Healthcare IT spending will increase to more than $34.5 billion in 2014, according to a new report from a Hampton, N.H.-based research and consulting firm.

Technology Business Research Inc. says that the spending will come as payers and providers look to build infrastructure modernization that meets regulatory mandates such as Meaningful Use of electronic health records (EHRs) under the Health Information Technology for Economic and Clinical Health (HITECH) Act and the transition to ICD-10. The research firm surveyed 225 IT decision makers across the C-Suite and line-of-business managers at payers and providers, conducting interviews to determine spending intentions.

“The wide variety of regulatory mandates and changes coming into force in the near term in the U.S. magnifies the pressure on healthcare providers, commercial payers and public sector agencies to maximize the value and ROI of their IT spend to meet these requirements,” TBR healthcare analyst Joseph Walent, said in a statement. “Health IT vendors able to recognize the IT spending habits of the market segments, and adjust accordingly, will be best positioned to secure market share.”

One survey respondent told Technology Business Research that ICD-10 had an estimated end-to-end budget of $2.5 million. The survey looks how the average IT budget at a provider and a payer is allocated across workloads such as implementation of EHRs.

A recent report from Moody’s Investors Service found that thanks to investments in IT, hospitals are incurring higher expenses, and for the first time in three years showing weakening financial performance.