Software segment to grow at the highest CAGR during the forecast period
On the basis of component, the global population health management market is segmented into software and services. In 2016, the software segment is expected to account for the largest share of the global population health management market. PHM software includes web-based and cloud-based solutions. The advantage of these solutions is that the service provider maintains and upgrades the software and eliminates the buyer’s responsibility of server support and maintenance, which enables the buyers to focus on their core business.
The global population health management market is expected to reach USD 42.54 billion by 2021. Factors such as implementation of the Affordable Care Act (ACA) in the US, government support for the prevention of diseases and adoption of HCIT, growth in geriatric population and the subsequent increase in the prevalence of chronic diseases, need for affordable treatment options due to the rising healthcare costs, and advancing IT and big data capabilities are driving the growth of the population health management market.
Lack of data management capabilities and skilled analysts, reluctance to migrate from legacy systems, and safety concerns with regard to patient information, are the major restraints for the market.
A major concern with cloud-based population health management solutions is that data hosted by vendors is not as secure as its on-premise counterparts. Patient information is highly sensitive, and a high degree of privacy needs to be maintained so that this information is accessible only to authorized users.
Patient information across countries has been under the scanner of various legal frameworks; for instance, stringent data privacy requirements were legislated through HIPAA (Health Insurance Portability and Accountability Act) in the U.S. Similarly, the European Union has several directives pertaining to data protection. Moreover, in many countries, a patient’s Protected Health Information (PHI) cannot be transferred out of the country of origin. Patients themselves are concerned about the security of their personal data, which adds to the necessity of maintaining necessary security standards for data protection. Public clouds face similar security issues as traditional IT systems and are thus not preferred. Although private clouds offer more secure access protocols and systems, the healthcare industry is still skeptical about the effectiveness of private cloud-based population health management solutions.
However, the increasing focus on value-based medicine, expansion in emerging economies, and rising focus on personalized medicine based on analytics are likely to offer lucrative growth opportunities for players in the population health management market.
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Minimal software and hardware requirements for using web-based PHM solutions (which reduces upfront installation costs) and increasing adoption of web-based services by healthcare providers are driving the web-based segment.
A web-based population health management system eliminates the buyer’s responsibility for server support and maintenance. Concurrently, control of the server also transfers from the healthcare provider to the vendor. The healthcare provider is dependent on the vendor for reliability, uptime, and functionality of the server. The vendor also takes responsibility of all external interfaces such as labs and imaging, making it beneficial for the healthcare provider. In the web-based delivery mode, a monthly fee per provider is charged; other relevant costs such as extra internet connection might also be applicable.
Cloud-based solutions are based on SaaS (Software-as-a-Solution), which utilizes a group of servers to spread data processing tasks across healthcare organizations. This process requires a shared IT infrastructure, which contains a large pool of data that is integrated from disparate locations. This technology is flexible, scalable, and affordable.
A cloud-based solution is sold on demand and is fully managed by the provider; these characteristics differentiate it from the traditional delivery models. Cloud-based services help healthcare organizations share and integrate information from disparate locations or systems in real time. Cloud services also help curtail costs incurred in the purchase of hardware and licensing of software.
Many healthcare providers manage and optimize their complex IT systems. In doing so, they strive to meet the requirements of the Affordable Care Act of improving the quality of care, reducing the rate of readmissions, reducing healthcare costs, and transforming themselves into Accountable Care Organizations (ACOs). All these requirements have driven healthcare providers to adopt cloud-based services.
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The on-premise mode of delivery is a traditional method to deploy population health management solutions. In this delivery mode, a licensed software is installed which runs on computers in the hospital/clinic premises. Healthcare providers are responsible for purchasing, installing, and maintaining the server, through its in-house IT staff or local IT support vendors. Decision makers in healthcare organizations prefer to maintain access to these solutions due to issues like control, the safety of patient data, and cost benefits.
Implementation of the Affordable Care Act and Hospital Readmissions Reduction Program in the US, high demand for PHM solutions among healthcare providers owing to various benefits offered by these solutions, and Medicare initiative to penalize hospitals for unnecessary readmissions are driving the growth of the healthcare providers segment.
Healthcare providers adopt population health management solutions to curtail the rising costs of healthcare, offer quality care, and improve financial outcomes. A number of provisions in the Affordable Care Act (ACA) have resulted in an increase in the number of population health management programs being implemented in the U.S. The ACA stresses on value-based reimbursement and quality of treatment rather than the traditional fee for reimbursement systems based on volume. At the same time, the ACA also aims to lower the number of uninsured people to reduce the cost of healthcare for the government as well as for individuals.
The healthcare payer industry is undergoing changes in terms of legislation, competition, and market segments, which have played a significant role in changing the outlook of the industry. Payers in the healthcare market include various private as well as public insurance bodies like the Centers for Medicare & Medicaid Services in the U.S. The new Medicare initiatives include penalizing hospitals for unnecessary readmissions and correlating their reimbursements to the quality of care provided. Payers aim to offer financial rewards to healthcare providers that deliver quality care in a cost-effective manner. Through a unified population health management solution, costs can be decreased by avoiding expenses related to pharmacies, readmissions, and length of stay. This, in turn, would help healthcare providers to maximize their reimbursements. In addition, payers can provide healthcare providers with a client database to integrate into their registries, thereby increasing the size of the population to be covered for assessing health.
Other End Users:
Many employers have initiated wellness programs to assess the health of their employees. The Affordable Care Act offers incentives for wellness programs at workplaces in the form of insurance discounts for participating employees and grants to develop wellness programs. Many companies use health risk assessments (HRAs) as an element to track the health of their employees. Employees in many of the large, self-insured companies are asked to fill these HRAs (questionnaires) as a part of their wellness programs. In addition, financial incentives are offered to increase the number of enrollments. These HRAs are uploaded online to make it easy for healthcare providers to access data.
The rising costs of healthcare have compelled government bodies to implement various mandates on healthcare providers and payers to improve the quality of care. Apart from healthcare providers, payers, and corporate entities, government bodies like the Ministry of Health are also engaged in population health management.
How does PHM relate to the industry transition to Value based Care & Reimbursement (VBC&R)?
What will be the impact on utilization and the provision of healthcare?
What will be the impact of PHM on revenue cycle management?
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