National Defense Magazine
2/1/2008
Byline Article from Chad Crank, Senior Vice
President
Information technology spending on defense, intelligence and
homeland security continues its upward trajectory, but contractors
are setting their sights on potentially even more lucrative
opportunities in health care information technology. From fiscal
2005 to fiscal 2007, homeland security IT spending rose from $1.9
to $2.7 billion (Source: Federal Sources Inc.) Intelligence IT
spending is expected to increase at a compound growth rate of 8.4%
over the next five years (Source: INPUT, Press Release of June 20,
2007).
Government contractors, meanwhile, are adjusting their business
models in anticipation of rising government IT spending on
healthcare during the next five to 10 years. Healthcare IT-related
spending by the government is expected to increase from $5.3
billion in 2007 to $8.7 billion in 2012 for a compound annual
growth rate of 10.7% (Source: INPUT). To capitalize on this growth
potential, federal contractors have engaged in a number of industry
acquisitions. Corporate mergers & acquisitions will likely
occur among middle-market players looking for “tuck-in”
acquisitions to complement current IT structures, while building a
presence in healthcare IT.
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