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Home ยป Healthcare BPOs, like IT Services BPOs, become age with increasing US healthcare costs: Report, ET HealthWorld
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Healthcare BPOs, like IT Services BPOs, become age with increasing US healthcare costs: Report, ET HealthWorld

adminBy adminMarch 11, 2025No Comments3 Mins Read
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New Delhi: The healthcare business process outsourcing (BPO) industry, like the IT industry, is gaining momentum as it expands its presence in the US healthcare sector despite being a niche segment. Currently, according to a report by JM Financial, it is achieving a measure that validates the Total Address Market (TAM).

The report noted that the sector benefits from the vast US health market, which recorded a total spend of USD 4.8 trillion in 2023. Of this, approximately USD 200 billion is spent on the operational process by payers (insurers) and healthcare providers (hospitals, clinics and other healthcare institutions). This US$200 billion operational spending represents the addressable total market (TAM) of healthcare BPO companies.

“Healthcare BPOs are as outsourced as IT services…. Despite their niche, they have achieved a measure to validate the TAM of pursuit, so that's their age.”

Currently, approximately 22% of this operational expenditure, or approximately US$45 billion, is outsourced.

The outsourcing trend is expected to grow at a combined annual growth rate (CAGR) of 7-12% due to several factors, including rising healthcare costs, shortages of medical staff, and increased regulatory complexity.

The payer segment, including federal, state and private insurance companies, accounts for US$138 billion in operational spending, while providers will donate US$63 billion. Over the next five years (2023-2028), this overall operational expenditure is expected to increase at a CAGR of 5%.

Despite its growth potential, the report also said that outsourcing in the healthcare sector has already reached penetration levels of 20-24%, similar to the IT services industry. This means that outsourcing alone may not be the major growth driver for healthcare BPO companies. Instead, market share profits among existing players are key to further growth.

Another important aspect is the increased reliance on offshore delivery. Currently, 80-85% of healthcare BPO services are provided from offshore locations.

However, offshore revenues are typically only one-third of land-based operational spending, which effectively lowers the total addressable market for offshore service providers.

Overall, the healthcare BPO sector is well suited to steady growth, and outsourcing plays a key role. However, companies in the sector should focus on efficiency and market share growth in order to maintain momentum over the next few years. (ani)

It will be published at 6:50am on March 11, 2025

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