245M American Lives Managed by PHM Solutions by the end of 2021

Data from Signify Research’s report “Population Health Management IT – North America – 2017” shows that the number of lives managed by PHM solutions in North America is projected to increase from 135 million at the end of 2016 to 245 million at the end of 2021.

Over this period, the market in terms of revenues is forecast to grow at a CAGR of 16.6% from $3.6B in 2016 to $8.0B in 2021. Solutions will be implemented by a range of organisations such as providers/ACOs, payers, government organisations and employers. In some cases this will lead to individual lives being managed by more than one entity. The provider/ACO vertical is projected to represent the largest market in terms of both managed lives and platform revenues, with the acute sector driving the lion’s share of the provider market.

Factors Driving Growth

The factors driving the uptake of PHM solutions in North America are focused heavily on US legislation and attempts to modernise health care provision. Although the Trump administration is still attempting to repeal the affordable care care (ACA), creating some uncertainty, it has been assumed that the underlying factors driving PHM growth (such as the move to value-based care) will persist. With most of the dialogue around changes to Obamacare and the Republican alternatives being focused on insurance reform, not care delivery reform, Signify Research expects the rollout of accountable care organisations (ACOs) and share savings schemes to continue. PHM solutions will be a core tool in their implementation.

Outside of ACO implementation, the targets put in place via MACRA/MIPS are also assumed to survive any future healthcare reform. PHM will play a central role for providers implementing strategies to make the transition to value-based care, to hit MIPS targets and to measure performance against these targets.

The Competitive Environment

In 2016 55% of the North American PHM market was accounted for by EHR vendors, such as Allscripts, Epic, Cerner and eClinicalWorks and payer/provider-owned vendors, such as Optum, Transcend Insights, Aetna/Healthagen and Conifer Health. The remainder was taken by broad portfolio healthtech/IT vendors such as IBM Watson Health and Philips and best-of-breed specialists such as Orion Health, Health Catalyst, Evolent and Enli.

In terms of overall share, it is estimated that Optum commanded the number one position in 2016, followed by IBM Watson Health, Allscripts and Cerner. However, the supplier base remains extremely fragmented and consolidation is expected to continue over the medium term.

EHR vendors are well positioned to leverage their existing installed base of customers in order to gain share as the PHM market grows. For many, they are banking on PHM driving a large proportion of future company growth as the EHR market matures. However, historically their PHM solutions have fallen short in terms of functionality and performance compared to the best-of-breed specialists. Through acquisition and product development the gap has started to close to some extent, but there still remains a significant opportunity for specialists to also enjoy success over the medium term particularly if they can maintain a leadership position in terms of product functionality and performance.