McKinsey April, 2018
Prashanth Reddy, Elina Onitskansky, Shubham Singhal, and Sri Velamoor

The healthcare services and technology market is growing rapidly, which creates opportunities, risks, and structural questions for companies in the sector and those in the broader healthcare value chain.

Services and technology have become the fastest-growing profit pool in the healthcare industry over the past five years, a trend driven by the significant value creation potential of technology-based and -enabled innovations. Major technological advances (e.g., interoperability, advanced analytics, machine learning, digitization, the Internet of Things) have found numerous applications in healthcare—and present important opportunities to address the half a trillion dollars of annual spending resulting from low productivity and waste.

To date, most healthcare services and technology companies have focused on managing medical costs and quality (e.g., through population health...

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