Federal Spending on Cloud-Based Medical Capabilities

While the cloud is fast becoming the go-to way that federal agencies acquire back office business capabilities, it is also gaining traction in health care. You would be correct in assuming that this is taking place at the Department of Veterans Affairs, which runs medical centers across the United States, but the VA isn’t the only agency using cloud-based health care applications. A number of agencies in both the defense and civilian sectors are turning to cloud capabilities to meet health care needs.

Total Spending and Awarded Contract Value

A look at the data for spending on cloud-based medical capabilities shows it grew strongly between FY 2022 and 2023.

The total value of awarded contracts (TCV) for cloud-based medical capabilities is also rising, but at a slower pace than spending. This is an interesting trend because in most cases TCV tends to outpace spending. Awarded contract values are almost always higher than the dollars spent on that contract because agencies want ceiling value available to meet future needs. It is for this reason that we here at Federal Market Analysis typically look at TCV as a forward-looking indicator of spending to come. Here, however, we see that spending in FY 2023 already surpassed the TCV for that year. This does not necessarily mean that spending will be down when the data for FY 2024 comes in. More likely it means  that the rise from FY 2023 to FY 2024 could be smaller than from FY 2022 to FY 2023.

Spending by Agency

A look at the spending data arranged by agency shows most of the agencies one would expect to see buying cloud-based medical capabilities.

The U.S. Peace Corps and Department of Justice might look like outliers, but in the former’s case, the spending is related to an engineering effort at the Office of Health Services called “SaaS for the Development of the OHS Clinical Risk Management and Quality Improvement Software Platform.”

In the DOJ’s case, the spending is related to a number of contracts awarded by the Federal Bureau of Prisons. Each BOP facility has a dedicated medical wing and so it makes sense to see health-related spending.

Spending by Solution

Now for the spending by medical solution. The data presented here is for spending from $1.0M and up. Spending on several solutions totals less than this, so total spending will not add up to the numbers presented above.

The VA is the department driving spending on most of these solutions. A couple of exceptions are the spending on UpToDate, which is a clinical decision support capability that provides the latest data for providers. Army Medical Command spent $1.8M on UpToDate in FY 2023. Small transactions make up the remaining balance. The Defense Health Agency also spent $2.9M on Symedical’s medical data management solution.

A final point worth making involves FedRAMP certification. Many of the cloud-based medical solutions being used by federal agencies, including Endosoft, Symedical, and Pyxis are not FedRAMP certified. It seems the newness of these capabilities might be compelling agencies that want to use them to procure them regardless of their “secured” status. Some capabilities, such as GetWellAnywhere Federal and MediaLab for Government, are either FedRAMP certified or in the process of getting certified.