Providers to Adopt IT Outsourcing Solutions in 2016 as More Hospitals and Physician Practices Slide Deeper Into Financial Uncertainty, Black Book Survey

As the healthcare delivery industry deals with technology updates and implementations from ICD-10, EHR issues, physician alignment, big data, interoperability, value-based reimbursement reforms, decision support, revenue cycle, and patient marketplace shifts, hospital leaders embark on the major restructuring of hospital technology priorities and staffing alternatives for survival.

Black Book™ surveyed 1,030 hospital CIOs and IT leaders, as well as 243 CFOs and financial executives, to contribute their perceptions on technology solutions and outsourcing services options between July and October 2015. 266 hospital and inpatient organizations were represented in the survey in total. Additionally the business managers of 1,395 outpatient, alternative care, and physician practices also submitted ballots, nearly two thirds owned by hospital networks.

“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 Market Research. 

“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and population health challenges ahead to get paid, may require several new applications, and the frank reality is that outdated, understaffed and failing current solutions will close a marginally performing hospitals for good.”

Black Book underscores, that the healthcare industry is no stranger to IT outsourcing.  Contractors have provided care and service coverage clinically from radiology to therapies, and administrative work such as billing, collections and transcription for decades. 

With pressure mounting from several directions, Black Book found that 73% of all surveyed hospitals and health systems over 300 beds are now looking outside for technology solutions from applications development to complex infrastructure services, with a much wider lens.  81% of provider organizations under 300 beds have also placed complex IT outsourcing in their priorities in the new year.

606 former and current users of IT outsourcing solutions provided feedback on the reasons why there is a new confidence in partnering with an outside contractors now, lessons learned since the early 2000s.

83% of the respondents agreed on the top ten lessons in failed hospital IT contracting engagements:

Outsourced IT services that 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

The return-on-investment and immediate access to trained staff and needed technology are the primary motivators for outsourcing today. 90% of hospital organizations in Q3 2015 state they are at or near an immediate (3 months or less) return on their investment for IT outsourcing.  Satisfaction with outsourcing vendors is also at an all-time high with 84% expressing their relationship is exceeding expectations.

Black Book notes that the last time healthcare provider industry saw a boon like this in IT outsourcing was in the late 1990’s. Back then, leading cost reduction consultants frequently recommended broad-based IT outsourcing to hospital organizations, but these contracts sharply declined after 2004.

“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 strained margins,” said 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.”

There is also little disagreement between CIOs and CFOs on how to best proceed with the exploration of IT outsourcing.

86% of CFOs and 91% of CIOs are willing to reshape their organization with the most effective combination of hospital staff and outsourced service providers in 2016 according to the survey results.

Learning from past experience, far fewer hospital executives will rely on the vendor to make the business case to outsource or not.

“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.

68% of CIOs endorse software development such as mobile solutions; big data support, predictive analytics and claims management are turning to their EHRs for possible add-ons and systems enhancements.  

Black Book™ also announced the top performing IT outsourced services vendors as ranked by customer satisfaction on eighteen hospital and physician organizational client experience based key performance indicators.

Dell swept the end-to-end complex IT outsourcing solution category, as well as top client experience rankings in provider security solutions, population health support, applications management and infrastructure functions.

Also high scores in the complex IT outsourcing service line for hospitals and physician groups were IBM, Allscripts, HP, McKesson, Accenture, CSC, Unisys and Cognizant.

More Black Book survey results can be viewed at http://www.blackbookmarketresearch.com/outsourcing-managed-services/

About Black Book ™

Black Book Rankings, a division of Black Book Market Research LLC, provides healthcare IT users, media, investors, analysts, quality minded vendors, and prospective software system buyers, pharmaceutical manufacturers, and other interested sectors of the clinical technology industry with comprehensive comparison data of the industry’s top respected and competitively performing technology vendors. The largest user opinion poll of its kind in healthcare IT, Black Book™ collects over 450,000 viewpoints on information technology and outsourced services vendor performance annually. Black Book was founded in 2000, is internationally recognized for over 15 years of customer satisfaction polling, particularly in technology, services, outsourcing and offshoring industries.

Black Book™, its founders, management and/or staff do not own or hold any financial interest in any of the vendors covered and encompassed in this survey, and Black Book reports the results of the collected satisfaction and client experience rankings in publication and to media prior to vendor notification of rating results.

Follow Black Book on Twitter at http://www.twitter.com/blackbookpolls For methodology, auditing, resources, comprehensive research and ranking data, see http://www.blackbookmarketresearch.com


Categories: Business Technology, Finance, Business Finance, Medical

Tags: Black Book, finance, hospitals, IT, ITO, Outsourcing, physicians, technology


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