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US Healthcare Spending More on Ai, Cybersecurity, Other It Investments– Bain & Company and Klas Researc

A new study from Bain & Company and KLAS Research shows US healthcare providers and payers are boosting their investment in AI, cybersecurity, and other IT areas to support innovation and improve operations. The survey of some 150 US healthcare provider and payer executives finds 75% have increased IT investments over the past year, a trend that is likely to continue. These are among the findings of Bain and KLAS in their 2024 Healthcare IT Spending study, released today.

“Payers and providers are continuing to place a premium on technology, a sentiment that has become increasingly true in the aftermath of the COVID-19 pandemic,” said Eric Berger, partner in Bain & Company’s Healthcare & Life Sciences and Private Equity practice. “While the focus on ROI has increased, we’re also finding these organizations are more inclined to experiment with technology, especially with advanced solutions, such as AI and natural language processing, to improve outcomes.”

“The need is there,” said Adam Gale, CEO of KLAS Research. “Providers and payers are making it clear that there are tremendous opportunities for vendors who are committed to providing innovative, secure, and reliable solutions that drive real outcomes and can show a real ROI.”

Where providers are investing
The study finds providers are focusing IT spending on IT infrastructure and services, such as cybersecurity, clinical workflow optimization, data platforms and interoperability, and revenue cycle management (RCM). IT infrastructure and services emerged as a top priority as providers seek to strengthen cybersecurity to mitigate the risk and impact of attacks and improve the integration of current IT applications. Efforts here have been amplified by the Change Healthcare incident, which highlighted the importance of robust cybersecurity measures. Cost management and electronic health records (EHR) integration and systems interoperability remain provider IT pain points.

Where payers are investing 
Payer organizations are prioritizing IT investments in care coordination and utilization management as well as in claims processing and payments. The study found payers are investing in provider payment tools, modernizing their core administrative processing system infrastructure, and purchasing more payment integrity solutions.

More than 65% of payers cite legacy technology as a key problem. Aging infrastructure limits scalability and flexibility; maintaining these systems imposes significant cost. While legacy tech has been a long-standing issue for payers, significant system modernization entails a multiyear effort and poses operational risk that many chief information officers are loath to assume.

Cybersecurity has emerged as an imperative for payers as well, with IT leaders citing cybersecurity as a reason for increased technology investment.

AI gains attention and adoption
AI technologies have made inroads across healthcare, with providers and payers exploring AI-supported solutions to enhance decision making, improve operational efficiency, and deliver care and engagement. Providers have made strides over the past year, with about 15% of providers in our survey saying they have an AI strategy today, a stark increased from just 5% in 2023. Roughly 25% of payers say they have an established AI strategy in 2024. A healthy majority of both types of organizations are optimistic about implementing generative AI. However, despite its potential, several barriers hinder more widespread adoption of AI. Providers and payers cite regulatory and legal considerations, cost, and accuracy as main hurdles to implementation.

A robust IT investment outlook
Amid diverse approaches to IT investment, healthcare providers and payers are doubling down on their commitment to investing in IT solutions, with a renewed focus on cybersecurity. Providers grapple with budget challenges and the need to integrate new solutions with EHRs and other suites. To address these obstacles, they are concentrating on solutions that offer clear, rapid ROI and that have proven integration. Payers are dealing with legacy tech stacks, many of which require significant spending and manual effort to maintain. Organizations hope to streamline their tech stacks and often favor existing vendors that offer cost-effective solutions with reliable cybersecurity.