expanding the role of it in healthcare delivery: insights from tbr’s healthcare it services...

TBR

T EC H N O LO G Y B U S I N ES S R ES EAR C H , I N C .

Expanding Role of IT in Healthcare Delivery

Insights from TBR’s 2Q14 Healthcare IT Services Benchmark Oct. 16, 2014

TBR

2 TBR HITS Benchmark Webinar| 10.16.14| www.tbri.com | ©2014 Technology Business Research Inc.

Healthcare IT Services Quarterly Benchmark Readout: Presenters

John Caucis

Senior Analyst and Practice Manager, Public Sector and Health 13 years of experience

Email: [email protected]

Twitter: @jcaucistbr

Jacob Gordon

Research Analyst, Public Sector and Health 3 years of experience


Twitter: @TBRJacob

Today’s presenters

mailto:[email protected]


TBR


TBR’s Healthcare IT Services reports deliver unique insight and value through in-depth analysis in a concise, consumable format

TBR Healthcare IT Services Overview

Clients gain advantages and a better understanding of revenue opportunities through our reports and their personal relationships with TBR

• TBR covers 20 vendors continually in its Healthcare IT Services Vendor Benchmark.

• We publish five Healthcare IT Services company reports that focus on the healthcare IT services businesses of Accenture, CSC, Dell Services, HP Services and IBM Global Services.

• The healthcare activities of nine other firms are covered in TBR’s overall IT services quarterly and semiannual reports on CGI, Cognizant, Deloitte Consulting, General Dynamics, HCL, Infosys, Leidos and Xerox.

• TBR’s Healthcare IT Services Benchmark report includes the activities of Allscripts, Cerner, CPSI, Epic, Harris, McKesson and NextGen.

o TBR reports are unique due to their deep, holistic analysis of leading vendor businesses.

o Financial modeling and TBR insights help customers build a better understanding of vendor business models.

o TBR reports and webinars are designed to be responsive to client time lines, to be clear and concise, and to provide insights across multiple layers of an organization.

o TBR’s strategic assessment provides an impartial reality check on how vendors are performing in their strategic objectives and the overall market.

TBR


Healthcare IT Services Quarterly Benchmark Readout: Agenda and Format

Today’s Agenda

1. Key fiscal results from the 2Q14 benchmark

2. Strategic actions: Portfolios, M&A, alliances

3. 2H14 & Full-year 2014 outlook

4. Q&A

TBR


Healthcare IT Services Quarterly Benchmark Research Highlights

Healthcare IT Services Benchmark Highlights for 2Q14

Solutions that enabled healthcare organizations to reduce costs and enhance patient outcomes sustained growth for health IT vendors

SOURCE: http://www.morrell-middleton.co.uk/wp-content/uploads/graph-arrow-upwards-growth.jpg

SOURCE: http://img.bloggercent.com/2013/06/marketing-trend.jpg

SOURCE: http://www.softwareag.com/blog/reality_check/wp-content/uploads/2013/12/Scale-up.png

Government regulations and demand for digital solutions drove health

IT vendor growth in 2Q14: Impending deadlines and demand for

solutions to control costs and enhance quality of service buoyed vendor

top lines.

Invest, ally and buy: Health IT vendors accelerate R&D of new

solutions, form new alliances and acquire to position for escalating

opportunities in analytics, cloud, mHealth and the U.S. federal sector.

Solid top-line expansion will continue for health IT vendors in 2014:

Demand for EHR, interoperability, cloud, mobility and analytics

solutions will sustain moderate to strong growth for health IT firms

in 2014.

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9.0%8.5%

8.1%

5.8%6.1%

9.4% 9.4%

8.6%

7.8%

7.1%

0%

2%

4%

6%

8%

10%

12%

2Q13 3Q13 4Q13 1Q14 2Q14

Gro

wth

%

Calendar Quarter

Average Growth (YTY TTM Revenue & YTY Quarterly Revenue) for HITS Vendors

Average YTY Growth Average TTM YTY Growth

TBR

SOURCE: TBR ESTIMATES AND COMPANY DATA

Solid year-to-year growth continued in 2Q14 as healthcare organizations increased their leverage of IT solutions to improve patient care and engagement, enrich the business value of health data and augment administrative efficiency.

