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Healthcare IT spending to hit £2.3 billion in 2007

Expenditure on IT in healthcare set for steady growth, increasing by as much as four per cent on outsourcing and off-the-shelf software, Kable has said.

By Nicole Kobie, 5 Jul 2007 at 15:04

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Spending on IT in healthcare in the UK is set to hit £2.3 billion this year, driven by outsourcing and spending on generic software, according to new research.

Public sector research firm Kable expects that IT spend on healthcare will grow at a steady rate of three to four per cent, reaching £2.6 billion by 2010.

The growth rate is inline with the rest of the public sector, said Kable senior analyst Victor Almeida. Previously, the government's total expenditure on healthcare has run about seven to eight per cent, but is expected to settle in at about 3.5 to four per cent in coming years, he said.

The National Health Service's (NHS) embattled 10-year, £12 billion national programme for IT (NPfIT) commands about half of the total spending on government healthcare ICT spending, but that proportion is expected to increase, the report said.

The main beneficiaries of the growth will be off-the-shelf software developers and large outsourcing firms, as spending on hardware and mobile services are falling on lower costs. Spending on in-house IT staff is stagnant, but headcount and salaries are both declining.

Expenditure on such software is expected to jump from £137 million last year to £201 million in 2010, while the value of outsourcing deals is seen increasing from £531 million last year to £830 million in 2010.

The increase in spending in those two areas is partially because the former 303 primary care trusts have been merged into 152 such trusts, giving them larger budgets and more complex systems.

"They're moving away from DYI mentality and moving to off the shelf," said Almeida. "Outsourcing and off-the-shelf are inextricably linked. If you're outsourcing, you don't want to do it yourself. If you're buying off the shelf, it's because you don't want to develop it yourself."

He said the trend toward outsourcing is seen across the public sector, and will continue to trickle down to smaller public sector bodies, such as local authorities, in the next four to five years.