Health IT outsourcing: a rising priority

Population health, analytics and EHR initiatives are accelerating IT expenses and a need for software solutions and proficiency
By Jessica Davis
11:14 AM
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Nearly three-quarters (73 percent) of health systems with more than 300 beds -- and 81 percent of providers with fewer than 300 beds -- are shifting their focus to IT outsourcing for development and complex infrastructure services.

Black Book Research surveyed 1,030 hospital CIOs and IT leaders and 243 CFOs and financial executives from 266 hospitals and the business managers from 1,400 outpatient, alternative care and physician practices for their insights on technology and outsourcing services options.

The overwhelming conclusion was that immediate access to a fully-trained staff and its technology, in combination with a positive return-on-investment, are driving forces behind the turn toward IT outsourcing, especially as the demand on healthcare organizations grow in complexity.

[See also: Health IT outsourcing demands rise]

"Most hospital leaders see no choice but to evaluate and leverage next-generation information and financial systems as an outsourced service in order to keep their organizations solvent and advancing technologically," said Doug Brown, managing partner of Black Book, in a statement.

The healthcare industry has used IT outsourcing for decades, from administrative to clinical needs. But the push for more sophisticated electronic health records, analytics and population health management are fueling a the shift toward outsourcing to reduce costs, the Black Book survey shows.

"The reimbursement and population health challenges ahead to get paid may require several new applications," Brown said. "The frank reality is that outdated, understaffed and failing current solutions will close marginally performing hospitals for good."

[See also: Fort Memorial: Outsourcing for IT excellence]

Hospital executives are no longer looking to vendors to make the case for outsourcing; they're taking the initiative to research the cost and benefits on their own, poll results show.

About 600 of those surveyed are former and current users of IT outsourcing. And of these respondents, 90 percent reported they're at or near a full return on their investment within three months or less.

[See also: Outsourcing IT takes many shapes]

Additionally, 84 percent of respondents using the services stated they're satisfied with rendered services and their expectations have been exceeded.

Meanwhile, 83 percent of those who've used IT outsourcing agreed when the strategy didn't work it was due to reasons that include: choosing the wrong vendor, neglecting to prepare accurate budgets, unrealistic expectations and unmonitored performance for contracted outsourcing.

Despite past failures, 86 percent of CFOs and 91 percent of CIOs are willing to restructure their organization to support a combination of outsourced providers and hospital staff, according to Black Book. And 68 percent of CIO respondents endorse software developments to support big data, predictive analytics and claims management for possible enhancements to the EHR systems.

"This pressure on bottom lines has again raised IT outsourcing as a panacea for cost control, but it is also a way to access needed software solutions and expertise in running these applications," Brown said.

[See also: CIO: Outsourcing 'allows me to focus']