We probably all know at least one negative story on IT outsourcing in healthcare from years past. But the pendulum is swinging back. As core IT services become more of a commodity and CIOs need to focus on strategic initiatives, selective outsourcing is worth consideration.
The recent announcement that Trinity Health is outsourcing application management and rebadging approximately 450 staff is getting attention from other provider organizations. There are other examples – many in infrastructure.
More and more I hear from CIOs who are considering selective outsourcing for various reasons: reducing costs, modernizing the infrastructure, providing scalability and flexibility as health systems grow, dealing with recruiting and retention challenges, and focusing on strategic initiatives instead of commodity services. Many CIOs find themselves part of overall cost reduction efforts at their health systems. While some CIOs start from a defensive posture and say they can’t possibly reduce costs any further, one of the most progressive IT leaders I know said she is looking at it as an opportunity to transform IT.
I was part of an organization-wide cost reduction initiative when I held roles at Brigham and Women’s Hospital, Michigan Medicine, and University Hospitals. As CIO, I was asked to identify opportunities to reduce costs while other departments’ opportunities needed additional IT help to achieve their reductions. But saying no to cost reduction is usually not an option. CIOs must partner with their peers and engage their staff to identify opportunities.
The healthcare IT outsourcing market is expected to reach $73 billion by 2024, according to an article published by Xtelligent Healthcare Media. A Black Book survey cited in that article found that 84 percent of respondents confirmed that they saw an increase in efficiencies and reduced costs. Eighty-one percent stated that the ROI was enough to keep their outsourcing partners, and 73 percent said that immediate access to trained staff and technology was their primary reason for outsourcing.
One of our experienced CIO advisors at StarBridge Advisors, Rich Pollack, talked about outsourcing in a recent blog post. His conclusion was well stated: “In a healthcare era where the competition for scarce capital and operating funds has grown more intense and where the ability to find, retain and develop a talented workforce is always challenging, partnerships that can deliver certain essential IT services at effective cost and performance end points are well worth considering.”
Is it time for you to consider selective outsourcing?