Pros and Cons of Healthcare IT Outsourcing

Recently Black Book issued a report stating that CFOs, CIOs both favor outsourcing for technology. Outsourcing is not new to healthcare information technology and it has been practiced for decades. However, with the healthcare scenery changing rapidly, outsourcing of IT has again gained prominence. Introducing technology to a healthcare organization can be an expensive undertaking and thus, outsourcing may be the way to go. One of the main reasons why outsourcing is attractive is because it helps put together resources quickly and reduces the time to market when implementing technology.

Besides cost, other reasons for outsourcing include increased flexibility, organization inability to further develop staff quickly and there may be a cash flow problem in keeping an employee long term. Building a trusted relationship with a vendor is key and someone must monitor their performance to hold the vendor accountable. One needs to weigh the pros and cons before proceeding to outsourcing because it is not without risks.

Outsourcing Tips:

  1. Lower cost is often the single most influential factor when deciding on offshore outsourcing. Some of the world’s largest organization use contract employees or foreign labor to perform the commodity work. This also reduces the need for full time employees.
  2. Outsourcing is ideal when you need a 24×7 workforce. Outsourcing is an easier method to augment your existing staff in order to manage the 24 hour operation we require in healthcare.
  3. With outsourcing, it is usually easier to transition and move temporary staff because they do not have permanent ties with your organization
  4. In certain countries, there are rules and regulations that govern privacy and intellectual property; when you outsource outside of geographical boundaries, you will need to pay closer attention to data export regulations.
  5. You must manage the internal staff culture and feelings about outsourcing. Most personnel will view outsourcing as a threat to their job, so leaders must be transparent when they are outsourcing projects or tasks.
  6. The outsource contract must be clear and concise as to the roles and responsibilities of each party. The arrangement will fail quickly if both parties are not clear on this.

I believe that successful departments and organization can utilize outsourcing as a competitive advantage if it is managed appropriately, but there has to be a dedicated resource managing the vendor relationship. I have managed both an outsourced IT department along with insourced staff. The key is to have transparent leadership which treats every employee (outsource, and insource) the same. Clear communication is definitely required from the leader.

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About the author

David Chou

David Chou

David Chou is the Vice President / Chief Information & Digital Officer for Children’s Mercy Kansas City. Children’s Mercy is the only free-standing children's hospital between St. Louis and Denver and provide comprehensive care for patients from birth to 21. They are consistently ranked among the leading children's hospitals in the nation and were the first hospital in Missouri or Kansas to earn the prestigious Magnet designation for excellence in patient care from the American Nurses Credentialing Center

Prior to Children’s Mercy David held the CIO position at University of Mississippi Medical Center, the state’s only academic health science center. David also served as senior director of IT operations at Cleveland Clinic Abu Dhabi and CIO at AHMC Healthcare in California. His work has been recognized by several publications, and he has been interviewed by a number of media outlets. David is also one of the most mentioned CIOs on social media, and is an active member of both CHIME and HIMSS. Subscribe to David's latest CXO Scene posts here and follow me at Twitter