Last year was a blockbuster year for health IT, according to the semi-annual health IT market review from Healthcare Growth Partners.

Health IT investment activity fired past prior records, and IT mergers and acquisitions activity and valuations were at all-time highs. 

Here are the numbers: U.S. health IT investment was $2.8 billion in 2013; in 2017, it totaled a whopping $7.1 billion.

[Also: Hospitals gear up for big revenue cycle investments to boost infrastructure, consolidate operations]

Since 2011, global investments are up 849 percent, and health IT investments are up 583 percent.

If anything, the HGP report questions whether the numbers are too high, and among its survey questions asked whether the health IT market is a bubble. 

In 2015 when asked this question, 29 percent of respondents said "yes," while in 2017, 36 percent did.

"With such a swing, one can speculate that the market is either correcting for historical underfunding or significantly overfunded," the report said.

The bulls expect mega-mergers such as the proposed $69 billion deal between CVS and Aetna to continue to get scale and reduce cost. The bears say the inflow of capital doesn't change the fact that payers and providers are historically not early adopters of cutting-edge technology.

[Also: CVS-Aetna merger will make an even bigger giant out of Epic]

There is also a concern that the increase in health IT investment may reorient the market away from customers and towards investors.

Today's buzzwords are blockchain and artificial intelligence, the report said. Customers don't buy either, they buy products that use blockchain or AI.

"We believe long-term value creation is a byproduct of serving customers, while investor-centric buzzwords push companies to operate at the leading edge of innovation," the report said.

Participants should keep this balance in mind to sustain the level of growth implied by the recent investment activity, the report said.

Since 2013, the market has seen nearly $34 billion in growth capital globally and $26.2 billion in the United States, a respective 608 percent and 387 percent uptick.

In 2017, the Standard & Poor's 500 gained nearly 20 percent, marking the ninth year of a bull market. The 4.1 percent unemployment rate is at a 17-year low. Interest rates also remain low, though are expected to trend up.

Healthcare Growth Partners reported its health IT index gained 25 percent. 

These numbers were recorded before the GOP tax bill kicked in on Jan. 1, lowering corporate and individual tax rates.

The stats were also unhampered by the uncertainty in the individual market under the Affordable Care Act and the resignation of Department of Health and Human Services Secretary Tom Price. 

Over the past 10 years, the electronic medical record and its byproducts have significantly expanded the market.

To support the current rate of investment, the overall health IT market would need to grow at an annual rate of 6.6-13.2 percent based on the 5-year average or 9-18 percent based on 2017 figures.

"We believe that the health IT market can ultimately sustain this level of investment as market participants begin to capitalize on the critical mass of EMR adoption that we have finally reached, as well as a number of other favorable market forces," the report said.

This includes the move to value-based care, telehealth and precision medicine.  

The Centers for Medicare and Medicaid Services Innovation Center continues to support value-based models and recently released new telehealth initiatives for providers to get paid for the service. 

Precision medicine is seen as the future of healthcare, with decision-makers in discussions to move technologies forward to clinicians through policies for reimbursement.

The report shows strong sector demand for telemed, benefits management and population health, among others, while consulting, revenue cycle management and outsource services can expect lower revenue multiple in a transaction. RCM tech falls in the middle of this scale.

Companies that receive institutional funding represent between 25 and 50 percent of the overall health IT market. 

The health IT initial public offering market has all but dried up in the last year. However, word on the street is that Change Healthcare may file for an IPO in 2018, the report said.

The semi-annual report summarizes M&A and capital raising activity across health IT, health information services, and digital health. 

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com