Health firm executives are expanding their IT budgets in 2019

This story was delivered to Business Insider Intelligence "Digital Health Briefing" subscribers hours before appearing on Business Insider. To be the first to know, please click here.

Health firm executives unanimously agree that digital transformation initiatives are gaining momentum - and 54% agree that health IT budgets will hike up at least 10% in 2019, according to a survey of 64 executives from healthcare enterprise and IT vendors conducted by Damo Consulting.

Health firm executives are expanding their IT budgets and reallocating spending to new initiatives as they race to keep stride with the industry's accelerating innovation.

Here's what's swelling healthcare executives' IT budgets in 2019:

• Execs plan to spend big on digital health and analytics. Health enterprises' top IT priorities in 2019 were accelerating digital health initiatives and investing in AI and analytics. It makes sense for firms to be bullish on analytics: The majority (57%) of provider and payer executives expect predictive analytics to save their organization at least 15% over the next five years.
• Firms are also racing to improve the patient experience. As patients start to flex their muscles as consumers - and apply their expectations of transparency, on-demand services, and digital offerings from retail to healthcare - providers and payers need to invest in new tech to stay competitive. For example, providers are investing in tools like online scheduling and bill pay to offer consumers greater convenience and digital communication tools to improve customer service, according to PwC.

But health firms say their transformation efforts are stymied by dynamics in the IT vendor sector. For example, 75% of health enterprise execs agree that rapid change in the health IT landscape makes buying decisions harder, and 42% say there aren't a lot of viable and ready-to-deploy artificial intelligence (AI) and digital health solutions.

The gap between health firms' IT priorities and IT vendors' offerings creates a favorable competitive landscape for market entrants. For example, Amazon Web Services, Apple, and Google each rolled out new software marketed at hospitals or formed closer ties with healthcare providers in the last year.

And healthcare tech vendors are already feeling the heat: 75% of healthcare tech and service providers say the rise of nontraditional players in the healthcare sector is having a "high" or "moderate" impact on their competitive environment.