Maximize opportunities in government contracts

June 1, 2012

Market is expanding for government health IT contracts.

Health IT has been identified as a critical tool in efforts to cut costs in the administration of these and various other federally funded healthcare programs. In fact, a recent study released by Deltek Inc. predicted that federal outlays on health IT will reach $6.5 billion by 2016, compared to $4.5 billion in 2011, which represents an annual compound growth rate of 7.5%.

RECENT CONTRACT AWARDS

The Department of Health and Human Services (HHS) awarded a $5 million contract for a software platform to perform modeling, simulation and other data analytics for disease conditions, healthcare settings, and medical interventions.

In addition to the growth of existing federal programs, certain mandates in healthcare reform legislation have underscored the need for new and improved technology solutions. For example, given policy requirements for the use of data in the design of benefits and in the evaluation of population health outcomes related to healthcare system design, it is likely that the government will procure relevant software services going forward.

Other IT opportunities have included contracts for healthcare consulting services and technology solutions, IT market research services and general technical support services.

Further, as the Medicaid program grows, IT resources will be implemented in an effort to coordinate care for beneficiaries as many state programs transition from fee for service to integrated care management. The results of the dual-eligibles pilot program will likely include additional recommendations for the use of IT solutions. Moreover, IT solutions are critical to the healthcare exchanges. The federal exchange contract has already been awarded, but many of the state-level procurements are just beginning.

Certainly, as with any government contract, there exist risks and unique compliance obligations. As the healthcare sector generally and IT initiatives specifically continue to grow, increased oversight is likely. Thus, while health IT contracting opportunities abound, contractors should proceed with appropriate caution, particularly the non-traditional government contractors that are new entrants to the market. Government contracting benefits are not without opposing obligations-the potential growth upside is significant, and contractors should make comprehensive efforts to maximize opportunities in the health IT space.

This column is written for informational purposes only and should not be construed as legal advice.

Jessica Abrahams is a partner at McKenna Long & Aldridge LLP.