Spending on state and local health IT systems will increase by 19 percent over the next five years, forecasts a new report from market research firm INPUT.

"States, localities, and regional extension centers are going to move quickly to capitalize on EHR funding," said Kristina Mulholland, senior analyst, at INPUT. "It is essential that they fulfill Stage 1 requirements – especially when it comes to meeting computerized physician order entry, and they will need to seek technical assistance from contractors that specialize in system integration and hardware, software, and professional services along the way."

Researchers expect the health IT market's worth to rise from $8.3 billion in 2010 to $9.9 billion in 2015. The rapid adoption of electronic health record systems will drive that growth, they predict. Spending on EHRs will account for $2 billion of the $9.9 billion total.

The report indicated $2.5 billion in funding from the American Recovery and Reinvestment Act for community-based medical facilities will lead to more spending on modernizing buildings, introducing electronic medical records and adding to the workforce.

Based on INPUT's analysis of the issues and implications surrounding healthcare reform legislation, EHR incentive payments will make up the largest portion of healthcare IT spending, researchers conclude. Most of the EHR-related opportunities will come from regional extension centers (RECs) and provider groups, they say.

"Contractors should keep in mind that the stakeholders involved are outcome-oriented," Mulholland said. "They are likely to work backward to determine how technology can help accomplish their goals. At the same time, they recognize the need for innovative solutions and want to learn more about what contractors can offer them. To gain a significant piece of the market, contractors should align their strategies with the stakeholders' needs, showcase their core competencies, match these solutions with specific meaningful use requirements, and get on the list of preferred vendors."