Hospitals are continuing to feel the financial pinch. As of February 2024, 40% are losing money.
To stay afloat, one of their cost-cutting measures is to outsource parts of their IT. The idea is not new. About 37% of IT is already outsourced, but the IT outsourcing trend is growing. Outsourcing of IT and other services by hospitals is predicted to nearly double by 2027 (see chart).
By Outsourcing IT, Hospitals See Many Advantages
What is behind this surge in IT outsourcing for hospitals? Many benefits accrue from this strategic decision:
- More streamlined systems. Hospitals suspect that their legacy IT systems are bloated, out-of-date, and labor intensive. A fresh review from an independent healthcare IT firm can identify what can be scrapped and which new, more reliable and secure systems should take their place. By reducing redundancy and eliminating outdated systems, outsourcing can achieve “application rationalization,” where a better cohort of IT applications can be substituted for older systems.
- Staff cost reductions. Outsourcing can help hospitals save money on staffing and overhead costs while replacing staff with contractors who have more up-to-date experience and represent a variable cost instead of a fixed cost.
- Improved security. Hospitals must ensure the security of patient data and clinical research while complying with HIPAA regulations. Armed with the most current technology, outsourcing partners can help hospitals avoid cyberattacks and implement emergency protection measures if a breach occurs.
- Better mission focus. More and more, hospitals are focusing on their core mission: patient care. They are not in the IT business. In fact, outsourced IT may help achieve higher quality patient care by reducing distractions from a patient-first focus and by implementing more efficient and user-friendly patient interfaces.
When it comes to deciding where to start IT outsourcing, hospitals are tending to start with a review of their entire IT ecosystem. This comprehensive approach means hospitals are looking at everything from medical billing to data collection and analysis, claims processing, clinical data and infrastructure management, and even payroll management.
IT Outsourcing Has Become a Logical Progression for Hospital Cost Savings
The move to IT outsourcing aligns with the non-core offloading direction hospitals have been taking most recently. Hospitals want to be in the healthcare business and not distracted by back-office operational demands. This offloading started with simple things, like laundry services, and then moved to food services, environmental services, and transportation. Now outsourcing is moving to labor-intensive functions, like triage nursing, home care contracting, and IT services.
As a healthcare IT implementer, Innovative’s whole value proposition is built around saving hospitals (and other providers) money money while improving their IT infrastructure. Our goal is mission critical, because we’re freeing hospitals to focus on helping sick people get healthy.