______________________________________________________________________________________

The Federal Healthcare Technology Domain

A cross-government report on Federal spending

By Ray Bjorklund
Senior VP and Chief Knowledge Officer
FedSources, a Washington Management Group company

Overview
The U.S. Federal government will spend more than $385 billion on healthcare – not including Medicare
spending – in GFY2010. Nearly $70 billion of that will go to government contractors in the area of
healthcare technology.

Note that $70 billion will be spent on healthcare technology, not simply health IT. Health IT, according
to its definition, is patient centric. The contractor addressable market for health IT is about $900
million. The contractor addressable market for healthcare technology is magnitudes larger and
presents much greater opportunity.

While this report covers health IT as part of the overall healthcare technology market, it does not
cover grants, health benefits, or healthcare reform legislation. Instead, this report maps out
contractor addressable spending for those technologies and services involved in healthcare.

These technologies and services span a broad range of agencies, including the Department of Health
and Human Services (HHS), the Food and Drug Administration (FDA), the Department of Defense
(DoD), the Department of Homeland Security (DHS), the Department of Justice (DoJ), and many
others.

Federal healthcare technology is a large, complex market ripe with opportunity. This report will
present the market in a unique way, highlighting opportunities within programs and agencies
government contractors may not have previously considered for healthcare technology business.

Market Breakdown
In this report, we’ve broken the healthcare technology domain into three categories: Health Research
and Promotion, Health Protection, and Healthcare Delivery. Each category below includes a
description, the dollar amount spent on that area, the type of activity for which the money is being
spent, and the agencies that spend the most money.

Health Research and Promotion

The Health Research and Promotion sector of the healthcare technology market covers healthcare-
related measures and investigations. It includes money spent on studies of social and demographic
healthcare factors, investigations into the prevention and cure of diseases, and enhancement of the
healthcare system.

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Health Research and Promotion represents the area with the largest growth rate: 26 percent CAGR
(compound annual growth rate) from 2008 to 2010. For GFY2010, the Federal government will spend
$7.28 billion on Health Research and Promotion. This figure follows spending of $4.6 billion in
GFY2008, and $6.13 billion in GFY2009.

The types of Health Research and Promotion tracked within the spending figures include:
 Biomedical research
o Medical research, clinical investigation, rehabilitative research, genomic research
 Public health science, policy, and practice
o Policy and planning; behavioral, social, and economic research; public health education;
health professionals education and training

The top spending agencies in the area of Health Research and Promotion include:
 Department of Health and Human Services
o National Institutes of Health
o Centers for Disease Control and Prevention
o Food and Drug Administration
o Agency for Healthcare Research and Quality
o Substance Abuse and Mental Health Services Administration
o Health Resources and Services Administration
 Department of Labor
o Occupational Safety and Health Administration
 Environmental Protection Agency
 Department of Defense
o Military Health System
o Uniformed Services University of the Health Sciences
 Department of Veterans Affairs
o Veterans Health Administration
 U.S. Department of Agriculture
o Food and Nutrition Service
o Rural Utilities Service
 Department of Energy

Health Protection
The category of Health Protection covers the government’s efforts to protect and defend its citizens. It
includes the development of standards, analysis of health trends, and preparedness. It also includes
the application of countermeasures to protect food and human health.

Health Protection is the second largest category in terms of growth rate: 8 percent CAGR from 2008
to 2010. For GFY2010, the Federal government will spend $5.83 billion on Health Protection. This
figure follows spending of $4.98 billion in GFY2008, and $6.42 billion in GFY2009.

The types of Health Protection tracked within the spending figures include:
 Disease Prevention
o Epidemiology, pathology, toxicology
 Compliance and Testing
o Medical device safety, drug safety, food safety, occupational health
 Environmental Health
o CBRNE (chemical, biological, radiological, nuclear, and high-yield explosives)
assessment, hazard and stress analysis, disease vector management

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______________________________________________________________________________________
 Preparedness and Response
o Medical countermeasures, emergency response

The top spending agencies in the area of Health Protection include:

 Department of Health and Human Services
o Centers for Disease Control and Prevention
o Food and Drug Administration
 U.S. Department of Agriculture
o Food Safety and Inspection Service
o Animal and Plant Health Inspection Service
 Department of Defense
o Military Health System
 Department of Labor
o Occupational Safety and Health Administration
 Department of Homeland Security
o Office of Health Affairs
 Department of Justice
o Federal Bureau of Investigation
 Department of Commerce
o National Institute of Standards and Technology
 U.S. Postal Service
 Department of Energy

Healthcare Delivery
Healthcare Delivery is the largest category by far in the healthcare technology domain, covering all
the means by which the government cares for healthcare recipients. It also includes medical and
dental services, pharmaceuticals, medical supplies and healthcare facilities construction and
maintenance.

