May 22, 2017: Today IDC Health Insights announced the second annual IDC Health Insights HealthTech Rankings. The leading global vendors of healthcare IT hardware, software, and services have been separated into two categories: Optum is the leader of the Top 50 and IBM is the leader of the Enterprise Top 25.
The rankings provide several perspectives of the healthcare IT marketplace. First, the rankings show a snapshot view of the top companies and their relative positions:
2017 HealthTech Rankings Top 50: Vendors that derive more than one-third of their revenue from healthcare payer and/or provider institutions. The top 5 companies in this category are:
- GE Healthcare
- McKesson Technology Solutions
- Epic Systems
2017 HealthTech Rankings Enterprise Top 25: Enterprise companies serving multiple industries that derive less than one-third of their revenues from healthcare payer and/or provider institutions. The top 5 companies in this category are:
- Royal Philips
Second, the rankings illustrate growth over the 12 month period of 2016 among these companies.
- Top 50: Total healthcare IT revenue for the Top 50 in 2016 was $37.0 billion. This represents growth of 9.0% over the prior year's total of $34.0 billion. Through organic growth Optum has clearly taken over the top position in healthcare IT globally. It generated $8.3 billion, or 22% of the healthcare IT revenue generated by companies in the Top 50 ranking.
- Enterprise Top 25: Total healthcare IT revenue for the Enterprise Top 25 in 2016 was $54.9 billion, or 6.4% greater than the prior year ($51.6 billion). For these enterprise companies, healthcare IT revenue generated by healthcare payer and provider clients totaled approximately 6.5% of their revenue, which is greater than the 6.1% generated the prior year. IBM maintained a dominant position atop the Enterprise Top 25, with $7.6 billion having been generated from eligible healthcare IT revenue. This includes revenue from its 2016 acquisition of Truven Health Analytics.
Figure 1 illustrates growth among cohorts of firms within the two rankings.
Figure 1: 2017 HealthTech Rankings - Growth By Cohort
Third, examining the HealthTech Ranking data gave IDC Health Insights analysts deeper insight into ways that payers and providers can exploit important trends:
- Providers should take steps to mitigate the risks of vendor consolidation in the RCM marketplace as private equity (PE) and individual companies continue to roll up RCM vendors.
- Payers and providers buying IT services from India-focused firms could benefit from increased market leverage due to likely H-1B visa reform and due to declining labor arbitrage margins that will likely slow IT service vendor growth.
- Despite political uncertainty in the U.S., Top 50 companies like Optum, Cerner, and Epic will continue to invest in analytics for value-based care. This strategy should help these firms to expand their clinically-oriented software businesses and make their market positions more defensible.
- EHR market share is concentrating with vendors that have scale and accelerating the rate at which we can expect smaller EHR software firms to shrink or be acquired. Rapid consolidation by M&A in this marketplace is imminent.
- The HealthTech Rankings will become more geographically diverse as vendors with headquarters outside the U.S. and Europe grow quickly — frequently faster than American and European incumbents.
Last year IDC Health Insights introduced these rankings to provide a quantifiable and orderly way to evaluate technology providers in the constantly evolving healthcare industry. The HealthTech Rankings use the same methodology as the IDC Financial Insights FinTech Rankings, which have been published by the IDC Financial Insights team since 2004. Data fields include:
- Total revenue for fiscal and calendar years 2015 and 2016; healthcare IT revenue from healthcare payer and provider institutions for calendar years 2015 and 2016
- Identification of geographic information for each ranked company (location of corporate headquarters) as well as identification of company type (public and private) and fiscal year-end as of calendar year 2016
The detailed revenue information, methodology, and commentary on these rankings are detailed in the following two published documents:
- 2017 IDC Health Insights HealthTech Rankings Top 50 and Enterprise Top 25 — The Data Behind the Rankings ( , May 2017)
- IDC Perspective: 2017 HealthTech Rankings — Global Benchmarks for the Vendors of Healthcare IT ( , May 2017)
For more information: http://www.idc.com/prodserv/insights/#health-healthtech_rankings
Sven Lohse, Healthcare IT Services Strategies