Healthcare IT Spending 2024: Key Insights and Trends

In September, KLAS Research and Bain & Company co-published our third report, Healthcare IT Spending 2024: Innovation, Integration, and AI. Our goal is to understand the market dynamics of IT spending; this year, we added research on payer organizations to get a broader view of the market. Read on for a glimpse of this year’s findings.

Points to Know

• The report offers valuable insights for providers, payers, vendors, and investors. It covers provider and payer organization pain points from the perspective of the C-suite, and it details which technology solutions they are prioritizing to address their organizational strategic initiatives.
• Many providers face significant pain points, with costs being cited by 49% and EHR integration by 42% of respondents. While current vendor relationships, in particular the EHR vendors, are considered first, many organizations are turning to third-party vendors to supplement gaps and drive fast ROI through efficiency gains. Organizations are increasingly willing to explore new technologies beyond their EHR systems in key high-energy areas.
• Generative AI is gaining traction, and while there is optimism around its potential, uncertainty remains around its impact and risk.

What You’ll Find in the Data

For payers and providers, this report highlights shared priorities and strategies across the industry, helping healthcare organizations understand where they align with their peers. It is also a window into the “other side,” meaning it can help payers and providers better understand each other’s positions.

For vendors, firms, and investors, this report will provide market intelligence; they will be able to see what the biggest pain points are that their customers are trying to solve. It will also answer how payers and providers are looking to solve those pain points with technology, and it will cover some of the mindsets and beliefs surrounding their buying considerations.  

Learning about Pain Points: Integration & Costs

One of the crucial pieces in the report discusses provider pain points with their current tech stacks.

The pain points remain similar to the pain points in 2023; 49% of providers cite costs as a top pain point or as one of their top 3 pain points. At 42%, EHR integration is a close second.

Though there is still reliance on EHR and existing vendor partnerships, many organizations are looking to third parties to supplement gaps and to really drive true ROI. Integration with the EHR and other technologies is essential for workflows to be seamless and to get the right data going to the right place. It also takes integration to really align organizations and set them up for success.

As we think about the reasons that organizations are looking at these third-party vendors to supplement and even drive their ROI, much of it is due to their cost concerns. Providers and payers are hoping to either reduce costs through efficiency gains or increase revenue through better patient access.

The desire we’re seeing now is to find the right partnerships to help them close functionality gaps and quickly drive outcomes.  

An Emphasis on Experimenting

One of the most interesting findings is that we’re seeing a mindset shift in how organizations are considering the right solution. I’ve already mentioned the interest in third-party vendors. I’ll go even further to say that in many cases, providers and payers are more willing to look outside of their EHR and existing vendors to take advantage of new technologies in certain areas.

While there is not a massive shift from having organizations prioritize their EHRs and existing relationships, the openness to third-party solutions shows that there is a desire to stay current and keep from falling behind. Organizations want to take advantage of new, innovative technology, and the pandemic proved to them that they could do that faster than they once thought possible. We have many more findings surrounding generative AI in this report; that is one example of a new technology that is generating energy right now.

Looking to Generative AI

When I look ahead to the future of healthcare technology, I believe that generative AI will provide tremendous results in targeted areas; however, its use will continue to progress slowly. Strong adoption will take time, and clear ROI is still being defined. It’s not a silver bullet for all healthcare woes, but I also don’t think anyone thinks it is. We are seeing optimism and positive use cases from generative AI.

Truthfully, we have been using AI in healthcare for many years, but the public is more aware of AI now because of ChatGPT and other tools. The healthcare industry likely needs to be ready to educate the public and patients more broadly on how AI has been and is already being leveraged.

There are a lot of unknowns, but we’re excited to see that journey.

In the meantime, there is much, much more to this report than I could possibly cover here. I recommend reading the full report for more detailed information.

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