projected to rise to $4.5 trillion by 2018, from $2.4 trillion in 2008, there is a need to control spending, the report said.

“Health IT market acceleration is imminent as the federal government introduces disruption change to the U.S. health care industry through the [stimulus law] and pending health care reform legislation,” the report said.

About the Author

Alice Lipowicz is a staff writer covering government 2.0, homeland security and other IT policies for Federal Computer Week.

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