The payer services market could be worth $118.2B by 2027: report

The payer services market is expected to grow by double digits annually over the next several years, according to a new analysis.

These services, which include data analytics, digital health and care management, are in growing demand, according to analysts at Markets and Markets, which conducts market research. The report said the sector was worth about $69.9 billion in 2022. That’s expected to increase by an 11.1% compound annual growth rate, reaching $118.2 billion by 2027, according to the analysis.

The projected growth is backed by increasing health insurance enrollment, rising fraud, federal mandates and increasing rates of chronic illness. However, multiple factors could constrain the market, too, the analysts said: cultural and language barriers, the risk of data breaches and the high costs related to outsourcing this work.

In addition to supporting payers, the services provided in this space can help providers keep up with the evolving expectations of patients, Markets and Markets said in a press release.

As the industry continues to evolve, providers will need to focus on leveraging technology, as well as improving customer service, to remain competitive,” according to the release. “In addition, they must ensure compliance with various healthcare regulations and be prepared to comply with the changing demands of the healthcare industry.”

The report analyzed these services in three categories—business process outsourcing (BPO), information technology outsourcing (ITO) and knowledge process outsourcing—as well as compared the likely performance of private and public payers. As of 2021, BPO services made up the largest share of the broader health payer services market, according to the analysts, as they can drive lower costs, boost efficiency and allow companies to focus on their core operations.

However, the analysts project that ITO services will see the highest growth over the next five years, driven by greater integration between healthcare and technology as well as the adoption of electronic health records.

Private payers also account for the largest share of this market and are expected to grow at a faster rate than their public payer counterparts due to increasing competition between insurers.

North American firms accounted for the largest market share in the payer services space, though the analysts expect that companies based in the Asia-Pacific market will grow the most over the next several years.

Factors such as increasing adoption of advanced technologies, increasing pressure to reduce healthcare costs, growing prevalence of chronic disease, presence of large and growing patient population in this region, availability of skilled labor at low costs, high growth opportunities and growing focus of established players on emerging [Asia Pacific] countries are driving the market growth in this region,” they said in the report.

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