- Nearly three-quarters of hospitals and health systems with over 300 beds will be looking outside their organizational walls in 2016 for health IT integration help ranging from application development to complex infrastructure services, according to newly released survey results from market research firm Black Book. For smaller organizations, under 300 beds, the rate jumps to 81 percent.
"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 public statement.
He added, "The reimbursement and population health challenges ahead to get paid, may require several new applications, and the frank reality is that outdated, understaffed and failing current solutions will close marginally performing hospitals for good."
Healthcare has a decades-long history of outsourcing, Black Book noted, with contractors working in clinical areas such as radiology and therapies to administrative functions such as billing, collections and transcription. Many organizations have learned lessons from past outsourcing engagements and are in position to apply that experience toward future IT services, the survey found.
The survey gathered feedback between July and October 2015 from more than 600 former and current users of IT outsourcing solutions. Among the top lessons from failed hospital IT contracting arrangements:
- Outsourced IT services should have stayed within the organization.
- Selected the incorrect vendor for the job.
- Neglected to realize the full costs of outsourcing.
- Permitted the outsourced service to get out of control.
- Disregarded employee and/or community concerns about outsourcing/offshoring.
- Wrote ineffective statements of work for the services outsourced.
- Failed to strategize an exit procedure before terminating the outsourcing contract.
- Unrealistic expectations.
- Lack of best practices for hospital IT outsourcing established.
- Did not monitor the performance of the contracted outsourcer.
Black Book’s report said strong return-on-investment projections and immediate access to trained staff and needed technology are today’s main motivators for outsourcing. Among respondents, 90 percent of hospital organizations said that during the third quarter of 2015, they were at or near an immediate (3 months or less) return on their investment in IT outsourcing. At the same time, satisfaction with outsourcing vendors reached an all-time high, according to Black book, with 84 percent expressing that their outsourcing relationship was exceeding expectations.
"Population health, analytics, revenue cycle management, EHR and HIE initiatives have accelerated IT expenses again, much faster than anticipated as have market conditions and changes in hospital revenue that are severely straining margins," explained Brown. "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."
Looking forward, about 90 percent of surveyed CFOs and CIOs said they “are willing to reshape their organization with the most effective combination of hospital staff and outsourced service providers in 2016,” the survey report said.
“Hospitals, from the board down, are examining the costs and benefits and owning the responsibility to make sure hospital staff and outsourced services mesh well,” said Brown.
The survey found that 68 percent of CIOs endorse software development such as mobile solutions, big data support, predictive analytics and claims management, while also considering EHR add-ons and system enhancements.