The global healthcare payer services market was valued at USD 32.5 billion in 2015 and is projected to grow at a CAGR of 8.5% over the forecast period. The high growth is anticipated on account of the increasing demand for advanced technologies to operate business process services in a cost-effective way through the implementation of various engagement and contract models.
Some factors, such as the growing implementation of digital technologies in payer operations, increasing demand for consumerism, and the upsurge in the number of mergers and acquisitions are anticipated to boost the market in the coming years. Moreover, the growing involvement of a wider population, beyond front and back-end office operations, to drive the effectiveness and efficiency across business processes is also one of the crucial factors that is expected to boost the market growth over the forecast period. The increasing incorporation of secure cloud infrastructure and the growing usage of updated software & applications to address emerging and current needs of the healthcare payer services industry are some of the main factors that are expected to drive the market growth in the coming years.
North America healthcare payer services market, application 2014 to 2024 (USD Billion)
The surging demand for offshore talent to provide value-added services is a key factor driving the growth. Presence of various acts, such as the U.S. Patient Protection and Affordable Care Act (ACA), Health Insurance Portability and Accountability Act (HIPAA), and International Statistical Classification of Diseases and Related Health Problems (ICD)-10, is one of the crucial factors propelling the market growth over the forecast period.
BPO held a share of 51.7% of the overall vertical in 2015. The growing healthcare cost and the increasing focus to reduce the overall administrative cost of member services & claim management services are anticipated to boost the healthcare payer BPO sector over the forecast period. Moreover, the high demand to incorporate health insurance exchanges in the private healthcare insurance enrollment procedures and the presence of the ACA are factors that are driving the healthcare payer BPO segment.
However, the healthcare payer KPO segment is expected to grow at a lucrative CAGR of 17.9% due to the upsurge in the demand for highly skilled professionals and the cost advantage associated with outsourcing the high-end processes at a low cost to the developing countries. Moreover, the growing need in the emerging economies for low-cost high skilled professionals for domain-specific core and non-core activities of the payer vertical is one of the crucial factors anticipated to propel the sector growth in the coming years.
Claims management services held a majority share of over 34.6% in 2015. The presence of ACA and increasing overall healthcare expenditure are among some crucial factors that are driving the number of members enrolled in the Centers for Medicare and Medicaid Services. In 2015, the number of ACA enrollment was approximately 11.7 million and over 8 million people were stated to signed up for health insurance coverage in the insurance marketplace.
However, the analytics and fraud management services segment is expected to grow at the highest CAGR of 9.7%. The growing demand for predictive modeling and claim analytics is one of the main factors that is expected to drive the segment in the coming years. Some of the key operations such as fraud monitoring analytics, and risk management analytics data analysis are mainly a part of KPO services. The increasing demand for low-cost skilled professionals in the developed economies to share the workload and to cater to high-end healthcare payer analytical applications, and growing outsourcing of infrastructural management, application management, and data architecture are expected to positively reinforce this segment’s growth over the forecast period.
In 2015, private payers accounted for the majority revenue share of 52.3% owing to the increasing private investment in the healthcare payer vertical and growing government support to promote private investment in the healthcare industry.
However, the public payers segment is expected to emerge as the fastest growing with a CAGR of 8.6% over the forecast period. The increasing presence of international health insurance acts such as ACA, HIPAA, and ICD-10, growing healthcare expenditure, rapidly decreasing out of pocket expenditure are some of the pivotal factors expected to positively reinforce the sector growth over the forecast period.
In 2015, North America accounted for the maximum revenue share of 77.3%, followed by Asia Pacific. The U.S. is the most important sector and captured the majority share of the North America segment. The increasing health insurance enrollment, the favorable individual mandate levied by the ACA, the presence of favorable reimbursement framework, and the lack of skilled professionals are some of the factors that are accountable for the sizable market share.
Asia Pacific is also expected to emerge as the fastest growing region touting a cumulative growth of 10.8% over the forecast period. India is one of the leading nations that captured the global KPO vertical. Moreover, some of the economies, such as Mexico, Brazil, Japan, China, are expected to contribute strongly toward the global ITO over the forecast period.
Some key players include United HealthCare Services Inc., Anthem Inc., Aetna Inc., Accenture, Cognizant, Xerox Corporation, and Genpact. The large conglomerates have been increasingly undertaking acquisitions to target market development in untapped regions. For instance, Aetna, Inc. acquired Humana for around USD 37 billion in 2015 to advance towards patient-driven, value-based healthcare.
These companies are mainly focusing on mergers and acquisitions to expand their capabilities, diversify business portfolio, and improve healthcare delivery outcomes. In addition, it is also expected that these mergers will facilitate population health management through incentives that aid in improving the efficiency while moving toward a quality driven system.
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