The increasing customer demand for new IT solutions to reduce costs and enhance the utility of healthcare data sustains health IT growth


TBR


AccentureCGICognizant

CSCHarris

CernerIBM GS

McKesson

HP Services

Allscripts

Infosys

Dell Services

CPSI

XeroxNextGen

Deloitte

General Dynamics

EPICHCL

-15%

-5%

5%

15%

25%

35%

-15% -10% -5% 0% 5% 10% 15% 20% 25% 30%

Op

era

tin

g M

argi

n T

TM

Healthcare IT Services Revenue TTM Growth YTY

2Q14 HITS TTM Operating Margin and Revenue Growth

NOTE: SPHERE SIZE REFLECTS VOLUME OF REVENUE. SOURCE: TBR ESTIMATES AND COMPANY DATA

TBR

Leidos $158m-24.8% YTY; -4.5% OM

6.7% Avg. TTM Growth YTY

13.2% Avg. TTM Operating Margin

Outperformers are enhancing intellectual property in their portfolios and continuing to capture growth in transformational EHR projects and state health exchange (HIX) markets.

Vendors focused on IP portfolio expansion, health exchange work and EHR implementation outperformed generalist peers in 2Q14


Outperformers

Laggards

State HIX awards, analytics-infused

offerings, end-to-end enterprise

transformations

Higher-margin service mix and

cost-efficient service delivery

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R&D, alliance and M&A activity increased as health IT firms scale up capabilities to chase opportunities in mHealth and the U.S. federal market







top lines.







in 2014.

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The introduction of R&D-driven solutions expanded health IT services vendors’ collaboration, cloud and interoperability capabilities


Healthcare IT Services Vendors: Portfolio Additions in 2Q14

Cognizant

Shared Investigator Platform

Infosys

Clinical Trial Supply Management

CPSI

Emergency Department Patient

Care

NextGen

NextGen Share

R&D

TBR


Health IT vendors leverage alliances to expand their digital capabilities and develop healthcare analytics to improve patient outcomes


Healthcare IT Services Vendors: Key Alliances and Partnerships in 2Q14

Philips: Accenture and Philips will develop analytics to

interpret human brain waves using software that both firms

developed to connect and interpret EEG data.

IBM: CSC and IBM will jointly develop and offer cloud solutions

built on IBM’s SoftLayer and Bluemix cloud platforms that

incorporate CSC’s ServiceMesh solutions.

Intermountain, Forest Laboratories: The companies collaborate

on outcomes research using Deloitte analytics to enhance data

from health research from both Forest and Intermountain.

CSC

Accenture

Deloitte

3M Health Information Systems: The companies will jointly offer

a Web-based ICD-10 Education Program to help provider

organizations transition to and meet ICD-10 standards.

NextGen

TBR


Event spotlight — DHMSM: Let the battle begin

1H14 PSBQ Public Sector IT Services Benchmark Research Highlights: Strategic Actions

TBR Position

The U.S. Department of Defense’s (DOD) $11 billion

Defense Healthcare Management System Modernization

(DHMSM) program is the most significant opportunity in

federal health IT in many years. DHMSM

Announced Teams Key Capabilities

IBM-Epic-Impact Advisors

• Scale, integration, change management, operations expertise and analytics (IBM) • Deep expertise & global implementations of Epic platform (IBM & Impact Advisors) • Strong and structured EHR deployment methodology (Epic)

Allscripts-CSC-HP • Strong track record with DOD (CSC and HP) • Business continuity, availability, disaster recovery, data redundancy (HP) • Open EHR architecture (Allscripts)

