Financial experts predict value-based care will drive more than half of health IT spending by 2025

The transition to value-based care models is driving healthcare spending across the board, and IT is no exception.

Among providers, IT investments to support value-based care are expected to grow 34% over the next eight years from $600 million in 2017 to $6.4 billion in 2025, according to a report by The Everest Group. By that time, value-based care IT investments will account for more than half of all health IT spending among providers, which is projected to reach $11.7 billion over the next eight years. 

As federal payment regulations transition from fee-for-service, compliance will be the driving force behind those provider initiatives, accounting for more than $3 billion in IT spending. Under the Obama administration, the Department of Health and Human Services set a goal to tie 50% of Medicare payments to alternative payment models by 2018. Although healthcare leaders have urged President Donald Trump to continue that transition, the administration has delayed the start of some bundled payment programs and stopped the expansion of several others slated to begin in January.

Federal officials are also seeking information to reform the Centers for Medicare & Medicaid Services.

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Patient engagement will also make up a significant chunk of IT investment, with $2.1 billion in projected spending among providers by 2025. Several major healthcare IT contracts worth $9 billion are up for renewal over the next five years, including a $563 million agreement between CMS and Accenture.

But analysts also point out that ineffective data sharing, as well as the growing gap between supply and demand for analytics talent and capabilities, are significant barriers to value-based care adoption.