News & Events

Healthy Interest

CGI’s recent announcement that it intends to start breaking out its healthcare revenue as a separate vertical segment is just another signal to the market regarding the excitement around health (

In the federal space, health IT (“HIT”) and health services continue to make headlines as an opportunity to organically buck the broader slow-to-no growth trend of the federal market (especially given tightening DoD market) and broader economy. Federal HIT expenditures are estimated at $10.5 billion – $11.5 billion per year (including HHS, Military Health, and VA) through 2017.

In the frenzy to strategically reposition and/or bolster their health presence, the larger public players are turning to M&A. In the past few months alone, DRC acquired HPTi (VA), Lockheed acquired QTC Holdings (VA medical evaluation), SAIC acquired Vitalize Consulting (EHR), CSC acquired Maricom Systems (CMS business intelligence), and GD acquired Vangent (MHS, CMS). Through October, health related services deals have represented approximately (17)% of total transactions, a meaningful pick-up from the (7)% from 2007-2010.

Given the significant challenges, dollar value, and complexities around healthcare – to include the non-discretionary spending needs and escalating demand (albeit Medicare / Medicaid or Veterans’ benefits), we anticipate continued focus on this segment by traditional federal, commercial, and diversified players alike. Some trends worth keeping an eye out for:

  1. Heightened competition for and importance of new contract vehicle awards and task orders (e.g., T4, CMS ESD, CDC CIMS, FDA ELMS)
  2. Customer thirst for crossover technologies and solutions in some cases developed in the commercial space and introduced by commercial or diversified players
  3. Existing federal players opening their aperture to new product / service lines in order to capture a greater market share
  4. Continued deal activity at premium valuations