Accenture-Cerner-Leidos

• Extensive work with complex health IT environments (Accenture) • Strong clinical applications, enhanced by acquisition of Siemens (Cerner) • Deep knowledge of DOD health IT (Leidos & Accenture via ASM Research)

General Dynamics-PwC-DSS Inc.-MedSphere

• DOD footprint, analytics and EHR capabilities acquired from Vangent (GDIT) • Open source solution from Open Source Electronic Health Record Alliance (PwC) • Strong commercial applications portable to DOD health IT (DSS & MedSphere)

TBR


Strategic acquisitions in 2Q14 expand health IT vendor portfolios, improve competitive positioning and build international scale


Healthcare IT Services Vendors: Key Acquisitions in 2Q14

SOURCE: TBR RESEARCH AND ESTIMATES; COMPANY DATA AND ESTIMATES

Siemens ($1.3 Billion): The acquisition provides

Cerner with expanded EHR, analytics and

consulting solutions and adds global scale; it will

merge Cerner’s applications capabilities with

Siemens’ expertise in medical devices and

images.

TriZetto ($2.7 Billion): The acquisition enhances

Cognizant’s proprietary IP portfolio of health IT

solutions, enhances onshore delivery capabilities,

and adds 350 clients and 245,000 providers.

Cognizant

Cerner

TBR




Health organizations embracing digital solutions such as analytics, cloud and mobile will drive growth for health IT firms through 2014







top lines.







in 2014.

TBR


The top lines of most health IT services competitors will grow in 2014, sustained by continued demand for EHR, analytics and HIE solutions


TBR


Questions?

Healthcare IT Services Quarterly Benchmark Research: Questions

TBR


Jacob Gordon

Research Analyst, Public Sector and Health Email: [email protected]

Twitter: @TBRJacob

Telephone: 603.758.1880

James McIlroy

Vice President of Sales Email: [email protected]

Telephone: 603.929.1166

Twitter: @TBRinc SlideShare: www.slideshare.net/TBR_Market_Insight YouTube: www.youtube.com/user/TBRIChannel LinkedIn: www.linkedin.com/company/technology-business-research

Healthcare IT Services Quarterly Benchmark Research: Contact Information

John Caucis

Senior Analyst & Practice Manager, Public Sector and Health


Twitter: @jcaucistbr

Telephone: 603.758.1836


https://twitter.com/TBRinc

http://www.slideshare.net/TBR_Market_Insight

http://www.youtube.com/user/TBRIChannel

https://www.linkedin.com/company/technology-business-research






TBR


PSP Syndicated Research Coverage IT Services Vendors Public Sector Vendors Benchmarks

(Benchmark XLS data also available)

• Accenture • Atos • Capgemini • CGI* • Cisco Services • Cognizant • CSC • Dell Services • EMC Services* • Fujitsu • HCL Technologies • HP Services • IBM Global Services • Infosys • T-Systems • Tata Consultancy Services • Unisys • Wipro IT Services • Xerox

• Booz Allen Hamilton* • CACI International* • General Dynamics IS&T* • L-3 Communications* • Leidos* • Lockheed Martin IS&GS* • ManTech* • Northrop Grumman IS&TS* • Raytheon Intelligence, Information &

Services* • SAIC*

• Business Intelligence Professional Services Vendor Benchmark*

• Global Delivery Benchmark* • Healthcare IT Services Benchmark • IT Services Addressable Market Forecast • IT Services Vendor Benchmark • Management Consulting Benchmark* • Public Sector IT Services Vendor

Benchmark

Healthcare IT Services Vendors

• Accenture HITS* • CSC HITS* • Dell HITS* • HP HITS* • IBM HITS*

Management Consulting Vendors

• Bain & Company* • Booz & Company* • Boston Consulting Group* • Deloitte Consulting* • McKinsey & Co.* • PwC*

TBR Professional Services Practice Syndicated Coverage

*Semiannual publication

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