U.S. Healthcare Payer Analytics Market Size, Share & Trends Analysis Report By Analytics Type, By Component Type, By Delivery Model, By Application, And Segment Forecasts, 2020 - 2027

Report Overview

The U.S. healthcare payer analytics market size was valued at USD 2.7 billion in 2019 and is expected to expand at a compound annual growth rate (CAGR) of 24.1% from 2020 to 2027. Healthcare payer data analytics supports payers in determining the areas of improvement in patient care and implementing innovative strategies for engaging high-risk patients. Advanced data visualization techniques help healthcare administrators in intelligent business decision making that significantly impacts the organization’s performance and revenue. Healthcare analytics further enables payers in combating significant challenges that include surviving in a competitive space, increasing customer base, incorporating new health plans, and reducing organizational costs. Besides, it also contributes to increasing revenue and improving efficiency.

Moreover, the ongoing COVID-19 pandemic is further enabling payers to navigate the complexities with advanced analytics solutions to contain costs and support optimal outcomes. Organizations across the healthcare ecosystem are facing unexpected challenges as a result of COVID-19 owing to a significant influx of new members enrolling in health plans due to the pandemic, and payers are working to enhance understanding regarding their needs and risk.

In addition, the availability of a variety of risk- and revenue-sharing, pay-for-reporting (P4R), and pay-for-performance (P4P) programs with providers have resulted in significant investments by payer organizations in applications that support balancing cost as well as quality through improved understanding of healthcare needs and risks of their members. It further allows providers and payers to share a common understanding regarding quality, cost, and utilization performance as described in value-based care contracts. The up to date and detailed information regarding members and populations available in provider data sources further provides significant opportunities to payers for performance improvement.

Moreover, a shift from volume- to value-based care is driving the adoption of Alternate Payment Models (APMs) among payers and other strategies to drive more value to their members. For instance, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) offered significant financial incentives to healthcare professionals to shift from the traditional Fee for Service (FFS) system to outcome- and value-based payment models. The MACRA is focused on increasing participation in risk-bearing models among all payers, not just Medicare. This has led to increased adoption of healthcare analytics to promote shared risk, aiding in market growth.

Furthermore, rising investments, collaborations, product launches, mergers and acquisitions, partnerships, and government initiatives, to support the adoption and implementation of healthcare analytics for payers is propelling the market growth. For instance, in September 2019, HMS announced the acquisition of VitreosHealth. The acquisition was aimed at using VitreosHealth’s prescriptive health insights for enriching population health management for improved predicting, identifying, and avoiding preventable high-cost events.

Analytics Type Insights

The descriptive segment accounted for the largest revenue share of 42.8% in 2019. The descriptive segment provides a description of the whole data and processes it to be interpreted by professionals. It is a basic and widely accepted form of analytics that acts as a precursor for predictive and prescriptive segments. In addition, benefits offered by the descriptive segment such as identifying irregularities associated with insurance claims to support organizations in gauging their performance, and understanding member populations or patient cohorts is further enabling its adoption among payers, thereby aiding the market growth.

However, the predictive analytics segment is expected to emerge at a significant growth rate over the forecast period owing to its adoption in forecasting future market scenarios. According to a survey conducted by the Society of Actuaries in March 2019 among 100 health payer executives and 101 health provider executives, 60.0% of payers and providers were expected to dedicate 15% or more of their spending to predictive analytics. Moreover, healthcare analytics is enabling payers to adopt predictive analytics-driven telehealth outreach programs for gathering efficiencies in care and direct potentially timely interventions to patients in greatest need.

Component Type Insights

By component type, services account to be the largest segment with a share of 41.5% in 2019. The segment is expected to witness a lucrative CAGR of 24.7% over the forecast period owing to the prevailing trend of outsourcing, as healthcare companies lack the resources and skillset required for deployment of the solution. In addition, other factors such as growing focus on value-based care, continuous technological advancements in healthcare analytics solutions, growing adoption of cloud, lack of IT skills in the healthcare industry, and increasing awareness and availability of analytics are driving the growth of the market.

Services are followed by hardware components in terms of the market share. The high cost associated with infrastructures such as the computer system and high-speed internet is boosting the segment growth. The prices of these devices especially electronic devices are anticipated to decline over the forecast period, which is likely to reduce the overall cost of implementation of healthcare analytics, thereby aiding the market growth.

Application Insights

By application, the financial segment accounted for the largest revenue share of 35.2% in 2019 and is anticipated to witness a significant growth rate over the forecast period. This can be attributed to their growing adoption in government as well as private health settings. Various initiatives, such as FPS that helps avoid frauds, aid in saving cost, thus generating demand for these services. The key financial applications include claim settlement, fraud analysis, and risk adjustment and assessment.

Moreover, increasing penetration of healthcare analytics in the country, supportive government policies, and increasing public and private funding in the market are driving the adoption of clinical applications in the country. In addition, the growing adoption of these applications to increase access to clinical data in supporting payers in developing care management applications, and managing cost reduction programs is aiding segment growth.

Delivery Model Insights

By delivery model, on-premises accounted for the largest revenue share of 51.0% in 2019 in the U.S. healthcare payer analytics market. The on-premises delivery model includes the installation of solutions and services on computers available within the organization. On-premises delivered software is generally termed as “shrink-wrap software”. Although the software needs to be installed within the organization premises, it can be accessed from remote locations, providing benefits of reduced cost, power consumption, and maintenance.

However, the cloud-based delivery model is expected to emerge at a significant growth rate over the forecast period. These cloud-based services offer increased access, storage capacity, and security. In addition, these services increase workforce efficiency, optimize process efficiency, and reduce redundant tasks. The technology provides three services - Platform as a Service (PaaS), Software as a Service (SaaS), and Infrastructure as a Service (IaaS). The analytics software is a SaaS-based service. For instance, IBM offers its Watson Analytic services on the SaaS platform.

Key Companies & Market Share Insights

Increasing collaborations and partnerships among industry participants are the major strategies adopted by the key players to gain a competitive edge. For instance, in September 2020, SAS announced its partnership with RTI International with the aim of empowering government agencies with improved technology and greater insights by combining the best in expertise, research, and analytics. Some of the prominent players in the U.S. healthcare payer analytics market include:

• CitiusTech, Inc.

• Oracle

• Cerner Corporation

• SAS Institute, Inc.

• Allscripts Healthcare, LLC

• McKesson Corporation

• MedeAnalytics, Inc.

• HMS

• IBM

• Optum, Inc.

U.S. Healthcare Payer Analytics Market Report Scope

Segments Covered in the Report

This report forecasts revenue growth at the country level and provides an analysis of the latest industry trends in each of the sub-segments from 2016 to 2027. For the purpose of this study, Grand View Research, Inc. has segmented the U.S. healthcare payer analytics market report on the basis of analytics type, component type, delivery model, and application:

• Analytics Type Outlook (Revenue, USD Million, 2016 - 2027)

  • Descriptive Analytics

  • Predictive Analytics

  • Prescriptive Analytics

• Component Type Outlook (Revenue, USD Million, 2016 - 2027)

  • Software

  • Hardware

  • Services

• Delivery Model Outlook (Revenue, USD Million, 2016 - 2027)

  • On-Premises

  • Web Hosted

  • Cloud-Based

• Application Outlook (Revenue, USD Million, 2016 - 2027)

  • Clinical

  • Financial

  • Operational and Administrative