Four Reasons Healthcare Providers Should Reconsider IT Outsourcing

Healthcare providers are exploring a range of options for containing rising costs throughout their systems. One of the most promising approaches is the strategic outsourcing of IT services. Outsourcing can be defined as contracting with third-party vendors for services, rather than staffing and managing those services internally.

Healthcare providers are already commonly sourcing such services as laundry, maintenance, and lab tests. However, many providers have given only limited consideration to sourcing their healthcare IT services. The time has come for them to take another look at IT outsourcing. Here’s four reasons why.

1. Outsourcing Options Have Become Far More Sophisticated and Healthcare-Specific

Some pioneering healthcare providers tried sourcing early, had less than satisfactory experiences, and decided to bring their healthcare IT services back in house. They may be pleased to discover that the sourcing landscape has changed in the past few years. Sourcing options have proliferated, and some sourcing providers are tailoring their offerings specifically to the needs of healthcare providers. By choosing a managed service provider, like Magnet Solutions Group, that understands the challenges involved in achieving full utilization and optimization and understand clinical environments; importantly, they know how to customize services to accommodate the needs of doctors, nurses, and other clinicians, healthcare providers should have a much better experience now than was possible in the past.

2. Outsourcing Can Offer More Control, Not Less

Some companies take the position that because healthcare is provided locally, the healthcare IT that supports it needs to remain local as well. This view rests in part on a concern that in sourcing their managed and capacity services, companies may lose control over those services. However, experience has shown that sourcing of such services does not mean loss of control. In fact, many companies have cited improved visibility and management control, thanks to the use of structured reporting, governance processes, and dashboards. By approaching outsourcing as a critical relationship with service providers, healthcare providers are able to extract significantly more value out of their investments in healthcare IT applications and infrastructure.

3. Sourcing Can Generate Significant Cost Savings

Most healthcare provider companies that are currently pursuing sourcing strategies are seeing their healthcare IT and labor costs fall by 25 percent; some are achieving even higher savings.

These savings derive from several cost-related benefits that sourcing delivers:

• Gains in productivity and efficiency; vendors typically commit to year- over-year productivity gains of 25-30 percent over a five-year period.
• Process standardization, continuous improvement, and heightened effectiveness, thanks to deploying the correctly skilled resources at the right time.

• Lower labor costs; labor savings typically range from 40 to 70 percent, depending on whether using outsourcing replaces a contractor or a full-time employee.

In short, pursuing a sourcing strategy can allow a company to accomplish its healthcare IT agenda more efficiently, effectively, and productively, while using cheaper resources. The combination of these factors has the potential for significant cost savings.

4. Sourcing Generates Significant Quality Improvements

Managed Service Providers, such as Magnet Solutions Group, are able to help provider companies improve the quality and consistency of their healthcare IT applications in a number of ways. These include:

• Improved performance through the use of experienced application- management processes, tools, and experts. Also contributing to heightened performance are fresher personnel around the clock–through a combination of onsite and managed resources.

• Improved visibility and management control, as noted above. The provider stays in control, accessing capacity- services resources as needed, as a valuable extension of on-site teams.

• Improved access to skills and flexibility in their use. It is easier for third parties to flex both the skills of resources and the volume of resources needed over time.

• The freeing-up of internal resources to focus on higher-priority clinical- facing initiatives, such as order set definition, workflow optimization, and change/project management.

The Bottom Line

Clearly, healthcare providers that are not yet pursuing alternative sourcing strategies for their healthcare IT can no longer afford to ignore this opportunity. The risks have been greatly reduced, and the benefits—in terms of both cost and quality—are immense.

David Blair ~ January 15th, 2015