Although this is the largest category, it shows the smallest overall growth: 4 percent CAGR from 2008
to 2010. For GFY2010, the Federal government will spend $54.09 billion on Healthcare Delivery. This
figure follows spending of $49.91 billion in GFY2008, and $53.50 billion in GFY2009.

The types of Healthcare Delivery tracked within the spending figures include:
 Medical and Dental care
 Pharmacy services
 Combat medicine
 Emergency and humanitarian missions
 Veterinary care
 Acquisition of medical materiel, services, and facilities

The top spending agencies in the area of Healthcare Delivery include:

 Department of Veterans Affairs
o Veterans Health Administration
 Department of Defense
o Defense Logistics Agency
o Army Medical Department
o Bureau of Medicine & Surgery
o Air Force Medical Service
o TRICARE Management Activity
 U.S. Army Medical Research Acquisition Activity

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 Department of Health and Human Services
o National Institutes of Health
o Centers for Disease Control and Prevention
o Health Resources and Services Administration
o Indian Health Service
o Centers for Medicare & Medicaid Services
o Public Health Service
 Department of Justice
o Federal Prison System

Spending Breakdown
All three categories combined – Health Research and Promotion, Health Protection, and Healthcare
Delivery – are experiencing steady increases year-over-year with a compound annual growth rate of 6
percent from GFY2008 through GFY2010.

$90B
Contractor-addressable federal spending

$80B

$70B

$60B

$50B

$40B

$30B

$20B

$10B

$0B
CAGR CAGR
GFY2008 GFY2009 GFY2010 GFY2011 GFY2012 GFY08- GFY08-
10 12
Health protection $4.98B $6.42B $5.83B 8%
Health research and
$4.60B $6.13B $7.28B 26%
promotion
Healthcare delivery $49.91B $53.50B $54.09B 4%
Totals $59.49B $66.05B $67.20B $72.24B $77.30B 6% 7%

The chart above maps out each category as it relates to overall spending. The information comes from
FedSources analysis of GFY2010 President’s Budget. Note that the contractor-addressable market
does not include grants, loans, subsidies, or incentives.

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Opportunity Breakdown
Based on the types of services and products the Federal government has spent in each of the
Healthcare Technology Domain categories in GFY2008 and GFY2009, one can predict which types of
opportunities will be most prevalent within the Healthcare Technology Domain for GFY2010, GFY2011
and beyond.

$80B
Contractor-addressable federal spe nding

$70B

$60B

$50B

$40B

$30B

$20B

$10B

$0B
CAGR CAGR
GFY2008 GFY2009 GFY2010 GFY2011 GFY2012
GFY08-10 GFY08-12
Real property $3.57B $4.62B $3.42B -2%
Telecomm $1.14B $1.28B $1.41B 12%
Prof services (incl R&D) $4.91B $7.24B $6.00B 11%
Other white collar services $11.26B $11.38B $12.33B 5%
Medical services $19.37B $19.90B $21.24B 5%
Investment products $3.65B $3.64B $4.25B 8%
Consumable products $13.72B $15.98B $16.49B 10%
Blue collar O&M services $1.89B $2.00B $2.06B 4%
Totals $59.49B $66.05B $67.20B $72.24B $77.30B 6% 7%

According to the above chart, Telecom will see the greatest increase between GFY2008 and GFY2010,
growing 12 percent to $1.41 billion, from $1.14 billion. Spending on Professional Services – including
research and development – will also see significant growth, of 11 percent in the same time period.
Consumable products will see the third highest growth rate, of 10 percent in the same time period.

Conclusion and Additional Analysis

Healthcare Technology is a sizeable market, covering a significantly broader range of products and
services than the subset health IT market. Many agencies play a role in the Healthcare Technology
Domain, including agencies that contractors may not expect to find there. The U.S. Postal service is

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______________________________________________________________________________________
one example, as the agency responsible for delivering “countermeasures” in the event of a biological
attack.

Based on the number of agencies spending money in this market, and growing interest from a range
of influencers, the healthcare technology market will be a source of significant opportunity during the
next several years.

