Health Care and Social Services: Budget and Future IT Business Opportunity Correlation

Deltek Sr. Analyst Chris Cotner reports.

In previous articles, GovWin illustrated how state budget efficiency can be used as a metric for future budget increases or decreases. While those articles focused on state all-funds budget efficiency, this article focuses instead on health care and social services budgets. The analysis outlined below offers insight into state spending trends, including how budgets and efficiency affect the number of available IT opportunities a particular state may have. For the business community, such analysis bears utility as a tool to determine states of future business focus.

In terms of state budget efficiency, the prevailing logic is that efficient state budgets can indicate that a particular state is positioned for future growth (see previous articles here and here). On the contrary, states with inefficient budgets may be poised for future cuts to improve efficiency. However, the counter point to this line of reasoning is that efficient states may look to become more efficient, while inefficient states may continue down the same path of increasing budgets. So, while a universal model does not apply for all states, certain patterns and trends emerge when examining specific state budget verticals.

In particular, analysis indicates a strong, direct, positive correlation between overall state health care and social services budgets and both the number and value of government contracting opportunities available in that state. This means that as current FY state budgets increase, both the number and value of available government contracting opportunities also increase. So, states with higher health care and social services budget efficiency (more efficient) have a lower number and value of currently listed health care and social services contracting opportunities. To the contrary, states with lower current efficiency (less efficient) have a higher number and value of currently listed opportunities. For the business community, this makes sense; more money in the budget equals more government business opportunities.

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