Healthcare BPO Industry Expands with U.S. Market Dynamics

The healthcare BPO sector, paralleling the IT industry's growth, is gaining traction in the U.S., leveraging a USD 4.8 trillion market. With 22% of operational processes outsourced, the industry is growing at 7-12% CAGR. Despite high penetration, future growth hinges on market share expansion and offshore efficiency.

The healthcare business process outsourcing (BPO) industry is mirroring the IT sector's rapid growth as it gains traction in the expansive U.S. healthcare market. According to a report by JM Financial, this niche segment has achieved significant scale, validating its total addressable market (TAM).

In 2023, the U.S. healthcare market recorded spending of USD 4.8 trillion, with USD 200 billion dedicated to operational processes by payers like insurance companies and providers such as hospitals and clinics. This figure represents the TAM for healthcare BPO firms, with 22% or approximately USD 45 billion currently outsourced.

The outsourcing trend is poised to grow at a 7-12% compound annual growth rate (CAGR) due to rising healthcare costs, staff shortages, and complex regulations. The payer segment, including federal, state, and private insurers, dominates with USD 138 billion in spend, while providers account for USD 63 billion. Over the next five years, this expenditure is expected to grow at a 5% CAGR.

Despite significant growth, healthcare outsourcing has reached a penetration level akin to the IT services industry. As such, the primary growth driver will be market share gains among existing players, not just increased outsourcing. Moreover, the sector relies heavily on offshore delivery, with 80-85% of services provided from abroad.

However, offshore revenue represents just a fraction of onshore operational spending, indicating a lower TAM for offshore providers. The healthcare BPO sector is poised for steady growth, yet companies must focus on efficiency and market share to maintain momentum in the coming years. (ANI)

(With inputs from agencies.)