Specifically, government contractors can expect to see greater than average opportunity in the
following areas:
 Certification processes, such as health information exchanges, information security and
privacy, health IT “devices”, and “meaningful use” standards
 Program integrity and forensics
 Strategic sourcing, for clinicians and practitioners, pharmaceutical and medical supplies, and
supply chain management
 Enhancements in grants management
 Modernization of healthcare delivery, including workflow and process re-engineering, case
management tools, investment in clinical diagnostic tools, building out IT and facility
infrastructure (including telecom), and training of healthcare providers in information-based
technologies
 Information sharing, accelerated by high performance computing and cloud computing,
including preparedness and countermeasures

The overall message for contractors is, if you can help improve the effectiveness and efficiency of the
federal healthcare system, you will find great opportunities within the Federal Healthcare Technology
Domain.

About the author

Ray Bjorklund is Senior Vice President and Chief Knowledge Officer at FedSources. Ray has more than
three decades of hands-on experience in federal program management and procurement processes.
As a former government program manager and procurement official focusing on defense, C4ISR and
IT initiatives, he has a deep understanding of the public sector market and its complex policy and
procurement procedures. Ray specializes in identifying market factors, technology trends, and
strategic solutions to help clients posture for success in the government marketplace, and is regularly
quoted in the media as a highly regarded expert in the public sector marketplace.

Ray holds a BS from the University of California at Davis in Environmental Sciences and an MS from
Northrop University in Procurement and Contract Law.

About FedSources
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drive growth within your company. Our strength is in our people. As a client, you’ll get unlimited
access to our team of government experts who will answer any question at any time.

At FedSources, we provide a depth and breadth of government intelligence unmatched in the industry.
We do the research and analysis for you. We deliver detailed intelligence – from agency spending
priorities to targeted opportunities to specific government contacts – along with the “human touch”
necessary to align that intelligence with your company’s objectives.

At FedSources, your business growth goals are our measures of success. For more information visit:
www.fedsources.com.

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© 2010 FedSources. All rights reserved.
 FedSources InFocus: Healthcare Technology
Sample Agency & Opportunity Targets

January 2010

© FedSources  2010  Ι 8400  Westpark  Dr.  McLean,  VA  22102  Ι www.FedSources.com  Ι 703.610.8700
 Introduction

Want to learn more about Healthcare Technology?

Which agencies should you focus on? How do you map your 
competencies to Healthcare Technology opportunities?  

The following Appendix provides a high level overview of 
government agencies with Healthcare Technology program 
initiatives and program opportunity examples.  

These sample agency profiles and opportunity profiles are 
merely a snapshot of what is available via FedSources Market 
Intelligence Services.

© FedSources 2010, All Rights Reserved. Reproduction Prohibited. 1

 Department of Health and Human Services (HHS)

© FedSources 2010, All Rights Reserved. Reproduction Prohibited. 2

 HHS Opportunity

© FedSources 2010, All Rights Reserved. Reproduction Prohibited. 3

 HHS Opportunity

© FedSources 2010, All Rights Reserved. Reproduction Prohibited. 4

 HHS Opportunity

© FedSources 2010, All Rights Reserved. Reproduction Prohibited. 5

 Centers for Disease Control and Prevention (CDC)

© FedSources 2010, All Rights Reserved. Reproduction Prohibited. 6

 CDC Opportunity

© FedSources 2010, All Rights Reserved. Reproduction Prohibited. 7

 CDC Opportunity

© FedSources 2010, All Rights Reserved. Reproduction Prohibited. 8

 CDC Opportunity

© FedSources 2010, All Rights Reserved. Reproduction Prohibited. 9

 National Institutes of Health (NIH)

© FedSources 2010, All Rights Reserved. Reproduction Prohibited. 10

 NIH Opportunity

© FedSources 2010, All Rights Reserved. Reproduction Prohibited. 11

 NIH Opportunity

© FedSources 2010, All Rights Reserved. Reproduction Prohibited. 12

 NIH Opportunity

© FedSources 2010, All Rights Reserved. Reproduction Prohibited. 13

 Department of Veterans Affairs (VA)

© FedSources 2010, All Rights Reserved. Reproduction Prohibited. 14

 VA Opportunity

© FedSources 2010, All Rights Reserved. Reproduction Prohibited. 15

 VA Opportunity

© FedSources 2010, All Rights Reserved. Reproduction Prohibited. 16

 VA Opportunity

© FedSources 2010, All Rights Reserved. Reproduction Prohibited. 17

 Military Health Systems (MHS)
TRICARE Management Activity (TMA)

© FedSources 2010, All Rights Reserved. Reproduction Prohibited. 18

 TRICARE Opportunity

© FedSources 2010, All Rights Reserved. Reproduction Prohibited. 19

 FedSources Contact Information

• If you are a current client of FedSources, contact your CDE 
for more targeted analysis.  
• If you would like to learn more about how FedSources can 
support your business success, contact us today. 

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© FedSources 2010, All Rights Reserved. Reproduction Prohibited. 20