2017 is Proving A Challenging Year for North American PHM Market
Published: November 1, 2017
Data from Signify Research’s report “Population Health Management IT – North America – 3Q 2017” indicates that the first half of 2017 proved a challenging period for some North American PHM vendors. After consistent Quarter-on-Quarter (QoQ) market growth for the last eight quarters, Q1 2017 saw the North American PHM market decline for the first time since Signify Research started tracking the market. Q1 2017 revenues were estimated to be down 7.1% compared to Q4 2016, at $938M.
The market is estimated to have picked up in Q2 2017, bouncing back to a similar level to that seen in the final quarter of 2016. However, this still resulted in revenues for the first half of 2017 being flat compared to the second half of 2016.
General sentiment from vendors was that the first quarter of the year was very soft due to uncertainty in relation to US healthcare legislative reform. As the Trump administration pushed ahead with its agenda to repeal and replace the Affordable Care Act (ACA), providers, payers and other buyers of PHM solutions delayed purchasing decisions. However, for many vendors this was only evident in the first quarter. The second quarter was much more positive and a significant number of these delayed orders were ultimately made during Q2 2017.
As for the remainder of the year, the short-term uncertainty experienced earlier in 2017 has partially subsided and to some extent the industry has started to “catch up” on its original direction of travel. Year-on-year growth of 12% is forecast for the full year in 2017, a solid performance considering the uncertain environment, but still down on the high teens growth seen in 2016. For the medium term outlook, the transition to value-based care is not progressing as fast as some had originally expected, and this will limit market growth to some extent. However a CAGR of 16% is still forecast for the period 2016 to 2021.
The Competitive Environment
Optum is estimated to have been the market leader in 1H 2017. Its internal business with UnitedHealth drove much of its PHM revenue but its continued success selling its Optum One solution to US health care providers has steadily increased its overall share during the last two years. Its 2017 acquisition of the Advisory Boards’ health care business will further boost its market share, although only by a relatively small amount.
IBM Watson Health is estimated to have been the second largest vendor in 1H 2017. Its acquisitions of Truven Health Analytics, Phytel and Explorys had catapulted IBM Watson Health to this position in 2016. However, it has struggled to leverage these three acquisitions in order to gain share during 2017.
Over the last two years Evolent Health has risen up the PHM market share rankings and it was estimated to have been the third largest vendor in 1H 2017. Allscripts and Cerner are estimated to have made up the remainder of the top five PHM vendors in 1H 2017.
The market remains highly fragmented, with the top five vendors accounting for a combined 35% of the market in 1H 2017. The highly fragmented nature of the market is expected to drive considerable M&A activity. This has been apparent in 2017 with Allscripts’ acquisition of McKesson’s Enterprise Information Solutions business (albeit with only a small PHM operation transitioning); Optum’s acquisition of the Advisory Board’s health care business including its Crimson PHM offering; NextGen Healthcare’s acquisition of EagleDream Health, a PHM analytics specialist; and Medecision’s acquisition of AxisPoint Health’s platform customers. Expect more to follow in the coming years.
About the Report
The market data presented above is taken from Signify Research’s just published report on the North American PHM market. The report is a component of the Signify Research “PHM & Telehealth Market Intelligence Service”. Vendors tracked include Aetna, Allscripts, AthenaHealth, AxisPoint Health, Caradigm, Cerner, Conifer Health, eClinicalWorks, Enli, Epic, Evolent, HealthCatalyst, Humana/Transcend Insights, IBM Watson Health, McKesson, Medecision, Meditech, NextGen, Optum, Orion Health, Premier Inc., Verscend, ZeOemga and others. The report provides quarterly market estimates for 2015, 2016 & 2017, and annual forecasts by vertical, function, service type, platform delivery and country to 2021.
About Signify Research
Signify Research is an independent supplier of market intelligence and consultancy to the global healthcare technology industry. Our major coverage areas are Healthcare IT, Medical Imaging and Digital Health. Our clients include technology vendors, healthcare providers and payers, management consultants and investors. Signify Research is headquartered in Cranfield, UK.
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